Market fundamentals rather resilient to start 2024, but growing signs of a pullback materialize
The Detroit industrial market exhibited some signals of a slowdown in early 2024, as vacancy rates crept higher while asking rates remained below levels observed throughout most of 2023. Net absorption slipped for the third straight quarter, falling below the market’s long-term average. Furthermore, available subleases have risen for five consecutive quarters, and at 2.3 million square feet (msf) are at their highest level in more than a decade. Still, vacancy across the Detroit market remained below the national average and has increased just 50 basis points (bps) from recent lows. In the wake of uncertain occupier demand and the current lending environment, developers have cut back on new spec builds, with construction activity falling to its lowest level since 2019. This recalibration had the impact of curtailing the supply of new construction delivering vacant. Meanwhile, the region witnessed unemployment inch higher, increasing to 4.8% at the end of February. The unemployment measure tracked at a comparatively healthy level but notably above the 3.9% average for the country.