Expect a surge in the number of spec warehouse developments hitting the Detroit market in the coming monhts.
Newmark Knight Frank in its first quarter 2018 industrial research, reported that Detroit’s industrial market remains strong, and that demand for modern bulk warehouses is on the rise. This means, then, that industrial users searching for a new home in the Detroit market can expect more spec space from which to choose.
Vacancy rates for the Detroit industrial market stood at 5.1 percent during the first quarter, according to Newmark Knight Frank. Just more than 565,000 square feet of industrial space was absorbed during the same quarter.
The challenge for users? There isn’t enough modern industrial space in the Detroit market to satisfy demand. That explains why new construction in this sector is on the rise.
Newmark Knight Frank reported that new-construction starts in the Detroit industrial sector jumped 30 percent in the first quarter, to 5.9 million square feet.
Amazon began buiding its third distribution facility in this market, one of 1 million square feet. Other companies new to the market, such as Kentucky Trailer and Berkshire’s E-Supply, are also building major industrial facilities in the Detroit market.
The spec development that is taking place here is generating plenty of interest, too. Newmark Knight Frank reported that of the 1.5 million square feet of speculative industrial space in construction, more than 1 million square feet is already pre-leased.
“The metro Detroit industrial market continues to be as strong as ever,” said Fred Liesveld, managing director of Newmark Knight Frank’s Detroit office, in a written statement. “Diversification is driving demand in metro Detroit and is pushing new construction to levels not seen in this market.”
As an example? Two major developments by Ashley Capital, the 575,000-square-foot Tri-County Commerce Center in Hazel Park built in 2017 is already 80 percent leased while the 919,000-square-foot Livonia Corporate Center I & II currently being built are 100 percent pre-leased.