CBRE|Martin releases Marketview Reports on statistics for commercial real estate in Mid-Michigan
Wednesday, March 23, 2016
Posted by: Eric Dimoff
CBRE|Martin announced today the release of its H2 2015 MarketView reports for mid-Michigan (covering the second half of 2015). The reports are divided by office, retail and industrial commercial sectors. The reports provide information on new developments, vacancy rates, market rate trends and many other economic real estate barometers.
Below are a few highlights from the MarketView reports:
Retail (Mixed-use and outlot development on the rise):
- Over the past six months, the average vacancy for leasable space within the greater Lansing area increased slightly from 17.7 percent to 18.4 percent.
- Both the east and west sectors outperformed the balance of the market with vacancy rates of 11.2 percent and 11.7 percent respectively.
- Class A space with good visibility along high-traffic corridors was in high demand and not readily available which prompted build-to-suit activity.
- Both build-to-suit and speculative development will continue into 2016 and beyond. Much of this new development is located near big box developments.
- Net absorption of leasable space was positive in all submarkets except for the North Submarket, which totaled negative 19,087 SF. Retail sales are expected to increase in 2016 despite negative overall absorption.
Office (Vacancies and absorption steady as activity slows):
- Greater Lansing vacancies increased slightly from 17.2 percent in H1 2015 to 17.7 percent in H2 2015 and are expected to remain at this level throughout 2016.
- The Central Business District (CBD) Submarket continued to outperform the suburbs in terms of occupancy, as urban vacancy averaged 13.7 percent, while that of the suburbs averaged 19.8 percent.
- Activity for Class A space slowed across all markets. Class A vacancies averaged 7.1 percent market-wide and were in shorter supply within the CBD and West Submarkets.
- Market size continued to contract due to owner/user purchases and reclassification of space.
- Market continued to be reliant on the State of Michigan, Michigan State University, the auto industry and the healthcare and financial services sectors.
- The South Submarket reached 40 percent vacancy by the end of H2 2015, although CBRE|Martin anticipates absorption to trend positive in 2016 as tenants search for options within this sector.
Industrial (Market vacancies continue to decline):
- Greater Lansing industrial vacancies dropped from 7.8 percent in H1 2015 to 5.8 percent in H2 2015. This is a result of moderate leasing activity, creating historic lows in the availability of Class A space.
- The North and West Submarkets experienced the lowest average vacancy rates, while the South Submarket experienced the highest averages.
- There was a wide gap between Class A and B/C vacancy and the Submarkets with higher vacancy possessed a higher percentage of outdated facilities.
- Currently, the majority of market vacancy was within obsolete buildings. H2 2015 demand did not outweigh supply; however, activity of new and existing users is expected to increase.
- Owner-user construction dominated the market; no speculative construction was in the pipeline.
- Over the past six months, net absorption of leasable industrial space totaled 85,554 SF. Due to lack of space, leasing activity was moderate.
The CBRE Global Research team provides strategic investment services and market-related data, analysis and econometric forecasts. Their website, cbre.com/researchgateway, archives all of CBRE’s MarketViews as well as reports from all of their offices around the world.