Retail Off to a Good Start
At the risk of sounding like a broken record, Metro Detroit posted another steady but solid quarter of statistics to begin 2017. Absorption, vacancy, and rental rates all moved in the right direction. Most notably, the vacancy rate for the market decreased from 6.5% in the previous quarter to 6.2%, a decrease of 30 basis points. Overall, the trend is a positive one, showing that tenants have the confidence to grow and sign leases.
One of the broader positive trends is the addition of new, national tenants to the market—mostly of the fast-casual restaurant variety. Tenants like Naf Naf Grill, Piada, and many others have been a healthy addition to our market. However, the first quarter of 2017 will be known as the quarter that brought the crown jewel of fast casual dining, Shake Shack, to Downtown Detroit. Known for their upmarket burgers and tasty milkshakes, Shake Shack opened to long lines, and seems to mark a turning point in Downtown Detroit’s ability to attract national tenants.
Into the warmer months of 2017, we expect the same market dynamics to continue. More national tenants will move into Michigan, and we expect rents, vacancy, and absorption to improve on a market-wide basis. However, with many national retailers such as Macy’s and Kmart closing up shop, we do expect to see a rough ride in certain submarkets.