When Clint Eastwood’s “Halftime in America” ad aired during the 2012 Super Bowl, the much-discussed spot displayed a kind of gritty optimism about Detroit’s economic prospects. Lines like the “Motor City is fighting again” and “Detroit’s showing us it can be done” resonated not just with Southeast Michigan residents, but a nation hungry for optimism in the wake of an extended recessionary cycle. Despite the recent announcement that Detroit has become the largest U.S. city to file for bankruptcy, a closer look at the broader trends within the Detroit retail market reveals a development landscape that is generally moving in a positive direction. While the bankruptcy filing will affect certain aspects of Detroit’s immediate recovery, the overall theme is one of renewal and revitalization. Motown Momentum Across the Detroit marketplace, retailers are reviewing their existing inventory as leases mature, with a general focus on infill or relocations. There seems to be a widespread understanding that Southeast Michigan has historically been a solid retail market, and that the region’s economic turnaround is opening up new opportunities. The list of positive developments across metro Detroit continues to grow. As Wayne State University continues to transition from a commuter campus to a more …
Market Reports
The industrial real estate market in West Michigan, and particularly in Kent County, continues to trend positive. CBRE’s most recent survey of this real estate class recorded the fifth consecutive period of positive absorption, resulting in a vacancy rate of 7.8 percent for gross industrial space. The industrial base in West Michigan includes nearly 95 million square feet of gross space, of which nearly 50 million square feet is categorized as “leased” space, with the balance “owner occupied.” The absorption of space is being led by the slow and steady improvement of economic conditions in our region. As of the December 2012, the Grand Rapids unemployment rate stood at 6.5 percent, much better than Michigan and the nation, with unemployment rates of 8.9 percent and 7.8 percent, respectively, for the same period. Economic Catalysts Much like the rest of the state, West Michigan has benefited from the steady improvement of the auto industry. The increase in vehicle sales — brought about by both pent-up demand following the recent recession and by need resulting from natural disasters such as Hurricane Sandy — has boosted manufacturing orders to local companies that supply parts and capital equipment to the auto industry. Additionally, our …
In the Detroit area and across Southeast Michigan, medical office continues to be a strong performer. With healthcare being one of the state’s largest and fastest-growing economic drivers, an aging population and a robust system of public, private and university hospitals across the region, a generally positive growth trend seems unlikely to change anytime soon. Farbman Group’s own portfolio of 4 million square feet is currently more than 95 percent occupied, and quality medical office space remains in high demand. There are, however, some noteworthy developments taking place both inside and outside the healthcare industry that are shaping its future. Medical office real estate trends locally and regionally are beginning to reflect those changes. Consolidation Wave Perhaps the healthcare trend with the most significant potential to alter the medical office and medical real estate marketplace in Southeast Michigan is that of consolidation — healthcare systems coming together via mergers, acquisitions and strategic partnerships. This trend is, in some respects, similar to what has occurred in the banking industry during the last decade. We are likely to see the same kind of phenomenon continue to pick up momentum in healthcare during the next five years or so. There are three primary …
After a seemingly relentless economic recession, the retail atmosphere is changing in southeastern Michigan as more local and national tenants look to grow here. The positive momentum that began in 2011 in the retail industry has continued. Retail sales rose modestly in 2012, and retailers expect sales to continue to rise in 2013. The source of the optimism stems from the resurgent auto industry, which drives metro Detroit’s economy. Job growth is accelerating, leading to a drop in the unemployment rate. Absorption is positive in the Class A industrial and office markets. All of these factors are having a positive effect on Detroit’s retail market. Retailers eye downtown Downtown Detroit is bursting with an energy not seen since the 1950s. Dan Gilbert, owner of Quicken Loans, is responsible for much of the change. His recent real estate acquisitions, 15 buildings to be exact, and relocation of 7,000 employees to the central business district, have created a buzz that retailers are noticing. Olga’s, Bagger Dave’s, Buffalo Wild Wings and Moosejaw have all planted roots downtown. Whole Foods Market is scheduled to open this year in midtown near the Detroit Medical Center and Wayne State University. National retailers are lining up to …
It was a little less than two decades ago that local business leaders could see what was unfolding in West Michigan. The industrial sector was steadily declining, and companies were either going out of business or moving away. It was evident that something had to be done. That’s when two hometown heroes, Amway founders Richard DeVos and Jay Van Andel, proposed their vision to turn Grand Rapids into one of the top medical services cities in the world. Their leadership and philanthropic efforts spurred a series of events, forever changing the landscape, mentality and image of Grand Rapids. One of the city’s first streets, Michigan Street, running parallel to I-196, was the initial site of their vision. In 1996, Jay and Betty Van Andel founded the Van Andel Institute. They broke ground in 1998, and the Van Andel Institute opened its doors in 2000. The institute is now home to scientific research that is focused primarily on cancer and Parkinson’s disease and has received more than $1 billion in research funding. The original development was a $60 million facility. In 2010, the institute opened a second phase with an additional 242,000 square feet at a cost of $175 million. Butterworth …
