Most fundamentals hold steady for now as a slowdown appears increasingly likely in 2024
The Detroit industrial market remained resilient at the close of the fourth quarter, with occupier demand holding firm and vacancy remaining nearly unchanged from levels observed a year ago. The market’s 4.1% vacancy rate ticked up slightly from midyear 2023 levels, but its steadiness stood in sharp contrast to other U.S. market that have witnessed sharply softening fundamentals. However, other metrics showed signals of potentially shifting market dynamics. Among them, the market’s net absorption fell for the second straight quarter, falling below the long-term quarterly average. Also, in the wake of slackened levels of absorption and the current lending environment, developers have begun cut back on new construction, with levels falling to three-year lows. Meanwhile, unemployment across the Detroit Metro trended higher across the second half of the year, to 3.9% at the end of November, bolstered in part by layoffs at Big Three automakers that coincided with work stoppages during the United Auto Workers strike.