Industrial V Michigan

Amazon, e-commerce providing boost to Detroit’s industrial market

Amazon, e-commerce provides industrial boost in Detroit,ph01

The automotive industry has always been a key part of Detroit’s economy. The news that automotive production slowed in 2017, then, should have meant a significant slowdown in lease and sales activity in Detroit’s industrial market.

But that didn’t happen, according to the latest research from Newmark Knight Frank.

The CRE frm recently released its fourth-quarter 2017 industrial trends report for the Detroit region. According to the research, the increased diversification of the metropolitan Detroit industrial market led to increased demand for warehouse, distribution and manufacturing space last year, depsite the slowdown in the auto industry.

Newmark Knight Frank reported that in 2017, U.S. automotive sales experienced a slight decline from their peak of 17.5 million units in 2016. Despite that, 2017 served as what Newmark called “another banner year” for the Detroit-area industrial market. The market recorded more than 6.9 million square feet of absorption and 4.3 million square feet of completed new construction.

That’s not much different from a busy 2016 in which the Detroit metropolitan industrial market totaled 7.6 million square feet of absorption and 1.9 million square feet of new construction.

In addition to the automotive industry, e-commerce companies have played a big role in Detroit’s industrial market, Newmark Knight Frank reported. During the past two years, Amazon has expanded its footprint in metropolitan Detroit from roughly half-a-million square feet to a projected more than 3 million square feet by the end of 2018. Last year, Amazon completed a 1-million-square-foot distribution center in Livonia, Michigan, and began construction of 850,000 square feet in Romulus. The online giant is also in the planning stages of another 1-million-square-foot facility in Macomb County.

“The metro Detroit industrial real estate market historically swung in the direction of the automotive industry, however, the e-commerce sector, led by Amazon, has been critical to metro Detroit’s diversified industrial expansion,” said Fred Liesveld, managing director of NKF’s Detroit office, in a written statement.

John DeGroot, research director of Newmark Knight Frank’s Detroit office, said that the metropolitan industrial market here is on its seventh year in expansion mode that has resulted in a vacancy decline from 16 percent to just 5 percent as of the end of the fourth quarter of last year.