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Industrial real estate implications
Sources: JLL Research, Bureau of Labor Statistics
Job growth/loss by sector (12-month change)
Detroit
Absorption has been positive for the past two years, pulling vacancies down to
within 2008 levels. The market has also been seeing fewer large move-outs
lately, allowing the recovery to play out as the auto industry ramps up
production and drives growth in the local economy. Major tenants continue to
make leasing decisions in the 100,000- to 250,000-square-foot range and the
prospects for net absorption, at least in the next couple of quarters, remain
solid.
Demand growth will continue to favor large, modern product, and when met
with fewer move-outs, the result will be a continued firming of market
fundamentals. With a minimal supply pipeline, marginal improvements in
demand will result in a tightening of vacancies. Much of the metro’s supply has
fallen into obsolescence, making demolitions seem like a good option for
improving fundamentals.
Total jobs vs. unemployment rate
Detroit
Industrial employment trends (12-month change)
Detroit
Industrial employment update
Metro Detroit . May 2015
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2000 2002 2004 2006 2008 2010 2012 2014
Peak: 2,217,186 jobs
unemployment rate
total jobs
3.0%
-2,000
100
200
1,100
2,400
2,600
5,300
8,700
8,900
10,900
-5,000 0 5,000 10,000 15,000
Government
Other Services
Information
Leisure & Hospitality
Financial Activities
Educational & Health Services
Trade, Transportation & Utilities
Mining, Logging & Construction
Professional & Business Services
Manufacturing
Number of Jobs
6.0%Detroit unemployment
2.0%Detroit 12-month job growth
5.5%U.S. unemployment
2.3%U.S. 12-month job growth
• According to the most recent estimates from the BLS, total non-farm
employment in Detroit stood at ~1.9 million payrolls, representing an
annualized increase of 38,200 jobs or 2.0 percent. Meanwhile,
unemployment decreased 3.4 percentage points year-over-year to 6.0
percent.
• Industrial employment sectors employment sectors have experienced
substantial employment expansion over the last year, recording an
annualized net gain of 25,000 jobs across the metro. Employment gains
were led by the manufacturing sector, which added 10,900 jobs year-
over-year.
• Total U.S. nonfarm employment increased by 126,000 jobs in March, the
lowest level since March 2013 and well below economist forecasts of
244,000 jobs. Downward revisions were also made to the January and
February figures, totaling 69,000 jobs.
• U.S. unemployment was unchanged at 5.5 percent and wage growth
remained sluggish as average hourly earnings increased only 2.1 percent
year-over-year, far below the Fed’s goal of 3.5 percent or better. (10.0)
0.0
10.0
20.0
30.0
40.0
2011
2012
2013
2014
2015
Trade,Transportation & Utilities Manufacturing Other Services Mining, Logging & Construction
March 2013 March 2014 March 2015
Total Non-farm
Employment
1,844,000
1.8%
1,871,400
1.4%
1,909,600
2.0%
Unemployment Rate 9.8% 9.4% 6.0%
Detroit Supersectors March 2013 March 2014 March 2015
Mining, Logging and Construction 51,800 3.0% 52,900 2.1% 61,600 16.4%
Manufacturing 226,100 4.4% 236,700 4.7% 247,600 4.6%
Trade, Transportation, & Utilities 339,300 1.0% 347,200 2.3% 352,500 1.5%
Information 26,800 0.4% 27,400 2.2% 27,600 0.7%
Financial Activities 102,500 4.5% 103,400 0.9% 105,800 2.3%
Professional & Business Services 356,200 4.4% 361,600 1.5% 370,500 2.5%
Educational & Health Services 298,800 0.7% 300,700 0.6% 303,300 0.9%
Leisure & Hospitality 174,200 1.0% 176,500 1.3% 177,600 0.6%
Other Services 77,200 2.9% 76,700 -0.6% 76,800 0.1%
Government 192,000 -3.3% 188,300 -1.9% 186,300 -1.1%
JLL Americas Research • Detroit Industrial Employment Update 2
Industry employment stratification
Detroit
© 2015 Jones Lang LaSalle IP, Inc. All rights reserved.
All information contained herein is from sources deemed
reliable; however, no representation or warranty is made
to the accuracy thereof.
Employment statistics
Detroit
Professional &
Business Services,
371,900, 20%
Trade, Transportation
&Utilities,
351,700, 18%
Educational &
Health Services,
302,200, 16%
Manufacturing,
249,400, 13%
Government,
185,300, 10%
Leisure & Hospitality,
173,100, 9%
Financial Activities,
106,000, 6%
Other Services,
76,500, 4%
Mining, Logging
& Construction,
60,100, 3%
Information,
27,600, 1%
Aaron Moore
Research Analyst Intern
Great Lakes Region
tel +1 248 581 3308
Aaron.Moore@am.jll.com
226 East Hudson Avenue
Suite 200
Royal Oak, MI 48067
www.jll.com/detroit
Andrew Batson
Senior Research Analyst
Great Lakes Region
tel +1 248 581 3300
Andrew.Batson@am.jll.com
226 East Hudson Avenue
Suite 200
Royal Oak, MI 48067
www.jll.com/detroit
News on the street
Detroit businesses expanding, contracting, etc.
