In little surprise, the latest research from Newmark showed that demand for bulk warehouse space in Detroit remained strong in the third quarter of the year, despite the economic slowdown caused by the COVID-19 pandemic and state shutdown orders.
Newmark’s third quarter industrial trends data did show one negative for the Detroit industrial market, though: The industrial vacancy rate in the Detroit area edged up 10 basis points to 4.5 percent.
Despite that, Newmark’s report highlighted an industrial market that continues to thrive in Detroit, even as the pandemic continues to hit the state of Michigan. According to Newmark, bulk warehouse remained the strongest industrial product type, with more than 1 million square feet of mostly new construction absorbed during the third quarter.
As demand for this product type continues to grow, developers are responding. Newmark said that nearly 80 percent of the 5 million squae feet of industrial product under construction in the Detroit market is speculative bulk warehouse.
During the last 10 quarters, users have absorbed 6.3 million square feet of bulk warehouse space. Demand is particularly strong for modern, efficient facilities, Newmark says. How strong? The 26-million-square-foot inventory of Class-A bulk warehouse space has a vacancy rate of just 1.6 percent.
“The evolution of consumer shopping methods continues to spur new demand for specialized industrial buildings in metro Detroit,” said Fred Liesveld, managing director of Newmark’s Detroit office. “Those specialized buildings at the heart of the e-commerce industry are modern bulk warehouse/distribution centers. These facilities are going to be the heart of industrial demand and the main driver of new construction for the foreseeable future.”
During the last two years, new construction has expanded the inventory of bulk warehouse space by 26 percent in the Detroit area. During the same period, companies have absorbed more than 6.3 million square feet. With another 4.2 million square feet of bulk warehouse space under construction here, the inventory will grow by another 16 percent by the middle of 2021.