Colliers International Detroit Industrial Market Report Q3 2018 David Abraham, MAI SRA Associate Managing Director | Detroit, Valuation & Advisory Services Valuation & Advisory Services Direct +1 734 674 9505 Main +1 248 540 1000 | Fax +1 248 226 1873 david.abraham@colliers.com

1. *Sale & lease transactions, Q3 2018.
Research &
Forecast Report
DETROIT & ANN ARBOR
INDUSTRIAL
Q3 2018
As the third quarter closes, all signs point to a strong quarter for Metro
Detroit’s industrial market, with the lowest vacancy rates we have ever
seen. The industrial sector is especially robust due to a healthy U.S.
economy as well as high demand in the e-commerce and manufacturing
sectors which is driving new development in Metro Detroit and around
the country. Growing demand from electric and autonomous-vehicle
manufacturers has led to a flurry of technology related real estate
investments in Detroit. This quarter, Subaru Research and Development
announced they will build a 60,000 square foot technical center near I-94
and Willow Run in Van Buren Township. The automaker plans to invest
$48.2 million into the tech center and hire 101 new employees. In Novi,
Nachi Robotics has out grown their current space and is expanding to
a nearby 66,000-square-foot building with plans to invest $12 million
and create 36 new jobs. In September, GM announced that Cadillac’s
headquarter operations will return to Warren from New York city,
where they’ve been for the last 3 years. Lastly, by 2020, Autoliv plans
a $32 million investment to modernize its Auburn Hills headquarters,
including a 3rd floor addition. Autoliv’s electronics division, Veoneer,
will invest over $22 million to consolidate four operations into a new
180,000-square-foot North American Headquarters building at 26545
American Drive in Southfield; construction is expected to complete in
the second quarter 2019.
In recent news, U.S. and Mexico are nearing a deal on renewing NAFTA,
which is especially impactful in our automotive region. Signs indicate
that the industrial sector will remain strong, but there are headwinds
to look for. Issues causing greatest concern are the availability of labor
and increased tariffs due to trade policy reform, creating a lot of tension.
GROWING DEMAND IN DETROIT LEADS TO
CONSTRUCTION STARTS
Amber Goodwin Senior Research Analyst | Detroit & Ann Arbor
123
TOTAL INDUSTRIAL
TRANSACTIONS
5,822,544
SQUARE FOOTAGE
IN DEALS
MARKET INDICATORS
VACANCY
NET ABSORPTION
CONSTRUCTION
RENTAL RATE*
Q2 2018 Q3 2018
*Asking Rents

2. TOTAL FLEX WAREHOUSE
2 Detroit & Ann Arbor Research & Forecast Report | Q3 2018 | Industrial | Colliers International
TOTAL FLEX WAREHOUSE
QUOTED RENTAL RATES
OVERALL MARKET
OCCUPANCY RATE
OVERALL MARKET
PROPERTY
CITY
SUBMARKET
SIZE OF
DEAL
BUYER NAME PRICE
43800 Gen-Mar
Drive
Novi
I-96 Corridor
439,150 STAG Industrial, Inc. $47.82
5025 Venture Drive
Ann Arbor
Washtenaw
25,260 5025 Venture Drive LLC $101.35
12499 Evergreen Avenue
(Industrial Cold Storage)
Detroit
Detroit East Area
303,383 AIC Ventures $54.77
12163 Globe Street
Livonia
Airport / I-275
55,000 Linear AMS $60.00
SALES
PROPERTY
CITY
SUBMARKET
SIZE OF DEAL TENANT NAME
19661 Brownstown
Center Dr
Brownstown
Airport / I-275
272,228 Westrock Corrugated
24680 Mound Road
Warren
East Area
86,422
Federal Resources Supply
Company
8555-8625 Inkster Road
Taylor
Downriver
70,000
Production Management
One Inc.
740 Advance Street
Brighton
I-96 Corridor
71,170 Unified Industries
LEASES
Notes on the Market
VACANCY & ABSORPTION
The total industrial vacancy in Metro Detroit was 3.2% for the third quarter
of 2018. The warehouse vacancy rate was 2.9%. The biggest constraints
in the warehouse market is in the East Area where the vacancy rate was
2.1% and in the Airport/I-275 submarket which is currently 3.2% vacant.
The total vacancy rate for flex product was 6%. The Washtenaw/Ann Arbor
area, a highly driven technology market, has the lowest flex vacancy rate at
2.3%. Demand in our region has pushed vacancies to a level we have never
witnessed before.
Net absorption in the third quarter was a positive 631,538 square feet.
The largest leases signed this quarter were for warehouse distribution
buildings. Westrock Corrugated signed a lease for 272,288 square feet at
19661 Brownstown Center Drive in the downriver industrial submarket.
Penske Logistics, a transportation services company, moved into their
590,000 square foot preleased warehouse space in Ashley Capital’s newly
constructed 745,694 square-foot warehouse at Livonia Corporate Center.
