1. Q4 2010 | INDUSTRIAL
METRO DETROIT & WASHTENAW MARKET
RESEARCH REPORT
Detroit Industrial Market
DETROIT INDUSTRIAL MARKET REPORTS NEGATIVE RESULTS FOR FOURTH
QUARTER 2010
Metro Detroit’s industrial/flex market began 2010’s fourth quarter with negative net
absorption and an increase in vacancy. Rental rates slightly decreased $0.02. A continued
drop in activity is expected throughout 2011 in all submarkets for both flex and warehouse
type industrial product.
Property owners must continue to focus on retaining their existing tenants by enticing them
with lease concessions and rate reductions. Land sales and new construction are expected
to remain at a standstill until the overall absorption improves.
MARKET INDICATORS Q4
2009 2010
2,000,000 18.0%
VACANCY
16.0%
NET ABSORPTION
1,000,000
CONSTRUCTION 14.0%
RENTAL RATE 0 12.0%
Million Square Feet
Vacancy (^)
10.0%
-1,000,000
8.0%
-2,000,000 6.0%
4.0%
-3,000,000
2.0%
-4,000,000 0.0%
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
07 08 08 08 08 09 09 09 09 10 10 10 10
Completions Absorption Vacancy Rate (%)
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2. RESEARCH REPORT | Q4 2010 | INDUSTRIAL | DETROIT
INVENTORY sectors. Rates range as high as $11.95 per
Total industrial inventory in the Detroit market Total industrial inventory amounted to square foot in the Airport I-275 market to as
area amounted to 480,579,732 square feet in 480,579,732 square feet in 9,573 buildings low as $4.89 per square foot in the Detroit
9,573 buildings at the end of the fourth quarter in the fourth quarter 2010. The flex sector submarket. Most of the rental rates range
2010.
consisted of 40,527,644 square feet and the from $7.00 to $9 per square foot; with the
Warehouse/Distribution sector consisted of average settling at $8.17 per square foot in
Fourth quarter reports a negative absorption
compromised of 3,685,375 square feet, with 440,052,088 square feet. the overall market.
the highest absorption this quarter found in
the I-75 corridor submarket. Asking warehouse/distribution rates are
RENTAL RATES
averaging $3.97 per square foot. Effective
This quarter the average overall asking rental rates are usually up to 20% less than
rental rate slightly decreased $0.02 and asking rates, due to concessions and face
currently stands at $4.33 per square foot. rate reductions used as incentives for
tenants to commit to a lease.
R&D and Flex rates are double that of
warehouse & distribution in almost all
submarkets and continue to fluctuate
significantly among the geographic market
continued on page 4
SALES ACTIVITY
PROPERTY ADDRESS CITY SALE DATE SALE PRICE SIZE PRICE PER SF
32000 John R Rd Madison Heights 10/7/2010 4,650,000 95,618 48.63
28000 Dylan Dr Novi 12/20/2010 3,387,000 47,782 70.88
2550 Auburn Ct Auburn Hills 10/22/2010 2,000,000 148,000 13.51
1045 Durant Dr Howell 12/6/2010 1,900,000 112,500 16.89
20189-20201 Northline Rd Taylor 11/24/2010 1,840,000 54,400 33.82
35935 Ecorse Rd Romulus 11/1/2010 1,600,000 43,000 37.21
2329-2333 E Walton Blvd Auburn Hills 10/8/2010 1,165,000 46,600 25
