Lansing’s Industrial Real Estate Market Remaining strong amidst low inventory
Buy a house, rent an apartment, lease a warehouse, or build a factory. They each respond to the same economic forces: historically favorable interest rates, low supply, high demand and opportunity.
In the Lansing area, industrial properties fulfill many functions and support more than 19,000 on-site jobs. They include facilities for manufacturing, distribution, storage, research and development — about a dozen other categories, according to the Lansing Economic Area Partnership (LEAP), which act as a clearinghouse for the regional industrial sales and leases.
Altogether there is about 8.7 million square feet of rentable industrial space available in the greater Lansing area with a vacancy rate of about 6.7 percent, according to CBRE|Martin.
“This is a very strong market. Our biggest problem is low inventory,” said Julie O’Brien, a CBRE|Martin senior associate and industrial advisor. The result, she noted, is slowly rising rates for properties.
A mid-year market analysis by CBRE|Martin reported that the north submarket, with 1.13 million square feet of rentable space, an area north of I-69 and Bus 96, had the lowest vacancy rate – just 1.5 percent – with asking lease rates between $2.52 and $6.15 per square foot annually.
By far, the region’s largest cluster of industrial real estate is in the west submarket. Bounded by I-69 and I-96, home to the General Motors Delta Assembly Plant and many of its subcontractors and suppliers, the area has 4.5 million square feet of rentable space, a 4.9 percent vacancy rate and asking lease rates in the $2.95 to $3.25 per square foot range.
The sprawling western submarket tends to have the low vacancy rate primarily because of the proximity to General Motors, O’Brien explained.
Detailing growth in the west submarket, CBRE|Martin cited the 600,000-square-foot stamping plant linked to the Lansing Grand River Assembly Complex and the 500,0000-square-foot Meijer dry goods warehouse at the intersection of Creyts and Mt. Hope roads. Properties in Mason and Holt, among them the Dart Container operations, are bundled into CBRE|Martin’s western region.
Other markets analyzed by CBRE|Martin are the Central Urban Area, essentially downtown Lansing, with 577,000-square-feet of rentable area, an 8 percent vacancy rate and asking lease rates between $3 and $4.25 per square foot; and the south submarket, the area east of I-69/west of U.S. 127, with 2.5 million square feet of space, a 12 percent vacancy rate and lease rates between $2.95 and $3.25.
Industrial properties, like commercial and office real estate, are graded by class. Most in demand is Class-A and Class-B space – facilities like the Comprehensive Logistics building on Snow Road in Lansing offering up to 135,000-square-feet of warehouse space starting in April.
While most industrial real estate activity happens away from the Lansing core, the recent sale of the former General Motors properties bordering Saginaw Street in Lansing Township, changed that.
In November, NorthPoint Development of Kansas City agreed to buy the former GM sites where it plans to develop a mix of manufacturing, warehouses and distribution centers. The properties belong to the Racer Trust which acquired them when GM declared bankruptcy in 2009.
“It’s exciting stuff that will change the landscape,” said Brent Case, vice president of business attraction at LEAP. “With those properties, there are so many variables. We hope that within two years we will see new buildings there.”
But he cautioned that what happens, and when, depends on the economy.