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Market Report

Detroit Industrial Investment Forecast

2019 Outlook

Auto Suppliers, E-Commerce Boost Demand; Rent Escalation Captures Investor Attention

 

Slower construction pipeline keeps vacancy low and rent advancing. Inventory growth will retreat this year after Amazon’s rapid expansion during 2018 elevated construction to a cyclical high. Automobile manufacturers and their suppliers continue to generate robust demand for industrial space as electric and autonomous driving technology bring additional firms to the metro and others expand. New facilities for Autoliv and Tenneco are among the deliveries due in 2019. Oakland County will account for the largest portion of the deliveries this year as the need for smaller warehouses capable of last-mile e-commerce delivery grows. The reduction in deliveries amid strong demand for industrial space and the redevelopment of many obsolete properties will contribute to the vacancy rate remaining tight in 2019 and encouraging healthy rent gains. The average rent has soared more than 40 percent from the cyclical trough in 2012, with growth above 5 percent in each of the past four years, a trend that should continue this year.

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