Demand for industrial space remains strong in Detroit. And according to the latest research from Newmark, that demand doesn’t look ready to slow any time soon.
Newmark’s latest market report showed that the industrial vacancy rate in the Detroit market fell 20 basis points to 4.2 percent during the third quarter of the year. At the same time, just more than 956,000 square feet of industrial space were absorbed.
What’s most interesting is that new construction accounted for most of this industrial absorption during the quarter. Newmark reported that during the third quarter, active industrial construction grew 13.3 percent to 7.58 million square feet. The bulk of this construction is centered around the city of Detroit, a submarket that is seeing more commercial industrial development now than at any point during the past 20 years.
About 86 percent of industrial space currently under construction, just more than 6.6 million square feet, in the Detroit area is bulk warehouse facilities. Those new developments will add to the 13.5 million square feet of bulk warehouse space built since 2015. The vacancy rate for this type of industrial is a miniscule 0.07 percent in the Detroit market.
Commercial real estate pros with Newmark’s Detroit office say that they expect this industrial hot streak to continue.
“The City of Detroit is an attractive location given its central location and significant production investments by General Motors, Ford and Stellantis NV,” said Fred Liesveld, managing director of Newmark’s Detroit office, in a written statement. “Land assemblage has been the biggest hurdle for large commercial industrial developments in the City of Detroit. Redevelopment of former and existing facilities like the Cadillac Stamping Plant gives developers the contiguous land needed to build.”