Martin Commercial Properties, a leading authority in Mid-Michigan’s commercial real estate landscape, has unveiled its highly anticipated biannual Market Insights Report. This comprehensive dossier delves into the industrial, office, and retail sectors, providing invaluable insights into the region’s real estate dynamics for the first half of 2024 (January through June).

Industrial Sector Highlights: A Beacon of Stability

The industrial sector in Greater Lansing showcased remarkable stability in the first half of 2024. The average vacancy rate for leased industrial buildings larger than 20,000 square feet decreased from 10.0% to 9.0%, reversing the trend of escalating inventory observed since the second half of 2022. This decrease in vacancy rates positions Greater Lansing as a low-risk option for investors and occupiers, with the West Submarket standing out as the strongest in tenant demand.

Noteworthy market activities include significant investments by major players: GM’s $500 million federal grant-supported funding to bolster hybrid and electric vehicle production at its Lansing Grand River plant, Neogen’s $200+ million expansion project in the Central Urban Area, and Gestamp’s $400 million commitment to renovate and expand their facility in Mason.

Office Sector Highlights: A Tenant’s Market Amid High Vacancy Rates

The office sector in Greater Lansing continues to face challenges, with the overall market vacancy remaining unchanged from the second half of 2023 and sitting at a 20-year high. This tenant-friendly market condition is expected to persist throughout 2024, providing smaller occupiers with ample leasing opportunities.

Despite the high vacancy rates, there have been notable large leases, including the Michigan Fitness Foundation (10,700 SF – East submarket), TIC International (9,400 SF – West submarket), and Creative Wellness (7,500 SF – East submarket). Major sales transactions include 415 W. Kalamazoo/400 S. Walnut ($1.875 million – CBD), 310 W. Lake Lansing ($1.167 million – East), and 431 W. Kalamazoo ($1.1 million – CBD).

Retail Sector Highlights: Surge in Build-to-Suit Development

The retail sector experienced a decline in average market vacancies, dropping from 14.3% in the first half of 2023 to 13.8% in the first half of 2024. Despite challenges such as inflated debt, land, and construction costs, development activity has been robust across all sectors of the market. The region’s vibrant and evolving dining scene is reflected in the emergence of numerous new eateries throughout the market.

While several closures impacted the market, the overall outlook remains positive, with expectations of a moderate uptick in vacancies in the coming months.