GROWING DEMAND IN DETROIT LEADS TO CONSTRUCTION STARTS

As the third quarter closes, all signs point to a strong quarter for Metro Detroit’s industrial market, with the lowest vacancy rates we’ve seen in a dozen years. The industrial sector is especially robust due to a healthy U.S. economy as well as high demand in the e-commerce and manufacturing sectors which is driving new development in Metro Detroit and around the country. Growing demand from electric and autonomous-vehicle manufacturers has led to a flurry of technology related real estate investments in Metro Detroit. This quarter, Subaru Research and Development announced they will build a 60,000 square foot technical center near I-94 and Willow Run in Van Buren Township. The automaker plans to invest $48.2 million into the tech center and hire 101 new employees. In Novi, Nachi Robotics has out grown their current space and is expanding to a nearby 66,000 square foot building with plans to invest $12 million and create 36 new jobs. In September, GM announced that Cadillac’s headquarter operations will return to Warren from New York city, where they’ve been for the last 3 years. Lastly, by 2020, Autoliv plans a $32 million investment to modernize its Auburn Hills headquarters, including a 3rd floor addition. Autoliv’s electronics division, Veoneer, will invest over $22 million to consolidate four operations into a new 180,000 square foot North American Headquarters building at 26545 American Drive in Southfield, construction here is expected to complete in the second quarter 2019.

In recent news, U.S. and Mexico are nearing a deal on renewing NAFTA, which is especially impactful in our automotive region. Signs indicate that the industrial sector will remain strong, but there are headwinds to look for. Issues causing greatest concern are the availability of labor and increased tariffs due to trade policy reform is creating a lot of tension.