Construction across southeast Michigan of nonresidential developments has continued to increase in the last three years, but remains far below pre-recession years, says a new report from the Southeast Michigan Council of Governments.
In 2013, the southeast region added nearly 5 million square feet of floor space in, up from 3.9 million the year before. In 2009, more than 8 million square feet of floor space was developed. Nonresidential development has been on the decline the last five years, when the combination of job losses, the housing bubble burst, and the national recession severely impacted the state’s economy.
“(Before), people were only buying necessities,” says Janet Mocadlo, a senior planning analyst at SEMCOG who authored the report. “Developers not willing to take a chance on a speculative commercial or industrial project. Spending was as needed or if a clear demand for a service was there.
The 123 percent increase in commercial building and 173 percent increase in industrial is a sign that the region is on a good path, Mocadlo says.
Of the 156 projects completed last year, the largest was the Chrysler Group Body/Paint Shop in Sterling Heights at 1 million square feet. Additionally, two 250,000-square-foot Menard’s stores also opened in 2013, one in Livonia and the other in Port Huron Township.
In total, the region — which includes Livingston, Macomb, Monroe, Oakland, St. Clair, Washtenaw, and Wayne counties — had about 11 million square feet of development space under construction or completed last year. However, it will take time before the industry sees a return to pre-recession numbers of about 280 projects averaging a total of 19 square feet of development space under construction or completed per year, Mocadlo says.
“We would need some very large projects coming online in the future or a significant increase in the total number of projects to reach that,” she says. “Although, with the recent announcement of the new Red Wings arena and the entertainment district surrounding it, I may eat my words.”
Looking forward and considering some of the speculative projects that have been submitted, Mocadlo estimates that nonresidential development will at least remain at 2013 levels, possibly experiencing a slight 5 to 10 percent increase.
To read the full report, click here.