795 S Oakwood Blvd Detroit 10/6/2010 921,000 23,350 39.44
40805 Mound Rd Sterling Heights 10/15/2010 801,000 28,751 27.86
1693 Thunderbird Dr Troy 10/19/2010 800,000 18,875 42.38
19800 Gibraltar Rd Gibraltar 11/30/2010 800,000 67,865 11.79
8000 Ronda Dr Canton 11/2/2010 775,000 47,326 16.38
50500 Mound Rd Shelby Township 10/19/2010 N/A 1,870,480 N/A
LEASE ACTIVITY
BUILDING NAME SUBMARKET TENANT SIZE SF
10401 Harrison Rd Airport District N/A 142,500
8747 Brandt St. Downriver North Ind The Edison Insitute 101,400
2800 Superior Ct. I-75 Corr/N Oak Dokka Fasteners 100180
1350 W Hamlin Rd. I-75 Corr/N Oak Kostal Kontakt Systeme 93,000
36501 Van Born Airport District Penske Logistics 81,608
754 W Maple Troy US Farathane Corp. 78,000
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3. RESEARCH REPORT | Q4 2010 | INDUSTRIAL | DETROIT
Existing Properties Direct Vacancy Sublease Vacancy Total Vacancy Net Absorption New Supply - Sq.Ft. Construction Avg. Rent
Market Bldgs. Total Inventory SF SF Rate SF Rate SF Rate 4th QTR YTD Current Period YTD Under Constr. Proposed Rate
DETROIT
Detroit
W/D 1027 84,249,312 18,387,084 21.8% 641,000 0.8% 19,028,084 22.6% (729,892) (635,393) $2.83
Flex 37 1,928,822 403,650 20.9% - 0.0% 403,650 20.9% (6,000) (1,100) - - $4.89
Total 1064 86,178,134 18,790,734 21.8% - 0.0% 19,431,734 22.5% (735,892) (636,493) - - - - $2.88
Downriver
W/D 395 41,223,044 5,260,372 12.8% 93,051 0.2% 5,353,423 13.0% 233,049 152,649 - 55,500 $3.94
Flex 10 1,116,409 227,139 20.3% - 0.0% 227,139 20.3% 4,525 - - $7.00
Total 405 42,339,453 5,487,511 13.0% 93,051 0.2% 5,580,562 13.2% 233,049 157,174 - - - 55,500 $4.02
Dearborn
W/D 228 12,471,156 1,624,002 13.0% - 0.0% 1,624,002 13.0% (245,908) (260,269) - - $3.52
Flex 56 3,141,418 1,508,054 48.0% 39,114 1.2% 1,547,168 49.3% 71,242 (91,105) - - $7.13
Total 284 15,612,574 3,132,056 20.1% 39,114 0.3% 3,171,170 20.3% (174,666) (351,374) - - - - $4.25
I-275 CORRIDOR
Airport
W/D 659 36,100,867 6,599,511 18.3% 215,390 0.6% 6,814,901 18.9% 142,989 (537,396) 1,249,745 $3.92
Flex 21 1,608,846 133,307 8.3% - 0.0% 133,307 8.3% 61,150 (29,372) - - $11.95
Total 680 37,709,713 6,732,818 17.9% 215,390 0.6% 6,948,208 18.4% 204,139 (566,768) - - - 1,249,745 $4.26
Southern I-275
W/D 327 15,841,646 1,912,049 12.1% 1,074,888 6.8% 2,986,937 18.9% 83,974 2,741 - - 691,766 $4.02
Flex 25 927,256 149,932 16.2% - 0.0% 149,932 16.2% (26,529) 112,547 - - $7.94
Total 352 16,768,902 2,061,981 12.3% 1,074,888 6.4% 3,136,869 18.7% 57,445 115,288 - - - 691,766 $4.24
Livonia
W/D 711 34,289,034 3,556,644 10.4% 172,082 0.5% 3,728,726 10.9% 243,684 935,728 860,289 $4.36
Flex 76 3,724,348 557,572 15.0% 800 0.0% 558,372 15.0% 21,961 60,722 - - 80,000 $6.83
Total 787 38,013,382 4,114,216 10.8% 172,882 0.5% 4,287,098 11.3% 265,645 996,450 - - - 940,289 $4.60
EAST
I-75 Corridor
W/D 675 44,845,974 3,719,006 8.3% 134,096 0.3% 3,853,102 8.6% 367,154 76,321 240,000 240,000 1,152,612 $4.53
Flex 109 5,191,824 828,284 16.0% 37,126 0.7% 865,410 16.7% 2,650 15,940 - - 114,036 $7.09
