A slowdown in demand? That’s what the Detroit-area industrial market saw in the first quarter of this year, according to the latest research from Savills.
The Detroit-area industrial market’s overall vacancy rate rose to 5.2% in the first quarter, up 90 basis points from the same quarter in 2024. That vacancy rate is the highest that the Detroit industrial market has seen in more than five years, Savills reported.
Is this reason to panic? No. As Savills points out in its report, the Detroit industrial market’s vacancy rate is still lower than what you’ll find in many comparable markets in the United States.
There are other signs, though, that demand for industrial space is waning in the Detroit market. Savills reported that the market’s asking rental rate decreased in the first quarter, too, falling from $6.68 a square foot in the first three months of 2024 to $6.63 a square foot in the first quarter of this year, a slight dip of 0.8%.
Net absorption stood at negative 1.1 million square feet in the first quarter. Savills says that this is the third consecutive quarter in which the Detroit industrial market saw negative absorption.
Construction activity dropped, too, falling from 4.4 million square feet of industrial space under construction in the Detroit market in the first quarter of 2024 to 2.2 million square feet in the first quarter of this year.
Finally, industrial deliveries decreased from 1.5 million square feet a year ago to 0.7 million square feet in the first quarter of 2025.
What’s behind this slowdown? Savills points to uncertainty among automakers and suppliers.
That doesn’t mean that the Detroit market didn’t see some larger industrial leases in the first quarter. Fisher Dynamics leased 311,000 square feet in Harper Woods, Michigan, and Bunzi Distribution leased 163,000 square feet in Flint. Envergia, UTEC and Integrity Contents Services also signed leases ranging from 84,000 square feet to 116,000 square feet during the first quarter.
