MichiganIndustrial Newmark Knight Frank report: Developers finding new industrial opportunities in Detroit market Dan Rafter July 15, 2020 Share on Facebook Share on Twitter Share on LinkedIn Share via email Ashley Capital's Tri-County Commerce Center III As the city of Detroit and state of Michigan continue to fight against the COVID-19 pandemic, developers here are seeing a new market opportunity: Spiking demand in the ecommerce industry is fueling new construction for bulk warehouse facilities in and around the Detroit market. That’s the good news coming from Newmark Knight Frank‘s second quarter Detroit industrial report. According to the report, while much of the Detroit-area industrial market was quiet during the second quarter, demand for bulk warehouse space jumped. That’s not surprising. As Newmark’s report says, people have been reluctant to shop at traditional brick-and-mortar stores as they worry about the spread of the coronavirus. According to Newmark’s numbers, new construction for bulk warehouse in the Detroit market jumped 50 percent to 4.3 million square feet during the second quarter. At the same time, Amazon continues to expand its presence here by taking more space in Macomb County. Overall, though, the Detroit-area industrial market did show some signs of a slowdown. Newmark Knight Frank reported that the market’s vacancy rate climbed 40 basis points to 4.4 percent during the quarter as just more than 1.6 million square feet in net vacancies were added. The good news? Much of this vacancy came from one facility. Art Van left its 1-million-square-foot facility in Warren, Michigan, after the furniture company declared bankruptcy. In Southeast Oakland County, the industrial vacancy rate climbed 20 basis points to 2.5 percent during the second quarter as nearly 177,000 square feet in net vacancies were added to the market. Several large vacancies were created in Auburn Hills, notably 84,000 square feet at 2430 E. Walton Blvd. and two separate 46,000-square-foot spaces at 1107-1121 Centre Road and 2840 Auburn Court. Leasing activity in this submarket was quiet, with the exception of Oxus America Inc. relocating from 2704 Paldan Drive to 34,000 square feet at 2046 Brown Road in Auburn Hills. In other lease deals, Esys Automation subleased 90,000 square feet from Valiant International at 1500 Highwood East in Pontiac and Michigan Diversified Holdings also subleased Stec USA Inc’s former 18,000 square feet at 31831 Sherman Ave. in Madison Heights. There were a few notable sales during the quarter. Magic Research LLC purchased 29,000 square feet at 31601 Research Park Drive in Madison Heights and Griffon Steel purchased 24,000 square feet it formerly occupied as a tenant at 1561 East Highwood in Pontiac. The newest construction project is Auburn Pharmaceutical Company’s 65,000-square-foot build-to-suit at 1744 Rochester Industrial Drive in Rochester Hills being built by General Development. Other projects are ongoing, including Ashley Capital’s Tri-County Commerce Center III, a development that will total 926,000 square feet when complete. In total, more than 6.1 million square feet of industrial space is under construction in the Detroit market, up from more than 4.6 million square feet in the first quarter of the year.