Report: Large Industrial Space Fuels Absorption in Metro Detroit Counties

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User demand for large-block industrial space continues to fuel absorption and new construction in counties throughout metro Detroit, says a new report from Newmark Grubb Knight Frank, a commercial real estate agency with offices in Detroit.

While metro Detroit’s industrial market year-to-date absorption of 7.3 million square feet is on par with the 7.7 million square feet seen for the first three quarters of 2015, the area’s vacancy rate, which saw just over 1.8 million square feet absorbed in the third quarter of this year, fell 40 basis points to 5.6 percent.

“Metro Detroit’s industrial market continues to suffer from under capacity,” says John DeGroot, vice president of research in Newmark Grubb Knight Frank’s Detroit office.  “New construction over the past three years has produced 33 pre-leased facilities totaling 4.3 million square feet and industrial users are still demanding more space. We expect another four million square feet of new construction to come online by the end of 2017.”

According to the agency’s third quarter 2016 industrial trends data for the Detroit region, limited bulk space availabilities are causing bulk industrial users to focus on the Western Wayne County submarket.

With nearly 1.8 million square feet absorbed, the Western Wayne County submarket vacancy rate fell 170 basis points to 4.4 percent during the third quarter. Ford Motor Co.’s 754,000-square-foot lease at the Livonia Corporate Center, Fuyau’s purchase of the 526,000-square-foot 909 North Sheldon Road facility in Plymouth, and KuKa Systems North America’s 384,000-square-foot lease at the Livonia Distribution Center accounted for the bulk of absorption during the third quarter.

The report also says that Southern Wayne County’s overall vacancy rate held steady at 2.7 percent during the third quarter. The submarket’s 24.1 million-square-foot inventory of Class A and B bulk warehouse saw its vacancy rate rise from 1.2 percent to 2.1 percent during the quarter, which was primarily attributed to a 90,000-square-foot vacancy in the Van Buren Business Center and a 75,000-square-foot space in the Romulus Business Center III.

The Southeast Oakland County submarket’s vacancy rate fell 10 basis points to 4 percent during the third quarter, as 228,000 square feet was absorbed. Two construction projects came to completion during the quarter: Recaro Child Safety Systems, Inc.’s 89,000-square-foot facility on Harmon Road and Shield Material Handling’s 78,000-square-foot facility on Atlantic Boulevard in Auburn Hills. Martinrea International Inc.’s 108,000-square-foot facility on Opydke Road also broke ground during the third quarter.

Southwest Oakland County’s industrial submarket vacancy rate fell 50 basis points to 5.2 percent during the third quarter, as 378,000 square feet was absorbed. The bulk of absorption came from Cosma Body Assembly Michigan, which moved into a 150,000-square-foot facility on Grand River Avenue in New Hudson. The submarket has the most construction projects underway in metro Detroit with 11 buildings scheduled for completion in the coming quarters.

Macomb County’s industrial market vacancy rate fell 10 basis points to 2.5 percent during the third quarter, as 88,000 square feet was absorbed. Projects during the third quarter included Nutrafizz Products’ 70,000-square-foot lease on Stephens Road in Warren, Warrior Sports, Inc.’s 27,000-square-foot lease on 19 1 / 2 Mile in Sterling Heights, and Toolcraft, Inc.’s purchase of a 22,000-square-foot building.

Founded in 1929, Newmark Grubb Knight Frank, which is part of global brokerage company BGC Partners, Inc., employs 14,100 professionals and has more than 400 offices in markets on six continents.

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