Total 784 50,037,798 4,547,290 9.1% 171,222 0.3% 4,718,512 9.4% 369,804 92,261 240,000 240,000 1,266,648 $4.80
Macomb
W/D 1666 55,761,480 5,670,411 10.2% 139,656 0.3% 5,810,067 10.4% 204,490 175,315 2,204,233 $3.61
Flex 43 1,274,034 275,469 21.6% 10,000 0.8% 285,469 22.4% 9,329 23,063 - - $6.16
Total 1709 57,035,514 5,945,880 10.4% 149,656 0.3% 6,095,536 10.7% 213,819 198,378 - - - 2,204,233 $3.67
Royal Oak
W/D 371 10,780,190 1,002,730 9.3% - 0.0% 1,002,730 9.3% 74,229 (160,698) - - 962,568 $3.40
Flex 24 853,126 130,439 15.3% - 0.0% 130,439 15.3% (19,325) (40,951) - $7.41
Total 395 11,633,316 1,133,169 9.7% - 0.0% 1,133,169 9.7% 54,904 (201,649) - - - 962,568 $3.69
Troy
W/D 866 25,614,849 3,247,656 12.7% 31,434 0.1% 3,279,090 12.8% 46,158 202,495 - - $4.33
Flex 120 4,474,602 784,788 17.5% 19,871 0.4% 804,659 18.0% 66,922 172,913 - - 170,000 $6.59
Total 986 30,089,451 4,032,444 13.4% 51,305 0.2% 4,083,749 13.6% 113,080 375,408 - - - 170,000 $4.67
WEST
Central I-96
W/D 672 28,569,853 3,030,958 10.6% 8,000 0.0% 3,038,958 10.6% 284,226 250,718 1,166,691 $5.00
Flex 129 4,307,336 966,043 22.4% 134,087 3.1% 1,100,130 25.5% (49,569) (166,543) 39,523 407,455 $9.31
Total 801 32,877,189 3,997,001 12.2% 142,087 0.4% 4,139,088 12.6% 234,657 84,175 - 39,523 - 1,574,146 $5.56
Farm. Hills
W/D 244 9,039,661 683,784 7.6% 15,900 0.2% 699,684 7.7% 190,122 90,486 - - $5.10
Flex 83 3,009,623 592,037 19.7% - 0.0% 592,037 19.7% (16,122) (73,401) - - $7.32
Total 327 12,049,284 1,275,821 10.6% 15,900 0.1% 1,291,721 10.7% 174,000 17,085 - - - - $5.65
Howell/Brighton
W/D 228 9,015,060 878,147 9.7% 42,356 0.5% 920,503 10.2% 59,964 146,688 - - 96,534 $5.34
Flex 13 294,751 82,363 27.9% - 0.0% 82,363 27.9% 5,258 37,886 21,000 $7.60
Total 241 9,309,811 960,510 10.3% 42,356 0.5% 1,002,866 10.8% 65,222 184,574 - 21,000 - 96,534 $5.41
Southfield
W/D 118 3,856,947 166,647 4.3% 30,200 0.8% 196,847 5.1% (3,360) 994 - - $4.52
Flex 41 1,771,692 582,409 32.9% - 0.0% 582,409 32.9% (4,650) (41,468) - - 60,000 $10.95
Total 159 5,628,639 749,056 13.3% 30,200 0.5% 779,256 13.8% (8,010) (40,474) - - - 60,000 $6.54
WASHTENAW COUNTY
W/D 461 28,393,015 7,523,866 26.5% 45,565 0.2% 7,569,431 26.7% (5,026,695) (4,728,067) - - $5.02
Flex 138 6,903,557 555,964 8.1% 7,000 0.1% 562,964 8.2% 274,124 408,864 - - $10.90
Total 599 35,296,572 8,079,830 22.9% 52,565 0.1% 8,132,395 23.0% (4,752,571) (4,319,203) - - - - $6.17
TOTALS
W/D 8,648 440,052,088 63,262,867 14.4% 2,643,618 0.6% 65,906,485 15.0% (4,075,816) (4,287,688) 240,000 240,000 - 8,439,938 $3.97
Flex 925 40,527,644 7,777,450 19.2% 247,998 0.6% 8,025,448 19.8% 390,441 392,520 - 60,523 - 831,491 $8.17
Total 9,573 480,579,732 71,040,317 14.8% 2,250,616 0.5% 73,931,933 15.4% (3,685,375) (3,895,168) 240,000 300,523 - 9,271,429 $4.33
QUARTERLY COMPARISON AND TOTALS
Q4-10 9,573 480,579,732 71,040,317 14.8% 2,250,616 0.5% 73,931,933 15.4% (3,685,375) (3,895,168) 240,000 300,523 - 9,271,429 $4.33
Q3-10 9,487 469,785,434 66,221,100 14.1% 2,466,808 0.5% 69,368,292 14.8% (209,793) 21,000 60,523 240,000 9,832,769 $4.35