RENTAL RATES
Rental rates continue to tick upward, and leasing activity remains strong in the
Detroit market. Activity surrounding lease renewals continues as occupiers
are renewing at their existing locations due to the space constraints within
the market. Leases are often being signed at full market asking rates with
minimal concessions as the market remains in favor of the landlord. The
average quoted rental rate for the total industrial market rose to $6.07 per
square foot at the end of the third quarter of 2018, an increase from $5.94 at
the end of the second quarter 2018. The average quoted rental rate for flex
space in the third quarter was $9.57 per square foot, compared to $9.29 in
the second quarter. The average quoted rental rate for warehouse space in
the third quarter was $5.60 per square foot, compared to $5.46 per square
foot in the second quarter.
SALES ACTIVITY
There were 82 industrial and flex sales transactions in the third quarter
totaling 3,791,919 square feet. Investors continue to find deal value in
Metro Detroit with the average sale price at $48 per square foot in the
total industrial sector, compared to the U.S. average of $80 per square foot.
The largest industrial building which sold this quarter was in Novi. STAG
Industrial Holdings LLC purchased 43800 Gen-Mar, a 439,150 square foot
distribution building for $47.82 per square foot. The building is currently
leased to CVS with a reported lease rate of $3.20 per square foot, NNN. In
Ann Arbor, 5025 Venture Drive, a flex building of 25,260 square feet, sold for
$101.35 per square foot.
CONSTRUCTION ACTIVITY
Construction and labor costs weigh on the minds of local developers.
Developers are pursuing land development and unique redevelopment
opportunities and feeling confident as most projects are met with preleasing
activity, with buildings greater than 100,000 square feet being 100% leased
by the time they deliver. In Metro Detroit, there is currently 7,028,371 square
feet under construction in 51 buildings, with 70.3% being preleased at
delivery. The market delivered 1,344,194 square feet and construction starts
are up to 1.7 million square feet the third quarter 2018, compared to 600,000
square feet that started in the second quarter.
NOTABLE INDUSTRIAL DEALS

3. 3 Detroit & Ann Arbor Research & Forecast Report | Q3 2018 | Industrial | Colliers International
BY THE NUMBERSINDUSTRIAL MARKET > Q3 > 2018
FLEX MARKET STATISTICS AIRPORT / I-275 DETROIT AREA DOWNRIVER EAST AREA I-96 CORRIDOR
OAKLAND
COUNTY NW
ROYAL OAK /
SOUTHFIELD
TROY AREA WASHTENAW TOTALS
EXISTING
INVENTORY
NO. OF BUILDINGS 253 71 17 140 302 175 105 142 164 1,460
TOTAL INVENTORY 11,138,916 2,255,122 893,232 4,680,738 9,033,029 8,140,791 3,148,117 4,494,003 8,127,701 54,059,067
VACANCY
DIRECT SF 579,149 161,052 49,845 155,800 465,696 736,280 303,189 274,512 187,562 3,147,338
TOTAL SF 655,912 161,052 49,845 155,800 477,227 736,280 303,189 306,782 187,562 3,267,902
VACANCY % 5.9% 7.1% 5.6% 3.3% 5.3% 9.0% 9.6% 6.8% 2.3% 6.0%
YTD NET ABSORPTION 58,470 39,400 2,996 (27,418) 266,777 48,502 (30,635) (24,453) 103,654 432,230
YTD DELIVERIES 0 0 0 0 0 0 0 0 44,525 44,525
UNDER CONSTRUCTION SF 118,785 0 0 22,165 0 0 180,000 0 0 330,950
QUOTED RATES $9.50 $12.98 $7.35 $6.84 $10.11 $9.41 $10.37 $10.97 $14.38 $9.57
WAREHOUSE MARKET STATISTICS AIRPORT / I-275 DETROIT AREA DOWNRIVER EAST AREA I-96 CORRIDOR
OAKLAND
COUNTY NW
ROYAL OAK /
SOUTHFIELD
TROY AREA WASHTENAW TOTALS
EXISTING
INVENTORY
NO. OF BUILDINGS 2,923 1,852 685 4,034 1,833 1,270 1,095 1,301 714 17,289
TOTAL INVENTORY 118,553,915 86,387,088 49,201,668 120,460,839 48,142,970 45,218,439 16,966,944 26,447,362 22,447,000 593,700,523
VACANCY
DIRECT SF 3,709,179 3,451,953 738,346 2,473,641 1,399,133 1,497,737 592,847 634,408 571,005 16,759,899
TOTAL SF 3,839,364 3,497,653 738,346 2,473,641 1,414,933 1,867,941 592,847 634,408 574,805 17,386,671
VACANCY % 3.2% 4.0% 1.5% 2.1% 2.9% 4.1% 3.5% 2.4% 2.6% 2.9%
YTD NET ABSORPTION (25,,969) 197,139 282,250 149,135 14,306 305,616 (58,113) (249,558) (32,809) 1,323,744
YTD DELIVERIES 1,194,095 0 0 750,850 213,261 136,000 0 0 15,200 3,393,964
