While the average rent for industrial space in the first quarter this year rose more than 6 percent when compared to 2015 — at $4.50 per square foot — it needs to increase to $5 per square foot for developers to take on large-scale speculative construction, according to a metro Detroit industrial outlook report by JLL Detroit, an investment management firm.
“The industrial market is definitely picking up in the region and part of that is when you look at the automotive industry, and you’re seeing an uptick in interest from outside firms and outside investors in the market,” says Aaron Moore, research analyst for the Great Lakes region of JLL. “We saw rents continuing to rise, (but) we are still waiting for supply to meet the demand.”
Moore says total availability of industrial space in metro Detroit decreased nearly 18 percent to 9 percent in the first quarter this year when compared to 2015. He says Macomb County and the Detroit Metropolitan Airport/I-275 corridor were especially in high demand in the first quarter of 2016. Macomb County has an availability rate of 6 percent, while the I-275’s corridor rate is 9 percent.
“We’re seeing some speculative construction in the I-96 corridor, but not enough to shake up the market,” Moore says.
He says the submarkets including the city of Detroit, downriver, I-96 corridor, Macomb County, Northern I-75 corridor, and Washtenaw County all showed positive trends in the first quarter, except for Monroe County.
To read the full report, click here.