All in One Medical Ι Medical Supplies Manufacturing: Expanding
Backed by $4.5 million in funding by Farmington Hills-based Beringea LLC, All In One Medical, which is based in Wolverhampton, England, has been scouting
locations in Southeastern Michigan for a manufacturing facility it wants to have running within a year. The plant will employ 35-40 people to make its patented
disposable antimicrobial curtains, room dividers and window blinds for hospitals and medical clinics
ATW Automation Ι Industrial Machinery: Expanding
ATW Automation has just relocated its Michigan manufacturing operations from an 85,000 square-foot facility in suburban Livonia to a significantly larger facility in
Wixom, one of many industrial operations in the metro area to expand recently as the local economy ramps up. Industrial users in Detroit absorbed a total of 5.2
million square feet of space in 2014. The general feeling around town is that 2015 will be the year more build-to-suits come to market.
Barrow Development Ι Real Estate: Selling
The Boston-based firm Barrow Development that bought 240 acres of the industrial site at I-96 and Wixom Road — including the massive and idled auto plant — for
about $7 million in early 2013 has since sold several parcels and is looking to sell the remainder of what it owns. It is now marketing 140 undeveloped acres for
resale at $75,000 an acre, or $10.5 million, according to Barrow Development's website.
General Motors Ι Automotive Manufacturing: Expanding
The Detroit automaker is seeking a 12-year tax abatement following six years of construction as it considers “constructing several structures (buildings, additions
and parking decks) and the renovation of various buildings at the GM Technical Center to support a more modern, competitive, collaborative campus,” according to
the application filed in late February. The company says the proposed project would retain 3,860 jobs.
Sakthi Automotive Group Ι Automotive Manufacturing: Expanding
The Michigan Strategic Fund announced that the auto parts supplier, a part of the $1.2-billion industrial conglomerate Sakthi Group, will invest up to $31.9 million to
expand its operations near its current facility on West Fort near Livernois. The investment includes the addition of 350 new jobs in Detroit — more than doubling its
workforce of about 200.
Simply Self Storage Ι Self Storage Services: Acquisitions
Pogoda Companies has just sold a 749,436 square-foot portfolio of 12 self-storage facilities located throughout the state of Michigan to one of the industry’s big
players for $61.3 million. Sales of this kind have become quite common for self-storage companies. Soaring revenue growth, rising occupancy and limited new
construction has perked up investor interest, pushing down cap rates to historic lows and encouraging consolidation.

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Detroit JLL Industrial Employment Update May 2015

  • 1. Industrial real estate implications Sources: JLL Research, Bureau of Labor Statistics Job growth/loss by sector (12-month change) Detroit Absorption has been positive for the past two years, pulling vacancies down to within 2008 levels. The market has also been seeing fewer large move-outs lately, allowing the recovery to play out as the auto industry ramps up production and drives growth in the local economy. Major tenants continue to make leasing decisions in the 100,000- to 250,000-square-foot range and the prospects for net absorption, at least in the next couple of quarters, remain solid. Demand growth will continue to favor large, modern product, and when met with fewer move-outs, the result will be a continued firming of market fundamentals. With a minimal supply pipeline, marginal improvements in demand will result in a tightening of vacancies. Much of the metro’s supply has fallen into obsolescence, making demolitions seem like a good option for improving fundamentals. Total jobs vs. unemployment rate Detroit Industrial employment trends (12-month change) Detroit Industrial employment update Metro Detroit . May 2015 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 2000 2002 2004 2006 2008 2010 2012 2014 Peak: 2,217,186 jobs unemployment rate total jobs 3.0% -2,000 100 200 1,100 2,400 2,600 5,300 8,700 8,900 10,900 -5,000 0 5,000 10,000 15,000 Government Other Services Information Leisure & Hospitality Financial Activities Educational & Health Services Trade, Transportation & Utilities Mining, Logging & Construction Professional & Business Services Manufacturing Number of Jobs 6.0%Detroit unemployment 2.0%Detroit 12-month job growth 5.5%U.S. unemployment 2.3%U.S. 12-month job growth • According to the most recent estimates from the BLS, total non-farm employment in Detroit stood at ~1.9 million payrolls, representing an annualized increase of 38,200 jobs or 2.0 percent. Meanwhile, unemployment decreased 3.4 percentage points year-over-year to 6.0 percent. • Industrial employment sectors employment sectors have experienced substantial employment expansion over the last year, recording an annualized net gain of 25,000 jobs across the metro. Employment gains were led by the manufacturing sector, which added 10,900 jobs year- over-year. • Total U.S. nonfarm employment increased by 126,000 jobs in March, the lowest level since March 2013 and well below economist forecasts of 244,000 jobs. Downward revisions were also made to the January and February figures, totaling 69,000 jobs. • U.S. unemployment was unchanged at 5.5 percent and wage growth remained sluggish as average hourly earnings increased only 2.1 percent year-over-year, far below the Fed’s goal of 3.5 percent or better. (10.0) 0.0 10.0 20.0 30.0 40.0 2011 2012 2013 2014 2015 Trade,Transportation & Utilities Manufacturing Other Services Mining, Logging & Construction
