The Detroit News
Aug. 17, 2023
Candice Williams
Detroit — One recent afternoon, workers at LM Manufacturing in southwest Detroit stood at their stations on the production line, each doing their part to assemble seating for the Ford Bronco and Ford Ranger.
After launching production last month, three shifts of nearly 700 workers at the plant on Fort Street assemble between 1,000 and 1,200 seats daily, which are then delivered to Ford Motor Co.’s Michigan Truck Assembly Plant in Wayne.
The plant’s location, the ability to expand, and access to a ready labor force were among the top reasons for the company’s site selection, said Sylvester Hester, president and CEO of LM Manufacturing. The company leases the building from Bedrock, part of a 37-acre campus the firm purchased in 2020.
“After an exhaustive search, we decided that, hey, this is where we want to be,” he said. “This is our new home.”
The facility is one example of the manufacturing plants coming online recently in Metro Detroit during a period of strong demand for industrial space.
Real estate experts say there’s high demand for such sites even as lease rates increase for an eighth straight quarter.
“We’re seeing demand in Wayne, Oakland and Macomb,” said Eugene Agnone, senior vice president of CBRE, a commercial real estate services and investment company. “It’s still very robust. And there’s a lot of spec development in each of those markets as well.”
Agnone said several factors are driving demand, including the auto industry’s transition to electric vehicles.
“Obviously automotive electrification,” he said. “We’re seeing a lot of e-commerce demand and a lot of onshoring of manufacturing.”
Sylvester Hester, President and Chief Executive Officer of LM Manufacturing. Photo Courtesy of The Detroit News.
‘A Lot of Leasing’
During the second quarter of this year, developers in the Detroit market completed eight industrial buildings totaling 1.2 million square feet, according to CBRE’s Q2 industrial market report.
Construction is underway on 18 properties in Metro Detroit for a total of 5.4 million square feet, according to the report. Among those buildings are the Romulus Trade Center in Romulus, the Eastland Commerce Center in Harper Woods and robotics company FANUC America in Auburn Hills.
In Detroit, four industrial projects are underway totaling 1.3 million square feet that are expected to be completed later this year or in early 2024, according to CBRE.
And more industrial projects are in the pipeline. Companies looking to move into Detroit include Ypsilanti-based vacuum insulated glass developer LuxWall Inc., which recently said it is considering leasing a facility Bedrock would construct in southwest Detroit to produce its energy-efficient windows. And Magna International has plans for a 280,000-square-foot manufacturing facility in Auburn Hills.
Some of the developments in the planning phase just a few years ago are now in operation. Late last month, online retail giant Amazon opened its 3.8 million-square-foot fulfillment center on the site of the former Michigan State Fairgrounds. And last year, automotive supplier Dakkota Integrated Systems opened a 375,000-square-foot manufacturing facility on the former Kettering High School site.
In Auburn Hills, Farmington Hills-based Friedman Real Estate recently facilitated a deal for DTE Energy to lease space to store equipment at a 528,340-square-foot building at Pinnacle Logistics Park in Redford.
“We’re doing a lot of leasing on the industrial side,” said Jared Friedman, executive managing director of Friedman Real Estate. “And then we’re also doing a lot of build-to-suit as well. And the reason we’re doing build-to-suit is because there’s a lack of industrial buildings because the market is so tight.”
Friedman Real Estate, in partnership with Southfield’s General Development Co., is building the seating plant for Magna International in Auburn Hills, which will supply seats for electric vehicles to be produced at the nearby GM Orion Assembly Plant. The Magna facility is replacing a former animal shelter and pet adoption center on Brown Road.
“So we’re seeing a lot of demand, not only on existing product but building custom buildings in the industrial space because there’s a lack of available product and still a lot of strong demand from the automotive sectors,” he said.
Projects that are done speculatively tend to be pre-leased before they’re complete, Agnone said.
That appears to be the case for NorthPoint Development, which has ramped up its development in Metro Detroit in the past few years with several projects, including those in Shelby Township, Romulus and Detroit. The Kansas-based firm also opened an office in downtown Detroit as it grows its presence in the area. Its portfolio is largely industrial.
NorthPoint Development has 3 million square feet of construction under development in Metro Detroit and has delivered 1.35 million square feet this year in Michigan, said Marc Werner, a regional vice president of NorthPoint Development.
Although the company is mum about prospective tenants prior to building completion, Werner said leasing activity is strong. Every completed project is 100% leased, he said, and of the 3 million square feet under construction, about half is already leased.