Overview of Select Industrial Real Estate Markets: Q2 2024
The industrial real estate market has largely worked past the significant changes wrought by the recent global pandemic, including the residual effects of supply chain disruptions, the increasing costs of construction, rising costs of borrowed funds and the growth of e-commerce, which has increased the need for logistics warehouse buildings, and influenced the reshoring of manufacturing. These factors continue to impact developers and more importantly, 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 manufacturer’s 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 market has experienced a continued decrease in most market aspects. That said, there was a slight increase in the square footage sold. Much of this decline has been driven by the increase in construction costs and the cost of capital. This is all compounded by the uncertainty of the upcoming elections.
Detroit:
The industrial real estate market in Detroit has slightly slowed in Q2 of 2024. That said, there has been a slight increase in leasing activity and sales prices. Sales prices continue to remain strong due to the limited product available and the slowing number of new product coming to market. New construction has slowed in many major markets due to a myriad of factors. Notably, among the transactions that occurred during Q2, OPW Fluids Group Inc. signed a 130,700-square-foot lease in Livonia.
Grand Rapids:
The industrial real estate market in Grand Rapids continues to fluctuate. Sale prices and volume have increased, but overall rents have slightly fallen. Grand Rapids, like most other markets, has seen a decrease in new construction, still being driven by the cost of construction and the cost of capital. It will be key to keep an eye on new products coming to the market, as vacancy is still hovering near all-time lows with continued activity in the market.
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 CoStar Group 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
Dominion Real Estate Advisors has collaborated with the MMA to provide its membership with ongoing updates and an overview of several major industrial real estate markets within the state of Michigan that impact members.
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 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.