Market Reports

Convergence of Factors Puts a Charge in Southeast Michigan’s Industrial Market

by Jaime Lackey May 27, 2015

A trifecta shaped by six years of a bull market, historically low interest rates and oil around $50 a barrel is benefitting one business sector arguably more than any other industry in the United States: automotive. Researcher AutoData Corp. estimates that, seasonally adjusted, the annual vehicle sales rate topped 17.1 million in March of this year, indicating the industry is on pace to have its best year in more than a decade. Further, the industry’s 5.6 percent sales increase in the first quarter has come entirely on gains of sales of trucks and sport-utility vehicles, two categories that do well when gas prices are low. Ford Motor Co. is forecasting that between 17 million and 17.5 million light vehicles — from all automakers — will be sold in the United States this year. The estimate is similar to competitor estimates. If it comes to pass, 2015 would be the best year for unit sales since 2006. Approximately 16.5 million cars and light trucks were sold nationally in 2014, according to AutoData. Consequently, it has been shocking to see how quickly so many vacant Detroit industrial buildings have been occupied in such a short period of time. Vacancy Rates Tumble The …

May 27, 2015

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Rising Popularity of Boutique Hotels Fuels Downtown Detroit’s Lodging Growth

by Danielle Everson May 7, 2015

One of the biggest stories in the hotel industry today is the growth of the boutique segment. Independent groups such as Ace Hotels, 21C, Grupo Habita and citizenM registered record growth in the last few years. Meanwhile, all the major brands have incorporated a boutique component. That trend was reinforced last December when IHG purchased Kimpton Hotels & Restaurants. For its part, Hyatt launched Andaz several years ago, and Marriott has rolled out the Autograph Collection, Moxy, EDITION and AC Hotels in the past few years. Even Best Western has unveiled its new urban boutique concept — Vib. I get the following question a lot: “Why should we invest in boutique hotels?” The conventional wisdom among investment funds tasked with finding hotel assets is to look for branded assets in the top five markets that are deemed less risky by pundits. However, some hotel investors don’t realize the substantial RevPAR (revenue per available room) premiums you can get with boutique properties over standard branded hotels. Among boutique properties, we’re seeing RevPAR premiums of 10 to 20 percent — sometimes 50 percent — over traditional hotels (see chart). Boutique hotels have less rigorous brand standards, if any at all, and offer …

May 7, 2015

Industrial Market Reports Michigan Midwest Midwest Market Reports

Industrial Developers in Grand Rapids are Putting More Shovels in the Ground

by Danielle Everson April 16, 2015

With the industrial real estate market in Grand Rapids nearing critical mass — where demand is strong enough to fill the entire supply of available space — a new challenge has emerged for developers. How do they create enough new, competitive product to keep up with continued market momentum? For the first time in a decade, total inventory in the industrial market must grow. The solution will likely come in the form of new construction and creative repositioning of functionally obsolete facilities. During the Great Recession and slow recovery, many companies consolidated operations. Buildings that had become vacant were repurposed, substantially modified or eliminated altogether. Now, we are beginning to see a trend of new construction. Both speculative and build-to-suit construction has become the logical solution to the lack of inventory. Noteworthy Projects An investment group led by a local building materials supplier, and marketed by the industrial team at Colliers, is developing a 45,000-square-foot light manufacturing speculative building, located at 3838 Soundtech Court in Kentwood, a southern suburb of Grand Rapids. Delivery is expected by June 1. On the city’s southeast side near Gerald R. Ford International Airport, a new industrial building is under construction at 5300 Broadmoor Ave. …

April 16, 2015

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Lack of Quality Inventory Spurs New Round of Development in Traverse City

by Danielle Everson November 20, 2014

A blistering cold winter lingered into the late spring and left the commercial real estate market in the Grand Traverse region frozen. Businesses waited for the market and the temperatures to thaw, and a third-quarter surge has activity back on track. From Jan. 1 through Sept. 30, property sales totaled $10.3 million and 221,136 square feet, including 118,515 square feet of industrial/warehouse buildings, 79,463 square feet of professional/medical office space, and 23,158 square feet of retail/restaurant space. That‘s slightly ahead of last year’s pace. During the first three quarters of 2013, property sales totaled $9.9 million and 207,845 square feet, including 121,469 square feet of industrial/warehouse buildings, 44,160 square feet of professional/medical office space, and 42,216 square feet of retail/restaurant space. The office sector posted about a 9 percent increase in the average sales per square foot during the first three quarters of 2014, while the industrial warehouse market recorded an increase of approximately 5 percent. The retail/ restaurant sector saw a 9 percent drop in the average sales per square foot The reduction in the average sales price in the retail/restaurant market sector is mostly due to the lack of quality inventory. This lack of inventory in our market …

