Stable Quarter for Industrial
Metro Detroit’s industrial sector closed with an overall 3.3% vacancy rate in the first quarter, a 30 basis points increase since the fourth quarter 2017. Vacancy rates in the industrial sector have been hovering in the low to mid 3% range since 2015. Absorption in the first quarter was negative (1,281,628) square feet, compared to positive 3,431,657 square feet in the fourth quarter 2017.
The numbers seem to point to a slow start leading into 2018. It appears local buyers and tenants are responding to opportunities with less velocity, “wait and see” mode, and even in some cases extending their existing leases over looking for new space. Sale prices and lease rates continue to climb, and quality industrial space remains challenged which is driving build to suit and speculative development. An uptick of out-of-town investments are being made in the region fueling construction starts, and in the first quarter a total of 1.5 million square feet broke ground. There is currently 6.4 million square feet under construction with 82.7% preleased at the end of the first quarter 2018. Leading market experts to believe that 2018 will be another strong year for Detroit’s industrial market.