DETROIT—The auto company agreed to lease the entire structure even before the previous tenant's lease ran out, a sign of just how tight the market is in the metro area.
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Brian J. Rogal |
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Updated on July 19, 2016
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28301 Schoolcraft Rd. in suburban Livonia.DETROIT—Industrial activity in the Detroit area recently hit a 20-year high, and with the vacancy rate also at a historic low, it’s a great time to be an owner in the sector.Newmark Grubb Knight Frank’ssenior managing directorDan Labesrecently provided a good illustration of that when he completed a 754,744-square-foot lease to Ford Motor Co. at 28301 Schoolcraft Rd. in suburban Livonia on behalf of the owner,Ashley Capital. Ford signed a long-term lease to occupy 100% of the building.“We were able to secure a full-building tenant with a long-term lease even before the expiration of the current lease,” Labes tells GlobeSt.com, “and that hardly ever happens. Some landlords have to wait years. But right now we have historically low vacancy rates and there is still great demand from users for high-quality buildings.”The previous tenant,Technicolor, had occupied28301 Schoolcraft Rd., one of two class A buildings in the Livonia Corporate Center, for more than 15 years, butnotified Ashley Capital that it would vacate the property upon lease expiration. Although some work needs to be done to prepare the building for Ford, there will be virtually no downtime for the landlord.According to a recent NGKF report, during the second quarter of 2016 the metro area’s overall vacancy rate fell 30 bps to 6.0%, with just over 1.7 million square feet was absorbed. It marks the 22nd consecutive quarter of positive absorption. During this time, tenants absorbed more than 41 million square feet.Furthermore, all this leasing activity has kicked off a construction boom. Since 2014, developers have completed 28 new industrial facilities totaling 3.9 million square feet, and have another 25 mostly pre-leased buildings totaling 3.0 million square feet under construction. “While pre-leased build-to-suit construction makes up the bulk of new developments, speculative construction is starting to occur in certain product types and locations,” NGKF says.“This is the tightest market I’ve seen,” says Labes, a Detroit veteran. And based on the robust demand, Ashley Capital plans to build two additional buildings at the center totaling just over 900,000 square feet with an estimated completion date of June 2017. The Dearborn, MI-based Ford will take occupancy of its new Livonia location in September.“Dan of NGKF is a skilled professional that has served our team well. He used his resources and knowledge to efficiently secure a quality tenant for us and minimize any vacancy time with Technicolor leaving,” saysKevin Hegg, vice president of leasing for Ashley Capital. “We look forward to welcoming Ford Motor Co. to the building.”
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28301 Schoolcraft Rd. in suburban Livonia.
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