Uptick in demand for Macomb County industrial space may signal rebound
The vacancy rate in Metro Detroit was 4 percent across nearly 399 million square feet, with one-fifth of that market, or nearly 83 million square feet, in Macomb County outpacing the region at just 2.8 percent vacancy, according to a first-quarter report from the brokerage firm Newmark Knight Frank. Warehouse/distribution space ($6.52 per square foot) and general industrial ($5.25 per square foot) bested the regional average of $5.30 and $5.53 per square foot, respectively.
Then March 10 hit, the day the first coronavirus cases in Michigan were revealed, and everything was upended. The state’s stay-at-home order has prompted businesses to shut down, and many had already halted operations to prevent the spread of COVID-19.
And Kevin Hegg, vice president in the Canton Township office of New York City-based industrial/warehouse developer and landlord Ashley Capital, said many tenants on the company’s rent rolls have asked for rent deferral.
But there has also been an uptick in the need for warehouse space, he said, with short-term requests of three months to a year for space ranging from 150,000 to 200,000 square feet.
“We received calls from national grocery store chains looking to stockpile paper products early on to disinfectant companies that make sanitizers and hand wipes who have trailer loads full of products that they need to place quickly,” Hegg said. “We’ve also been contacted by logistics companies that are handling personal protective equipment for customers that are working in conjunction with FEMA.”
Peter J. Kepic, senior vice president specializing in industrial real estate in the Southfield office of brokerage house Colliers International Inc., has seen a similar uptick in demand.
“While we are obviously seeing a temporary slowdown in activity due to stay-at-home orders, we’ve seen a spike in activity for short-term needs supporting COVID-19 related issues,” he said. “For example, we have seen a recent demand for temporary warehousing of supplies and manufacturing of medical equipment, hand sanitizer, etc. These are short-term deals but plugging the few holes that exist throughout Macomb County while we work through the current situation.”
Hegg remains confident that when the dust settles, the industrial market will continue its hot streak.
“Right now, if we come out of this relatively quickly, the demand that was there before this happened didn’t go away,” he said. “It’s just been put on the back burner. So a tight market is probably going to get tighter and, knock on wood, I’m fairly optimistic.”
And Kepic says industrial real estate will be quick on the rebound.
Posted By: Crain’s Detroit Business on April 19, 2020. For more information, please click here to read the source article.
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