"While cost cutting and space consolidation efforts among automotive-related companies has hurt demand, non-automotive companies have made up the bulk of tenants leasing space and have kept the industrial market stable," Grubb & Ellis reports.
The industrial vacancy rate was steady over the previous quarter, increasing only 10 basis points to 11.2% for the overall market, meaning about 40 million sf is available.
Positive absorption -- 335,621 sf -- was reported in the Macomb County submarket, where the vacancy rate declined 90 basis points to 7.8%. The southern Wayne County submarket also had a positive absorption of 179,443 sf. Most of the activity in southern Wayne County was caused by transportation companies adding space, such as Central States Trucking's lease of 179,443 sf at Airport Park in Romulus.
According to Grubb & Ellis, at the close of the first quarter, the overall market saw a net absorption loss of 190,057 sf. Meanwhile, some 2.97 million sf is under construction around the market. Asking rates for warehouse/distribution space are averaging $4.24 per sf across the market; R&D/flex space is asking $9.89 per sf.
"The positive news for landlords is that non-automotive companies will continue to keep vacancy rates stable. However, the weak dollar should create a significant boost for automobiles made in the US, and most importantly Detroit," G&E sums up. "On the other hand, with over 40 million sf of available industrial space on the market, landlords will have to remain competitive with their rates. The positive news for tenants is that effective rents will remain low as landlords competitively set asking rates while offering free rent as incentives."
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