Industrial Still in Overdrive
Despite the lack of headlines and front page press, Metro Detroit’s industrial market has been one of the greatest success stories of the past four years. The market is currently reporting a 4.0% vacancy rate—which is 20 basis points lower than the previous quarter, and the lowest reported vacancy rate on record. Other indicators, such as rental rates and absorption, continue to move in a positive direction.
For the second quarter, 1,415,771 SF of space was absorbed, an excellent complement to the previous quarter’s 1,395,740 SF. Rental rates grew from $5.13 per SF in quarter 2 to $5.25 in quarter 3. Although 470,588 SF of space was delivered in the quarter, new construction in Metro Detroit remains elusive, and is generally relegated to the big-box warehouse variety.
Into the final stretch of 2016, there is little to no indication that the market’s current conditions of low inventory and minimal new construction will change. This gives landlords and sellers the upper hand in the market, and forces users and tenants to make decisions quickly. Into 2017, Metro Detroit’s industrial real estate professionals will continue to look for the long sought-after rents required for new construction.