As we approach the end of the 2011, there are clear indications of an improving economy. Although the rate of commercial property foreclosure is still high, the rate of absorption of foreclosed properties has risen appreciably. These properties are not sitting on the market like they did the previous 24 months. One may say that this is not only a clear indication that we have turned the corner, but also that the community has genuine faith in the investment in commercial real estate. Although it may be time-consuming for some local businesses to secure financing, it is evident that traditional lending institutions are far more accessible than they were in 2009 and early 2010, albeit some more than others. The Small Business Administration (SBA) programs are propagated frequently, and the qualification process is not as cumbersome as in years past. The types of businesses that have taken advantage of the improved lending environment vary, and include automotive parts suppliers, manufacturing businesses, and distribution companies. Many area businesses are unsure about the near future. Considering what Detroit has endured over the past three years, this is to be expected. Although cautious, these same businesses are moving forward in a confident manner. …
It is no secret that, like much of the State of Michigan, the Motor City has not exactly been motoring along with regard to retail performance during the last few years. Southeast Michigan has been struggling, and since the beginning of the national recessionary cycle a few years ago, the state has been held up as an example of taking a retail roundhouse right on the chin from a faltering economy. A more nuanced view, however, reveals some more interesting — and in some cases more positive news — with regard to where southeast Michigan stands today, and how the region seems to be setting up for future growth. In a macro sense, it is accurate that Michigan was more challenged than the rest of the country by the initial economic downturn. There was a perception, real or not, that the struggles in the auto industry would substantially exacerbate the impact of the recession. The state’s unemployment rate was higher than the national average and Michigan was bleeding population. While some of those difficult circumstances and dire predictions seemed to be holding up two or three years ago, the state has made a pretty significant recovery in the last 10 …
For a city that has at times been portrayed as emblematic of the kind of economic fallout left in the wake of the recent recessionary cycle, Detroit is actually responding quite well. The current state of the Detroit office market is just one data point — but it’s a promising one. In greater Detroit — and across Southeast Michigan — there are tentative signs that things are moving in the right direction for the first time in several years. Not everything is positive by any stretch of the imagination, but the progress, while tentative, looks genuine. Since the city’s office market bottomed out in the summer of 2010, it has been slowly and steadily recovering. There were a few low points in August and September of last year, but the market began absorbing some space toward the end of the year, and that trend has continued in the first part of 2011. As you might expect, however, the progress has been uneven. Consolidation areas like Southfield, where there is a lot more activity in the marketplace, have generally done slightly better than destination-focused markets like Dearborn and Livonia, which had taken a more significant initial blow and subsequently have not …
It’s no secret that the greater Detroit area suffered a double hit in the last 4 years, first from the well-publicized decline in auto sales and then from the 2008 crash and lengthy downturn.Despite the economic gyrations, however, there is a considerable upside and leasing momentum to talk about. Several new-to-the-market retailers, restaurants and fitness chains are landing in the region, including ULTA, which has done 10 deals in the last 7 months in mostly high-income areas. Discount grocer ALDI has opened 20 stores in the past 18 months, most often purchasing land to build 12,000-square-foot stores in high-density, middle-income areas. Other new retailers to the market are Five Below, Christmas Three Shops, buybuyBABY, Yankee Candle, clothier Citi Trends and a new concept by local furniture giant Art Van called Pure Sleep. Five Guys Burgers and Fries, Fat Burger and Chipotle have also moved into the market, as have Fitness 19, Planet Fitness and their much larger competitor LA Fitness. LA Fitness is opting for 50,000-square-foot locations, both stand-alone and retrofit, primarily in professionally oriented, mid-to-upper income areas. The chain has opened eight locations in the market, and in the past 2 years, it has built clubs in such high-traffic …
What a difference a year can make. At this time last year, the Detroit and Southeastern Michigan multifamily housing markets were experiencing some of their worst economic times since the early 1970s. But with recent announcements from Ford and General Motors concerning first quarter profits, there appears to be hope for the troubled region. Because the region has been so challenged during the past 18 months, there has been very little new development planned for 2010. But in 2011, nearly 2,800 apartment units are planned in the metro region, representing a potential 1.3 percent increase in the current inventory. One recent success story within the city is Garden View Estates, a mixed-use development with affordable housing, including rental units, senior co-ops and single-family homes. Bloomfield Hills, Michigan-based Windham Development is the principal in the residential portion of the project, which celebrated its grand opening in September 2009. These types of developments are going to play a key role in re-growth within the city because of joint efforts between private developers, the U.S. Department of Housing and Urban Development, the Detroit Housing Commission and the City of Detroit. We can anticipate new development in Ann Arbor and downtown Detroit. Ann Arbor …