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Market Report

Detroit Industrial

Second Half 2019

Transformation in Vehicle Technology Fuels Industrial Demand; Vacancy Remains Among Tightest in Nation

New vehicle technology changing industrial market. The metro’s dominance in autonomous and electric vehicle technology is producing demand for industrial space as auto companies and suppliers expand facilities. The “big three” automakers are all upgrading facilities in the region and Fiat Chrysler is building the metro’s first new auto plant in three decades. While the auto companies occupy large buildings, vehicle parts manufacturers and suppliers generate demand for small and midsize properties within an easy driving distance to the automakers. Advances in vehicle technology are also creating the need for skilled workers and engineers, luring additional people to the metro. This is boosting storage and distribution needs as the demand for goods and services increases. Yet, construction was restrained until 2017, when Amazon began opening massive warehouses. Even though deliveries have surged recently, the vacancy rate has remained below 4 percent for three consecutive years. At 3.3 percent in the third quarter, the rate is one of the tightest in the nation, boosting rent growth. The average asking rent at $6.06 per square foot in September rests at a cycle high, soaring 42 percent over the past five years. Headwinds do persist, however, as the labor strike extends and tariff uncertainty remains.

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