The vacancy rate in Macomb County's industrial buildings rose 110 basis points from the previous quarter to 10% during the first quarter. Some 555,000 sf of vacant space was added to the Macomb County market in the first quarter, led by Utica Enterprises' departure from its 175,000-sf building on 23 Mile Rd. in Shelby Township.
Grubb & Ellis sees cause for optimism, however. As previously reported, Faurecia North America contracted to build a 91,500-sf interior system plant in Sterling Heights near 18 Mile and Mound Road. "We expect additional investment announcements to follow in the upcoming months," Grubb & Ellis says.
Some transactions completed during the first quarter include Vericorr Packaging, which leased roughly 92,000 sf at the Bart Industrial Park in Sterling Heights, and Genius Solutions, which purchased 25,200 sf on Miller Road in Warren.
The Metro Detroit industrial market's overall vacancy rate edged slightly higher during the first quarter of 2005. What happens for the rest of the year hinges in significant part on ramifications from General Motors' impeding cost-cutting measures. With just a 10 basis point increase in the overall vacancy rate from the previous quarter to 10.7% in the first quarter, the industrial market has not seen any ripple affect just yet.
While GM's losses will likely impact metropolitan Detroit's industrial market in the coming quarters, there is evidence the effects could be softened by foreign investment into the area, the brokerage says. The most notable example of this is Toyota Motor Corp.'s impending $150-million investment to expand its North American research center in the Ann Arbor area. The expansion should spur new corresponding demand for industrial space in the future.
In a related report, broker CB Richard Ellis says domestic automakers and their affiliated suppliers may push the industrial market in the coming months, as outdated facilities are upgraded or replaced to help efficiency and bring overall production costs down. CBRE also says distribution markets should continue to be strong, benefiting the Downriver submarket, especially the areas near Detroit Metropolitan Airport.
Both brokerages say there has been an upswing in industrial construction activity in the Detroit area. CBRE said 200,000 additional sf of industrial space was under construction in the first quarter of this year compared to the fourth quarter of 2004.
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