UNDER CONSTRUCTION SF 2,281,194 530,000 79,580 1,953,216 649,685 392,540 651,610 6,734 77,840 6,697,421
QUOTED RATES $5.48 $4.67 $4.24 $6.02 $6.57 $6.22 $6.07 $6.71 $7.35 $5.60
TOTAL MARKET STATISTICS AIRPORT / I-275 DETROIT AREA DOWNRIVER EAST AREA I-96 CORRIDOR
OAKLAND
COUNTY NW
ROYAL OAK /
SOUTHFIELD
TROY AREA WASHTENAW TOTALS
EXISTING
INVENTORY
NO. OF BUILDINGS 3,176 1,923 702 4,174 2,135 1,445 1,200 1,443 878 18,749
TOTAL INVENTORY 129,692,831 88,642,210 50,094,900 125,141,577 57,175,999 53,359,230 20,115,061 30,941,365 30,574,701 647,759,590
VACANCY
DIRECT SF 4,288,328 3,613,005 788,191 2,629,441 1,864,829 2,234,017 896,036 908,920 758,567 19,907,237
TOTAL SF 4,495,276 3,658,705 788,191 2,629,441 1,892,160 2,604,221 896,036 941,190 762,367 20,654,573
VACANCY % 3.5% 4.1% 1.6% 2.1% 3.3% 4.9% 4.5% 3.0% 2.5% 3.2%
YTD NET ABSORPTION (197,499) 236,539 285,246 121,717 281,083 354,118 (88,748) (274,011) 70,845 1,755,974
YTD DELIVERIES 1,194,095 0 0 750,850 213,261 136,000 0 0 59,725 3,438,489
UNDER CONSTRUCTION SF 2,409,979 530,000 79,580 1,975,381 649,685 392,540 831,610 6,734 77,840 7,028,371
QUOTED RATES $5.89 $4.88 $4.28 $6.05 $7.28 $6.97 $7.22 $7.75 $8.99 $6.07

4. 4
Copyright © 2018 Colliers International.
The information contained herein has been obtained from sources deemed reliable. While
every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No
responsibility is assumed for any inaccuracies. Readers are encouraged to consult their
professional advisors prior to acting on any of the material contained in this report.
Colliers International | Detroit
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COLLIERSINTERNATIONAL2018STATISTICS
Amber Goodwin
Senior Research Analyst
Detroit & Ann Arbor
+1 248 540 1000 Ext. 1624
amber.goodwin@colliers.com
FOR MORE INFORMATION
Paul Choukourian, CCIM
Executive Managing Director
Detroit & Ann Arbor
+1 248 540 1000 Ext. 1622
paul.choukourian@colliers.com
CONSTRUCTION ACTIVITY CONTINUED
Most notable is the ground breaking of industrial/warehouse developer
Ashley Capital’s, 569,382 square foot speculative industrial building in
the East Area submarket, which is set to deliver in August 2019. Asking
rates for this development are $6.95 per square foot, NNN. In a market
so tight, we expect this speculative construction will not sit vacant for
long. In April, Ashley Capital purchased the former 95-acre Hazel Park
Raceway for redevelopment. Work has begun to demolish the horse
track and begin construction preparation to develop two new industrial
buildings on this site. The project is slated for a 650,000-square-
foot speculative building and a larger building, of undetermined size.
Developer costs, for shell warehouse buildings, are typically $50-$75
per square foot. Occupiers should plan on additional costs for interior
finishes, mechanical, electrical, and plumbing improvements.
2018 REVIEW
»» Strong global economy drives demand for distribution and
warehouse space, in part due to technology advances including
e-commerce, changing consumer habits
»» Record low vacancy rates, record high asking rents and positive
absorption
»» Detroit is becoming a hub for tech talent and technology related
companies
»» The outcome of impending tariff regulations weigh on our minds
2018 OUTLOOK
»» Michigan is a great place to do business, the overall industrial
sector expected to remain healthy for the remainder of 2018
»» Occupiers and Investors are eager to tap into Detroit because of
economic incentives, access to a diverse talent pool, and automotive
resources
»» New speculative construction is met with optimism
»» The state and local colleges join forces to develop our local labor
pool and continue to attract new business opportunities to the
region
»» Optimism surrounding industrial real estate in Detroit and our
nation remains high despite the brewing trade war between the
United States and China
»» Tightness in labor markets with truck drivers and mechanical
engineers remaining in high demand
All statistics are for 2018, are in U.S. dollars and include affiliates.