JLL Detroit Industrial Insight & Statistics - Q2 2017
- 1. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemedreliable; however, no representation or warranty is made to the accuracy thereof. Q2 2017 Detroit Industrial Insight Market sentiment remains positive, yet leasing activity was slow in the second quarter. Low market availability for quality space has encouraged build-to- suit projects as well as speculative construction. Automotive supplier Flex-N- Gate broke ground on a $95.0 million, 600,000-square-footmanufacturing facility on the east side of Detroit. Speculative warehousing and distribution centers are popping up in the suburbs, primarily fueled by Ashley Capital’s investments in Livonia and Hazel Park. Their current construction portfolio totals nearly 2.5 million square feet and includes the newly delivered Tri- County Commerce Center. The Airportsubmarket has five major projects set to deliver by the end of the year, highlighted by Amazon’s distributioncenter. In the automotive sector, manufacturers and suppliers are rolling out new plants and expansions. Ford announced in May a $350.0 million expansion of its Livonia TransmissionPlant, expected to deliver in 2019. Toyota and Roush Industries invested in research and development facilities for autonomous vehicle testing, in York Township and Troy, respectively. Responding to tight market conditions, companies, including HollingsworthLogistics Group, have entered the capital markets arena by purchasing properties to occupy and leasing out remaining space. Outlook Looking ahead, we expect automotive companies to continue to lead industrial leasing activity in Detroit. As automakers and suppliers focus on autonomous technologies, look for R&D facilities and testing sites to be in demand. The Palace of Auburn Hills, former home of the Detroit Pistons, was recently rezoned to a technology research districtand will be a site to keep an eye on. A wave of new deliveries, upwards of 2.5 million square feet, is set to hit by the end of the year, providing much-needed manufacturing and distribution space for tenants in the market. Fundamentals Forecast YTD net absorption 3,791,536 s.f. ▲ QTD net absorption 1,091,928 s.f. ▲ Under construction 4,007,515 s.f. ▲ Total vacancy 6.4% ▼ Average asking rent (NNN) $4.81 p.s.f. ▶ Tenant improvements Falling ▼ 0 5,000,000 10,000,000 2013 2014 2015 2016 YTD 2017 Supply and demand (s.f.) Net absorption Deliveries Upcoming deliveries set to strengthen market 11.2% 8.0% 9.3% 7.5% 6.4% 2013 2014 2015 2016 YTD 2017 Total vacancy For more information, contact: Harrison West | [email protected] • Development activity has picked up, with over 4.0 million square feet under construction and 1.1 million square feet already delivered in 2017 • Tenants seek superior grade space, holding off from current on-market properties and anticipating upcoming inventory • Autonomous vehicle technology is driving industrial leasing activity among all stakeholders in the automotive supply chain $0.00 $2.00 $4.00 $6.00 2013 2014 2015 2016 2017 Average asking rents ($/s.f.) W&D Manufacturing Robert Goldstein | [email protected]
