The Walbridge Group is developing new warehouse space on a massive chunk of Lyon Township land it has owned for more than 35 years.
The Detroit-based construction giant is putting up a 280,000-square-foot speculative warehouse building on 21 acres off I-96 at Grand River Avenue and South Hill Road. Walbridge owns the 515-acre property encompassing the site.
Walbridge becomes the latest to take advantage of an eye-popping increase in development activity and plunging vacancy rates in the warehouse sector.
Marketing materials by Southfield-based Signature Associates Inc. say that the Lyon Distribution Center I building is expected to be completed in July and lease for $7.25 per square foot per year, not including utilities.
At that rate, rent payments for the whole building would be $169,167 per month.
A site plan for the project was approved in the summer, Hometown Life reported at the time.
Walbridge’s strategy for the site has shifted over the years since it acquired the property in 1984 when it bought a construction company. In 2013, the land was put up for sale for $33.5 million but it never traded hands. It was also listed in 2006.
“We realized we weren’t going to unload that really to anybody because industrial clients need more space,” said John Rakolta III, Walbridge Group’s president and chief administrative officer. “They have a more integrated supply chain. They’ve got research and development. In today’s world, they’re producing their own fuel cells on their sites, so 500 acres isn’t going to cut it. It wouldn’t give any room to expand. Ultimately we said that we could most likely create more value developing it ourselves than just unloading it for the current market price.”
It is the latest speculative industrial/warehouse construction to crop up in the region.
Kansas City-based Flint Development is proposing 2.3 million of speculative space at the former Ford Motor Co. Wixom plant site as well as on about 45 acres in Pontiac on land owned by defense contractor Williams International Co. LLC.
Another developer, Riverside, Mo.-based NorthPoint Development LLC, is planning to tear down the former Cadillac Stamping Plant in Detroit and erect a 682,000-square-foot building in its place.
Those are just a handful of the new speculative developments cropping up in the region.
According to the Southfield office of New York City-based brokerage firm Newmark, in the fourth quarter there was a 10-year high 5.72 million square feet of warehouse/distribution space under construction. Between the first quarter of 2010 and the third quarter of 2014, there was no warehouse/distribution space being built. But every quarter since the fourth quarter 2016, there has been no less than 1.62 million square feet being built.
It comes as the warehouse/distribution center market is at a 10-year low for vacancy, sitting at just 1.3 percent in the fourth quarter, according to Newmark. The vacancy rate peaked in the third quarter of 2010, when the market was 28.3 percent empty.
“There’s hardly any availability out there,” said Peter Burton, principal of Bingham Farms-based developer Burton-Katzman LLC. “There is hardly any availability of logistical space almost anywhere in the market, so it seems like it would probably work.”
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