According to Andrew Farbman, president of Southfield, Michigan-based NAI Farbman, much of the build-to-suit business has been hurt by the shorter automotive contracts that are being negotiated. “With contracts of 3 to 5 years versus contracts of 5 to 10 years, it is much harder to find long term leases that justify new buildings,” he says.

Instead, the majority of activity in Detroit is in the form of redevelopments of older sites including: landfills, such as in Auburn Hills and Orion Township; former hospital sites, such as the Clinton Valley Hospital in Pontiac at Telegraph and M-59; and old General Motors (GM) sites, such as Etkin’s redevelopment of a Livonia assembly plant, and Grand Sakwa’s redevelopment of the GM tank plant in Warren. Additionally, the Pontiac Silverdome, former home to the Detroit Lions, is currently evaluating three legitimate bids for redevelopment.

Most of the groundbreaking new development is slotted for the airport area. For example, Visteon, which will be relocating from Dearborn, is developing a new supply headquarters near the airport.

Prime industrial markets for the last 10 years have included the Interstate 275 corridor (Livonia, Novi and Canton) and Auburn Hills. Both markets are on the outer limits of the Detroit metropolitan area, and have highway access and high-end residential communities.

A limited number of new developers have entered the market, because mostly local family-owned companies are active in Detroit. However, Minneapolis-based Opus has recently entered the market.

Property managers and developers have primarily been trying to attract automotive-related tenants in Detroit. Recently, Ann Arbor (University of Michigan) and New Center (Wayne State University), have focused on attracting bio-tech companies.

Recent major lease signings include Bay Logistics for 600,000 square feet in Ashley’s development in Brownstown Township; Techmar for a 350,000-square-foot build-to-suit on GM’s Old Army Detour; and The Home Depot for 280,000 square feet at Northline Industrial Park in Romulus. Rental rates for new buildings range from $4.50 per square foot to $6 per square foot for NNN properties. Vacancy rates market-wide currently are 13 percent.

“The Detroit industrial market has experienced 2 consecutive years of negative absorption, while the automotive industry maintained record car sales in North America during the same time,” Farbman says. “Optimism prevails in the Detroit market that new buildings and expansions are around the corner.”

Andrew Farbman is president of NAI Farbman of Southfield, Michigan.


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