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Overview of Select Industrial Real Estate Markets

Over the past several years the industrial real estate market has undergone significant changes in the wake of the COVID-19 pandemic which has impacted e-commerce and supply chain logistics. Here is an overview and ongoing updates concerning select major industrial real estate markets in the state of Michigan that impact MMA members.

As the cost of leasing or buying industrial real estate continues to fluctuate, it can profoundly impact manufacturers’ decision-making processes in various ways. Facility costs for the average concern are usually second only to personnel and/or equipment where the operation is heavily asset based. Determining the optimal time to expand, relocate, sell and even make estate planning decisions can all be affected by the changing industrial real estate market.

 

Summary as of Q2 2023

Flint-Saginaw-Bay City:

The Flint, Saginaw and Bay City region has experienced a slight decrease in recent activity. Rental rates and purchase prices, while trending down in the last quarter, still remain strong. Despite this decrease in activity, two new separate ground up developments totaling 530,000 SF have commenced, which will introduce some much-needed new products to the market. Additional new construction is scheduled to begin in the third quarter.

Detroit:

Compared to its national counterparts, the Detroit industrial real estate market has remained robust, with vacancy rates still near all-time lows and new construction accounting for only about 1 percent of the total market. While there has been a slowdown in activity from e-commerce and third-party logistics suppliers, activity from manufacturers has remained strong. Notably, in June, Mayco International signed a new lease for 332,000 SF in Shelby Township. While the leasing volume has gone down, the vacancy rate has also dropped which has contributed to the rise in rental rates. Even with rising interest rates, sale prices continue to increase. A combination of strong demand, very limited inventory, and the high cost of new construction contributes to this increase.

Grand Rapids:

The Grand Rapids industrial real estate market remains strong, with dropping vacancy rates. A minimal amount of new inventory is becoming available in the market. Sale transactions slowed in the second quarter. Leasing has also slowed and there was a slight drop in rental rates with the accompanying drop-in vacancy rate we will have to wait to see if that rental rate drop is sustainable. Most of the demand in the Grand Rapids MSA has centered around the Gerald Ford International Airport due to its proximity to several major highways. It has become the ideal location for numerous logistics users, occupying large areas of real estate that could otherwise have been allocated to manufacturers. Even as e-commerce and logistics activity have slowed, there remains a diverse base of industrial real estate users in the Grand Rapids area.

Source: Information was pulled from www.costar.com

About the Authors

Murray SittsamerAlex Tokarz is Assistant Vice President of Dominion Real Estate Advisors. He may be reached at 248-470-7957 or atokarz@dominionra.com.

Ken WoodsideEric Banks is Group President of of Dominion Real Estate Advisors. He may be reached at 248-760-2525 or ebanks@dominionra.com.


Premium Associate MemberDominion Real Estate Advisors is an MMA Premium Associate Member and has been an MMA member company since March 2023. Visit online: dominionra.com.