- 2. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemedreliable; however, no representation or warranty is made to the accuracy thereof. Q2 2017 Detroit Industrial Statistics For more information, contact: Harrison West | [email protected] Robert Goldstein | [email protected] Inventory (s.f.) Quarterly total net absorption (s.f.) YTD total net absorption (s.f.) YTD total net absorption (% of stock) Total availability (s.f.) Total availability (%) Average total asking rent ($ p.s.f.) Quarterly completions (s.f.) YTD completions (s.f.) Under construction (s.f.) Market Totals Warehouse & Distribution 240,743,777 269,810 1,325,985 0.6% 19,379,217 8.0% $4.88 813,627 1,025,847 3,104,895 Manufacturing 222,505,266 822,118 2,465,551 1.1% 10,054,662 4.5% $4.67 109,395 109,395 902,620 Totals 463,249,043 1,091,928 3,791,536 0.8% 29,433,879 6.4% $4.81 923,022 1,135,242 4,007,515 Flex 50,383,813 140,536 140,536 0.3% 5,994,892 11.9% $7.95 0 0 44,000 Airport / I-275 Corridor Warehouse & Distribution 56,898,560 106,613 106,613 0.2% 3,918,199 6.9% $4.67 0 105,000 2,414,630 Manufacturing 39,359,752 355,611 355,611 0.9% 1,914,261 4.9% $4.41 0 0 120,346 Totals 96,258,312 462,224 462,224 0.5% 5,832,460 6.1% $4.58 0 105,000 2,534,976 Flex 7,054,500 53,670 53,670 0.8% 527,054 7.5% $8.63 0 0 0 City of Detroit Warehouse & Distribution 37,405,518 229,224 229,224 0.6% 6,002,745 16.0% $3.34 0 0 254,000 Manufacturing 37,592,134 679,301 679,301 1.8% 2,855,943 7.6% $4.06 0 0 600,000 Totals 74,997,652 908,525 908,525 1.2% 8,858,688 11.8% $3.57 0 0 854,000 Flex 1,931,903 -6,789 -6,789 -0.4% 570,882 29.6% $5.63 0 0 0 Downriver Warehouse & Distribution 19,743,685 245,887 245,887 1.2% 1,483,542 7.5% $4.11 0 0 0 Manufacturing 23,625,825 41,000 41,000 0.2% 1,673,161 7.1% $5.04 0 0 0 Totals 43,369,510 286,887 286,887 0.7% 3,156,703 7.3% $4.60 0 0 0 Flex 5,032,022 -4,746 -4,746 -0.1% 213,981 4.3% $8.43 0 0 0 I-96 Corridor Warehouse & Distribution 27,137,957 266,855 266,855 1.0% 1,822,908 6.7% $6.41 126,761 173,981 127,105 Manufacturing 15,209,743 296,101 296,101 1.9% 701,548 4.6% $6.27 0 0 106,778 Totals 42,347,700 562,956 562,956 1.3% 2,524,456 6.0% $6.37 126,761 173,981 233,883 Flex 8,811,560 -38,688 -38,688 -0.4% 1,285,655 14.6% $9.05 0 0 0 Macomb County Warehouse & Distribution 40,604,571 459,922 459,922 1.1% 2,370,309 5.8% $4.64 111,866 171,866 121,600 Manufacturing 57,264,605 123,033 123,033 0.2% 1,722,900 3.0% $5.08 0 0 75,496 Totals 97,869,176 582,955 582,955 0.6% 4,093,209 4.2% $4.83 111,866 171,866 197,096 Flex 4,383,832 9,302 9,302 0.2% 427,004 9.7% $6.63 0 0 0 Monroe County Warehouse & Distribution 5,149,740 67,088 67,088 1.3% 625,750 12.2% $3.28 0 0 0 Manufacturing 8,198,564 15,000 15,000 0.2% 78,720 1.0% $3.50 0 0 0 Totals 13,348,304 82,088 82,088 0.6% 704,470 5.3% $3.30 0 0 0 Flex 257,090 0 0 0.0% 0 0.0% NA 0 0 0 Northern I-75 Corridor Warehouse & Distribution 43,064,266 -34,123 -34,123 -0.1% 2,630,119 6.1% $5.72 575,000 575,000 137,560 Manufacturing 30,012,116 108,551 108,551 0.4% 1,760,949 5.9% $5.11 109,395 109,395 0 Totals 73,076,382 74,428 74,428 0.1% 4,391,068 6.0% $5.48 684,395 684,395 137,560 Flex 14,890,690 68,658 68,658 0.5% 2,596,107 17.4% $7.33 0 0 0 Washtenaw County Warehouse & Distribution 10,170,417 56,446 56,446 0.6% 773,016 7.6% $6.08 0 0 50,000 Manufacturing 11,350,844 125,000 125,000 1.1% 75,950 0.7% $3.75 0 0 0 Totals 21,521,261 181,446 181,446 0.8% 848,966 3.9% $5.87 0 0 50,000 Flex 8,022,216 59,129 59,129 0.7% 374,209 4.7% $12.36 0 0 44,000