The Detroit industrial market: Recalibrating, not retreating
Posted By: REjournals on January 30, 2026. For more information, please click here to read the source article.
The Metro Detroit industrial market wrapped up the fourth quarter of 2025 on solid ground, offering a clear signal that while the breakneck pace of recent years has eased, fundamentals remain intact.
That’s the takeaway from Colliers’ fourth-quarter 2025 Detroit industrial market report, which points to a sector that is recalibrating rather than retreating. Vacancy remains tight, rents are holding steady, construction activity is measured, and both occupiers and investors are making more deliberate, location-driven decisions.
Vacancy across Metro Detroit’s industrial market held firm at 5% during the fourth quarter, unchanged from the prior period and well below the national industrial average of 7.4%, according to Colliers. After the volatility that followed the post-pandemic surge in supply, that steadiness is notable for market participants seeking predictability.
Absorption figures painted a more nuanced picture. Net absorption totaled 912,247 square feet in the fourth quarter, but the year finished in negative territory, with year-to-date absorption of minus 2.25 million square feet. That softening reflects a slowdown in leasing velocity rather than a collapse in demand.
Leasing activity fell sharply in the final quarter of the year, with 122 deals totaling 1.82 million square feet. That marked the lowest quarterly leasing volume in several years, down significantly from the third quarter’s 154 deals and more than 4 million square feet of activity. It also stood in stark contrast to the first quarter of 2025, when leasing volume topped 4.7 million square feet.
While leasing slowed, new supply reemerged in a meaningful way. Deliveries exceeded 1.2 million square feet in the fourth quarter, a sharp jump from the muted 92,800 square feet delivered in the third quarter. Development remains active but disciplined, with approximately 2.6 million square feet still under construction across the region’s key submarkets.
As has been the case for several years, warehouse and distribution facilities dominate the development pipeline. Most new projects are concentrated in high-demand corridors such as Airport/I-275, the I-96 Corridor, and Oakland County Northwest, where logistics users continue to prioritize modern buildings with efficient layouts and strong transportation access. Manufacturing space also accounts for a meaningful share of development, particularly in Oakland County and Macomb County. Flex construction, meanwhile, remains limited, with only a handful of targeted projects underway in Washtenaw County and the Ann Arbor area.
Rental rates showed resilience despite the slowdown in leasing. The average asking rent across Metro Detroit stood at $7.59 per square foot on a triple-net basis—well below the national average of approximately $12.14 per square foot. That gap continues to reinforce the region’s appeal for cost-sensitive occupiers. Premium submarkets, including the I-96 Corridor and Washtenaw/Ann Arbor, continued to command higher rents, supported by newer product and proximity to major transportation routes.
On the investment side, the fourth quarter told a story of selectivity rather than pullback. Industrial sales volume reached approximately $127.5 million, down from the elevated levels seen earlier in the cycle. Even so, buyers remained active, focusing on well-located assets with strong fundamentals.
The quarter’s marquee transaction was the sale of 3800 Giddings Road in Auburn Hills, a 207,000-square-foot warehouse that traded for $37 million, or $178 per square foot. Other notable deals included 220 N. Alloy Drive in Fenton, a 103,896-square-foot facility that sold for $8 million ($77 per square foot); 1935–1955 Enterprise Drive in Rochester Hills, a 53,400-square-foot property that fetched $4.48 million ($83.80 per square foot); and 32900 N. Avis Drive in Madison Heights, a 61,319-square-foot asset that sold for $3.25 million ($53 per square foot).
Together, those transactions underscore a consistent theme in Metro Detroit’s industrial market: demand for quality, well-located space remains strong, even as the market settles into a more balanced and disciplined phase.
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