Q2-10 9,456 465,259,376 64,343,953 13.8% 2,515,016 0.5% 67,520,969 14.5% 120,011 21,000 60,523 250,127 10,219,875 $4.37
Q1-10 9,419 463,944,034 65,441,898 14.1% 2,408,261 0.5% 68,512,159 14.8% (959,150) 39,523 39,523 10,127 9,201,771 $4.44
Q4-09 9,395 461,158,849 63,100,091 13.7% 2,353,794 0.5% 66,115,885 14.3% (5,433,274) 45,000 289,514 25,996 9,887,898 $4.52
Q3-09 9,362 457,072,564 61,040,019 13.4% 2,212,501 0.5% 63,914,520 14.0% (3,624,326) 18,650 244,514 46,600 10,903,302 $4.64
Q2-09 9,335 456,220,593 60,532,645 13.3% 2,101,200 0.5% 63,274,845 13.9% (1,871,891) 90,864 225,864 65,250 11,610,439 $4.77
Q1-09 9,325 452,663,524 56,761,669 12.5% 1,742,247 0.4% 59,144,916 13.1% (776,074) 135,000 135,000 112,118 15,306,447 $4.86
Q4-08 9,284 449,173,375 54,124,559 12.0% 1,789,026 0.4% 56,554,585 12.6% 1,292,628 133,878 252,594 190,020 16,787,880 $4.98
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4. RESEARCH REPORT | Q4 2010 | INDUSTRIAL | DETROIT
480 offices in
CONSTRUCTION 61 countries on
With new construction at all time lows, SALE ACTIVITY 6 continents
fourth quarter of 2010 saw a total of
Total year to date, sales activity of industrial/ United States: 135
240,000 square feet added to the industrial
flex product increased compared to the Canada: 39
market.
same time last year. The first nine months Latin America: 17
of 2010’s industrial market finalized around Asia Pacific: 194
At the end of 2010, no significant square EMEA: 95
99 industrial sales with a total volume of
footage reported under construction.
over $158 million, while the nine months of • $1.9 billion in annual revenue
2009 recorded 94 transactions and a total • 2.4 billion square feet under
volume of over $155 million. The price per management
ABSORPTION/LEASING ACTIVITY square foot this year has averaged around • Over 15,000 professionals
The Detroit market reported a negative $20.00 per square foot.
absorption of 3,685,375 square feet in
2010’s fourth quarter. The highest On a local level, sales are averaging UNITED STATES:
absorption reported is in the I-75 submarket approximately $25-$50 per square foot. Colliers International - Detroit
with a positive 369,804 square feet. Year to Capitalization rates are averaging around 2 Corporate Drive
Suite 300
date, 2010’s net absorption amounted to a 9.8%. Nationally, sale prices range from Southfield, Michigan 48076
negative 3,895,168 square feet. $60-$85 per square foot, with capitalization TEL +1 248 540 1000
rates ranging from 6.9% to 8.9%. FAX +1 248 540 1038
RESEARCH DEPARTMENT:
Michelle McGuckin
TEL +1 248 226 1848
FAX +1 248 226 1849
EMAIL michelle.mcguckin@colliers.com
Copyright © 2010 Colliers International.
The information contained herein has been obtained
from sources deemed reliable. While every reasonable
effort has been made to ensure its accuracy, we cannot
guarantee it. No responsibility is assumed for any
inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the
material contained in this report.
Accelerating success.
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