A “New Normal” Office Market, and Rent Rising in Industrial
The highly anticipated “Market Insights” report from Martin Commercial Properties provides an in-depth analysis of the region’s retail, industrial, and office real estate sectors.
EAST LANSING, Mich. – Martin Commercial Properties released its biannualMarket Insights Reportdetailing Mid-Michigan’s commercial real estate market across the industrial, office, and retail sectors. This extensive report covers the first half of the fiscal year (H12023 – January through June) and provides an in-depth analysis of vacancy rates, lease renewals, typical lease rates, sale activity, and more.
Key findings from the report include:
· Industrial
o Vacancy rates of leased industrial space in Greater Lansing averaged 5.6%, up from 3.5% in H2 2022 and up from 1.6% a year ago. However, industrial occupier trends remain positive and there are few quality options for users in the market.
o Rental rates continue to rise, and concessions are nearly non-existent.
o Due to limited demand and increased material/labor costs, no new speculative or build-to-suit projects broke ground during H1 2023.
o Capital markets activity remained steady with the largest investment sales occurring in the South Submarket and included 2325 Jarco Dr. ($4.95 million) and 4940 Contec Dr. ($3.3 million).
· Office
o The average market vacancy rate remained flat, increasing 2 basis points over H2 2022 figures and 1 basis point over H1 2022 numbers, suggesting a “new normal”.
o Rental rates are largely unchanged.
o Tenants are electing to sign shorter-term leases for less space. Interestingly, the number of lease transactions during H1 2023 was up 24.4% over H2 2022 activity, while overall leave value was down 31.1%.
o Speculative construction is non-existent.
· Retail
o Average vacancies rose from 15.8% in H2 2022 to 16.5%. However, retail interest is up, and deals are getting done.
o Big Box retailers continue to make commitments to the market such as Trader Joe’s Dave & Busters, Ross Dress for Less, Harbor Freight, and FunCity Adventure Park.
o The Lansing Mall (West Submarket) continues to shed vacancies; recent leases include a new Hela’s Kitchen and a 5,000 SF expansion of The Fretail Store.
o Construction will soon be underway for Haslett Village, a new $65 million mixed-use project at the corner of Haslett and Marsh Rds.
Martin Commercial Properties is the premier commercial real estate firm in Mid-Michigan. The company leverages its 60 years of knowledge, influence, and resources to generate wins for their clients, while providing strategic advice and execution in a complete range of commercial real estate services; brokerage, property development, property management, investment services, and corporate services.
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