  • 2. March 2013 March 2014 March 2015 Total Non-farm Employment 1,844,000 1.8% 1,871,400 1.4% 1,909,600 2.0% Unemployment Rate 9.8% 9.4% 6.0% Detroit Supersectors March 2013 March 2014 March 2015 Mining, Logging and Construction 51,800 3.0% 52,900 2.1% 61,600 16.4% Manufacturing 226,100 4.4% 236,700 4.7% 247,600 4.6% Trade, Transportation, & Utilities 339,300 1.0% 347,200 2.3% 352,500 1.5% Information 26,800 0.4% 27,400 2.2% 27,600 0.7% Financial Activities 102,500 4.5% 103,400 0.9% 105,800 2.3% Professional & Business Services 356,200 4.4% 361,600 1.5% 370,500 2.5% Educational & Health Services 298,800 0.7% 300,700 0.6% 303,300 0.9% Leisure & Hospitality 174,200 1.0% 176,500 1.3% 177,600 0.6% Other Services 77,200 2.9% 76,700 -0.6% 76,800 0.1% Government 192,000 -3.3% 188,300 -1.9% 186,300 -1.1% JLL Americas Research • Detroit Industrial Employment Update 2 Industry employment stratification Detroit © 2015 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof. Employment statistics Detroit Professional & Business Services, 371,900, 20% Trade, Transportation &Utilities, 351,700, 18% Educational & Health Services, 302,200, 16% Manufacturing, 249,400, 13% Government, 185,300, 10% Leisure & Hospitality, 173,100, 9% Financial Activities, 106,000, 6% Other Services, 76,500, 4% Mining, Logging & Construction, 60,100, 3% Information, 27,600, 1% Aaron Moore Research Analyst Intern Great Lakes Region tel +1 248 581 3308 Aaron.Moore@am.jll.com 226 East Hudson Avenue Suite 200 Royal Oak, MI 48067 www.jll.com/detroit Andrew Batson Senior Research Analyst Great Lakes Region tel +1 248 581 3300 Andrew.Batson@am.jll.com 226 East Hudson Avenue Suite 200 Royal Oak, MI 48067 www.jll.com/detroit News on the street Detroit businesses expanding, contracting, etc. All in One Medical Ι Medical Supplies Manufacturing: Expanding Backed by $4.5 million in funding by Farmington Hills-based Beringea LLC, All In One Medical, which is based in Wolverhampton, England, has been scouting locations in Southeastern Michigan for a manufacturing facility it wants to have running within a year. The plant will employ 35-40 people to make its patented disposable antimicrobial curtains, room dividers and window blinds for hospitals and medical clinics ATW Automation Ι Industrial Machinery: Expanding ATW Automation has just relocated its Michigan manufacturing operations from an 85,000 square-foot facility in suburban Livonia to a significantly larger facility in Wixom, one of many industrial operations in the metro area to expand recently as the local economy ramps up. Industrial users in Detroit absorbed a total of 5.2 million square feet of space in 2014. The general feeling around town is that 2015 will be the year more build-to-suits come to market. Barrow Development Ι Real Estate: Selling The Boston-based firm Barrow Development that bought 240 acres of the industrial site at I-96 and Wixom Road — including the massive and idled auto plant — for about $7 million in early 2013 has since sold several parcels and is looking to sell the remainder of what it owns. It is now marketing 140 undeveloped acres for resale at $75,000 an acre, or $10.5 million, according to Barrow Development's website. General Motors Ι Automotive Manufacturing: Expanding The Detroit automaker is seeking a 12-year tax abatement following six years of construction as it considers “constructing several structures (buildings, additions and parking decks) and the renovation of various buildings at the GM Technical Center to support a more modern, competitive, collaborative campus,” according to the application filed in late February. The company says the proposed project would retain 3,860 jobs. Sakthi Automotive Group Ι Automotive Manufacturing: Expanding The Michigan Strategic Fund announced that the auto parts supplier, a part of the $1.2-billion industrial conglomerate Sakthi Group, will invest up to $31.9 million to expand its operations near its current facility on West Fort near Livernois. The investment includes the addition of 350 new jobs in Detroit — more than doubling its workforce of about 200. Simply Self Storage Ι Self Storage Services: Acquisitions Pogoda Companies has just sold a 749,436 square-foot portfolio of 12 self-storage facilities located throughout the state of Michigan to one of the industry’s big players for $61.3 million. Sales of this kind have become quite common for self-storage companies. Soaring revenue growth, rising occupancy and limited new construction has perked up investor interest, pushing down cap rates to historic lows and encouraging consolidation.