Overview of Select Industrial Real Estate Markets: Q1 2024
The industrial real estate market is slowly moving beyond the significant changes wrought by the recent global pandemic, however the residual effects continue to impact our commercial real estate markets. The disruptions in supply chain, increased costs of construction, increases in the cost of barrowed funds, combined with the growth of e-commerce, the need for logistics warehousing buildings and the reshoring of manufacturing continue to greatly influence developers and occupiers of industrial real estate.
Summary as of Q1 2024
As the cost of leasing or buying industrial real estate fluctuates, it can profoundly impact a manufacturers’ decision-making processes in various ways. Facility costs are typically second only to personnel and equipment costs in heavily asset-based operations. Determining the optimal time to expand, relocate, sell, acquire and make estate planning decisions can all be affected by changes in the industrial real estate market.
Flint-Saginaw-Bay City:
The Flint, Saginaw and Bay City markets have experienced an overall decrease in activity. However, net absorption has increased, partly due to a decline in new product construction, which aligns with trends across most markets. Sale prices stabilized in the first quarter of 2024 following an anomaly in Q4 2023 caused by a few outlying sales.
Detroit:
The industrial real estate market in Detroit remains strong in the first quarter of 2024. Vacancy rates have slowly decreasing, primarily due to sustained strong transaction volume and a slower pace of new builds caused by escalating capital and construction costs. There was a slight dip in the transaction sale price due to a few outlying transactions but the median price remains high at $77.74-per-square-foot. Notably, Dominion Real Estate Advisors sold an undisclosed building in Auburn Hills for over $100.00-per-square-foot.
Grand Rapids:
The industrial real estate market in Grand Rapids continues to fluctuate. Sale prices and volume have declined but overall rents have continued to rise. A notable transaction in the region includes HG Medical, a leading manufacturer of orthopedic implants, signing a 129,000-square-foot lease in Grand Rapids.
By offering our membership quarterly updates, we hope to educate and inform our Michigan manufacturers about their local real estate market and thereby assist them in improving their real estate decision-making processes.
Source: Information was pulled from www.costar.com. (NASDAQ: CSGP) CoStar Group, Inc. is a Washington, DC-based leading provider of information, analytics, and marketing services to the commercial property industry in the United States, Canada, the United Kingdom, France, Germany and Spain.
About the Authors
Alex Tokarz is Assistant Vice President of Dominion Real Estate Advisors. He may be reached at 248-470-7957 or atokarz@dominionra.com.
Eric Banks is Group President of of Dominion Real Estate Advisors. He may be reached at 248-760-2525 or ebanks@dominionra.com.
Dominion Real Estate Advisors is an MMA Premium Associate Member and has been an MMA member company since March 2023. Visit online: dominionra.com.