Motor City Starts Up Again: Detroit Industrial Vacancy Falls To 6%

Detroit’s industrial real estate past is a story of too many eggs in one economic basket.  When the over-concentration of auto industry capital fled Detroit, the communities that capital once sustained vanished, and the rest is rust belt history.

But the fact is the auto industry didn’t vanish entirely. Today, strong demand in auto sales pushes Detroit and its suburbs toward an industrial output that represents a giant step toward long-missing sustainability.  Robert Carr’s piece in NREI:

“You can’t find a lower vacancy rate in Detroit in the past 20 years,” [notes John DeGroot, research manager at real estate services firm NGKF]. “A big part of it is auto sales. The average yearly sales mark for the Big Three was around 16 million since 2002. During the recession we saw it dip to 10 million, but now we’re hitting 17.5 million per year.” Auto experts predict that figure will continue in 2016.

Typically, the suburbs around Detroit have fared better with industrial leasing and construction, with I-75/Auburn Hills, Macomb county and Western/Southern Wayne county being the preferred locations for new, modern facilities. However, though Detroit proper has many obsolete or dilapidated industrial buildings, the city is now a major draw for new construction as well, DeGroot says. Since 2015, the city has seen more than 765,000 sq. ft. of new construction completed, according to a second quarter NGKF report.

More from NGKF on the specific projects and locations in Detroit’s long path to industrial recovery:

Increased industrial demand in the city of Detroit continues to drive new construction of modern [facilities]. Much of the city’s existing inventory suffers from a form of functional obsolescence and/or physical deterioration and difficult to find users to absorb. Since 2015, the city has seen over 765,000 square feet of new construction completed. Auto supplier Flex-N-Gate is the latest company to make a significant investment in the city. The company recently announced plans to build a 500,000-square-foot production and sequencing facility on a 30-acre site in the industrial park located near Interstate 75 and I-94. Meanwhile, Lear Corporation is in the planning stages of building a new manufacturing plant in the I-94 Industrial Park. These planned upcoming developments follow the 904,000 square feet that is currently under construction, which include: Crown Enterprises’ 500,000-square-foot distribution facility for its Universal Truckload Services; YFS Automotive Systems Inc.’s 150,000-square-foot manufacturing facility; and Sakthi Automotive’s 540,000-square-foot expansion on Fort Street.

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