The Detroit economy is proving to be an inviting one for retailers, according to the latest research from Marcus & Millichap.
According to the company’s third-quarter Detroit retail report, employers in the area have added more than 100,000 workers during the last three years. Many of these new jobs are high-paying tech positions. And Marcus & Millichap expects more of the same, with companies such as Penske Logistics, Lear and Amazon expand in the Detroit market.
Amazon is making an especially big impact in the Detroit area, opening facilities in Livonia and Romulus, creating a combined 2,600 new positions.
The employment rise here has resulted in higher household incomes, which is contributing to rising retail sales. New retailers such as Topgolf and Duluth Tradiing Company are now entering the Detroit market.
Existing retailers are making big moves here, too. Marcus & Millichap points to Menard’s, which is opening new stores in Belleville and Taylor in 2018. That store in Taylor will serve as the anchor of the new 80-acre Trader’s Point development at the former Gibraltar Trade Center site. Kroger MarketPlace and At Home are two other retailers opening multiple locations this year in the Detroit market.
The numbers back up Marcus & Millichap’s optimism. Builders are expected to finalize about 1 million square feet of new retail construction in 2017, a small tick up from last year’s pace. Marcus & Millichap says that retail vacancy rates in the Detroit area will fall to 6.4 percent in 2017. That would be the lowest this rate has been in more than 10 years and 510 basis points below the rate’s high in 2010.
The drop in vacancy, not surprsingly, will translate into higher retail rents in the Detroit area. Asking rents here are expected to rise an average of 4.6 percent to $13.19 a square foot. That is still 5.4 percent below the peak of 2008.
