1. Industrial employment trends (12-month change, 000s)
Source: JLL Research
Industrial construction activity (m.s.f)
Source: JLL Research
Landlords push rents as quality blocks dwindle
Source: JLL Research
7%
12%
17%
22%
$3.80
$4.00
$4.20
$4.40
2010 2011 2012 2013 2014 2015
Asking rents Total availability
Manufacturing is driving Detroit’s industrial employment
Industrial employment sectors have experienced substantial employment
expansion over the last year, recording an annualized net gain of 32,200 jobs
across the metro. Employment gains were led by the manufacturing sector,
which added 14,200 jobs year-over-year, suggesting continued growth in
demand for warehouse space. Recent industrial employment numbers
demonstrate metro Detroit is still a vibrant manufacturing and distribution hub,
only it’s more technologically advanced and smarter than it once was. This
reflects the rapid growth of advanced manufacturing and e-commerce.
Modern space requirements spur new construction
Developers completed more than 1.1 million square feet of new construction in
the past two quarters and have about 1.0 million square feet currently under
construction. Warehouse construction has been developers focus of late,
representing about two thirds of construction activity. Of the product currently
under construction, 511,000 square feet is being built speculative while 340,000
square feet is set for owner-occupancy and the remaining 81,000 square feet is
build to suit. Looking forward, a focus on quality space and convenient location,
rather than price, will drive location decisions for Metro Detroit’s industrial
tenants.
Landlords gain leverage as fundamentals tighten
Detroit's industrial sector is continuing a solid run of activity that has pushed
availability rates in several submarkets to historic lows. Total availability in the
region sank to just 10.9 percent in the second quarter as users absorbed over
2.0 million square feet of space. As the market fundamentals have continued to
tighten, negotiating leverage has sifted into the landlord’s hands. This is
particularly true in the I-75 Corridor submarket where absorption gains have
totaled more than 1.8 million square feet. Based on demand trends and current
requirements, total availability is projected to decrease near 10.0 percent by the
end of the year.
Detroit industrial showing signs of resurgence
Industrial Insight
Detroit | Q2 2015
48,481,270
Total availability (s.f.)
1,313,157
YTD Total net absorption (s.f.)
$4.28
YTD Average Asking Rates
932,000
Total under construction (s.f.)
10.9%
Total Availability
0.3%
YTD total net absorption
5.3%
YOY Rent Growth
1,072,000
YTD completions (s.f.)
-10.0
5.0
20.0
35.0
2011
2012
2013
2014
2015
Mining, Logging & Construction Trade,Transportation & Utilities Manufacturing Other Services
0.0
0.4
0.8
1.2
Completions YTD Under Construction Pipeline