November 20, 2014

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Surging Land Sales in Grand Rapids Signal More Industrial Development Ahead

by admin May 14, 2014

The outlook for the West Michigan industrial real estate market remains optimistic due to consistent levels of sales and leasing activity, according to Colliers International. The industrial market has recorded six successive quarters of positive absorption despite the market seeing a major shortage of high-quality inventory. Some 522,717 square feet was absorbed during the fourth quarter alone, lowering the vacancy rate to 6.57 percent. With options for space becoming more limited every day, new construction is an important consideration for many companies. That option, however, requires vacant land on which to build. Consequently, vacant land sales have emerged as the focus of many industrial real estate transactions. Construction of industrial space has reached its highest level in eight years — 419,000 square feet completed in 2013 and 792,000 square feet underway and projected for 2014. We’ve experienced more land sales in the last six months than we’ve seen in the last six years. Our industrial team has recently closed or put under contract more than 150 acres of vacant land, and much of that acreage is slated for new construction. Ambitious Plans Several projects have already begun, including the 110,000-square-foot expansion that Undercar Products Group began occupying in November 2013, …

May 14, 2014

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Detroit Exudes Optimism

by admin May 7, 2014

Slowly but surely, the missing pieces of the puzzle critical to the long-term vitality of the city of Detroit are starting to fill in, say real estate experts and business leaders. While the city is working through a painful bankruptcy to get its financial house in order, the public and private sector are moving forward with a sense of urgency to make sure that revitalization efforts in Downtown and Midtown don’t lose momentum. The success stories in the office, retail and apartment sector often come in fits and starts, but collectively they show measurable progress. A planned 3.3-mile streetcar line, known as the M-1 Rail project, is the infrastructure piece of the puzzle. Utility relocation work is underway on Woodward Avenue, the first step toward full-fledged construction of the planned light rail line that will connect 11 stops between Larned Street in Detroit’s central business district up to West Grand Boulevard in the New Center area at the north end. Funding for the $140 million streetcar project, which is expected to be complete in 2016, has come from a variety of sources including corporations, foundations, nonprofit agencies and government sources. “We’ll have more of a pedestrian connection between Downtown, Midtown …

May 7, 2014

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Detroit Industrial Market is Once Again Firing on All Cylinders

by admin April 9, 2014

Considering the city’s recent negative press, as well as the government loans that General Motors and Chrysler both required in order to manage their way through structured bankruptcies nearly five years ago, it is understandable why one would question the economic vibrancy of Detroit and the surrounding region. However, the much-maligned Motor City is actually a lot healthier than the view projected by the city’s high-profile bankruptcy status. The Michigan jobless rate is hovering near 9 percent. While still high compared to other states, the unemployment rate is the lowest it has been since mid-2008. Since March 2012, the state has gained more than 18,000 manufacturing jobs and over 20,000 jobs in other sectors. The U.S. energy boom is making it more cost effective for factories to operate, and Michigan’s manufacturing base is directly benefitting from lower energy costs. In addition to the automotive sector, Michigan industries that thrive include advanced manufacturing, defense, information technology, water technology, medical devices, food processing and logistics and supply-chain management. The rebound in manufacturing has cut metro Detroit’s overall industrial vacancy rate by 400 basis points since the peak of the recession, falling from approximately 14 percent in mid-2010 to 10 percent at the …

April 9, 2014

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Detroit Industrial Market is Once Again Firing on All Cylinders

by admin February 10, 2014

February 10, 2014

Market Reports Michigan Midwest Market Reports

Formerly Vacant Buildings Find New Life as Apartments

by admin October 28, 2013

Revitalization efforts in Detroit are underway and drawing residents and businesses back to the city. These measures aim to improve downtown Detroit’s streets and parks, enhance outdoor activities to increase foot traffic and attract new retailers, jobs and residents. In addition, construction will begin later this year on 3.3 miles of the M-1 light rail line, which will run mainly down Detroit’s Woodward Avenue between downtown and the New Center neighborhood, attracting redevelopment along the route. These efforts, coupled with a growing desire of many young professionals and downsizing baby boomers to live in an urban setting, have led to tightening vacancy rates in the downtown core. Although there is no hard data collected on apartment vacancies in the downtown market, developers claim vacancy in some pockets is below 4 percent. The vacancy rate across the metro area currently stands at 4.4 percent. As a result, some vacant buildings such as the former Broderick Tower, Detroit Savings Bank and the David Whitney office building are being put to new use as apartments. Older apartments are also being renovated, some of which are being converted to luxury units, such as the Griswold Apartments. As renters in these properties are relocated, occupancy …

October 28, 2013

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Retail, Restaurants Dominate Leasing Activity in 2013

by admin September 30, 2013

Strong and steady is an apt description of the current course of the commercial real estate market in the greater Grand Traverse Area of Northwest Lower Michigan. Traverse City’s unemployment rate registered 7.5 percent in June, virtually unchanged from a year ago but down dramatically from 14.3 percent in March 2010. In 2012, the commercial real estate market rebounded with a total of 400,000 square feet sold, up from approximately 300,000 square feet in 2011. Last year’s rebound was fueled largely by increased investment in the industrial warehouse and light manufacturing market. More than half of the square footage absorbed last year was in this particular sector. Only 139,000 square feet of commercial real estate space has been absorbed year-to-date through July. This is considerably less than the 300,000 square feet absorbed during the first seven months of 2012. The reduction in absorption activity is due to a shortage in the available inventory of quality light manufacturing and industrial warehouse buildings. To put that statement into context, consider that a total of 22 industrial and manufacturing buildings ranging in all sizes traded hands in 2012. Currently, we have only six buildings 20,000 square feet or larger on the market for …

September 30, 2013

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