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Detroit Market Reports

Detroit Office Market

Average Asking Rent (Price/SF) $19.68
Vacancy Rate (%) 15.3%
Net Absorption (SF) 353,012

Metro Detroit's office market vacancy rate fell 20 basis points to 15.3% during the fourth quarter of 2018, as just over 353,000 square feet was absorbed. The metro office market posted just over 1.7 million square feet of absorption in 2018, compared with 1.0 million square for all of 2017. Large office users such as United Shore Financial Center, Henry Ford Health Systems, Mortgage Center, LC, MSX International, Inc. and General Motors accounted for the bulk of absorption in the Southfield, Troy, Auburn Hills and Pontiac submarkets in 2018. By contrast, the western office submarkets of Livonia and Novi continued to see slow market activity in 2018, similar to levels in 2017. The Detroit Central Business District posted negative absorption for the first time since 2012. Despite having an off fourth quarter, the city of Detroit could post more historic absorption levels in 2019, as more firms are set to establish a greater presence in the CBD.

Detroit Industrial Market

Average Asking Rent (Price/SF) $5.58
Vacancy Rate (%) 4.2%
Net Absorption (SF) 3,393,854

General Motors and Ford Motor Company are shifting investments from traditional passenger cars to more profitable trucks and SUVs while also increasing investments in electric and autonomous vehicles. This reallocation of investments has led to the planned closing of five plants, including two in metro Detroit: Detroit-Hamtramck Assembly and Warren Transmission. Looking at automotive sales trends, the reallocation of investments makes sense. According to market researchers at J.D. Power and Associates, sales of traditional passenger cars have fallen to just one-third of light vehicle sales, compared with nearly half in 2014. Declining demand has left the Big Three operating at overcapacity in many plants. According to Reuters and LMC Automotive, after GM ends production next year at factories in Michigan, Ohio and Ontario, it will still have four U.S. car plants, all operating at less than 50% of rated capacity. By comparison, Ford Motor Company and Fiat Chrysler Automobiles NV will have one car plant each in North America after 2019. As demand for heavy vehicles surges, companies like Ford are shifting hundreds of automotive workers to plants producing SUVs. Although these cuts will likely lead to new industrial vacancies from suppliers close to the sedan market, investments elsewhere are likely to pick up much of those losses. The Big Three and their suppliers are increasing investments in electric and autonomous vehicles. In turn, these investments are spurring new construction and expansion in the metro Detroit industrial market. This is particularly evident in Auburn Hills with Samsung SDI America, Inc.'s new vehicle battery pack factory and WABCO's new autonomous and electric (ACE) commercial vehicles technologies facility. Additionally, Ford plans to invest hundreds of millions of dollars in a new autonomous campus in Detroit. With vacancies at record lows, new construction from both the automotive and e-commerce industries continues to drive the metro Detroit industrial market. During the fourth quarter of 2018, eight new facilities were completed for a total of 3.4 million square feet for Amazon, Inc., Flex-N-Gate Corp, Hino Motors, Esys Corporation, Orotex Corporation and Penske Logistics.



Detroit Office Market Report
4Q18
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Detroit Industrial Market Report
4Q18
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