Market Information

Gain insight to the current and future Detroit area office, industrial and retail marketplace through L. Mason Capitani's Market Information reports.

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DETROIT AREA INDUSTRIAL MARKET

The Detroit Industrial Market ended 2009 with a vacancy rate of 14.2%, which was up from 13.5% at the end of the third quarter. Total industrial inventory in the Detroit market area amounted to over approximately 580 million square feet of space in nearly 17,000 buildings. The general consensus is that the Detroit industrial market is stabilizing. Although major improvements in the market will not come to fruition overnight, the market is heading in the right direction.

It is anticipated that additional vacancy will result in major restructuring by local industry.  With that being said, large blocks of space are beginning to be purchased and leased. For example, L. Mason Capitani Corfac International coordinated two transactions in 2009 that totaled nearly 1 million square feet. In July, the former 750,000 Cadence Innovation plant in Chesterfield sold. Three months later, a three-building complex totaling 221,000 square feet in Harrison Township leased for a five-year lease term. Transactions such as these will help stabilize the vacancy rate for the months to come.

Industrial building sales activity decreased from the last quarter. This was the case in terms of volume of transactions, as well as average dollar value per transaction. Cap rates on investment opportunities held constant for the most part, with a slight increase to 9.2% by year’s end.

FUTURE OUTLOOK

The strength of the Metropolitan Detroit Industrial Market is predicated upon the strength of the automotive industry. As suppliers employ cost-cutting measures, and as foreign suppliers expand locally, the industrial sector will surely improve in 2010. Furthermore, local companies continue to diversify their business portfolios through defense, aerospace and various commercial industries. Although we will not witness an immediate turnaround, a healthier industrial market is on the horizon.

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