Despite a struggling economy, one of Michigan’s most profitable industries, the retail industry is holding its own in the 2nd quarter of 2008. Although, local retail development has slowed this quarter and many expansions were put on hold, market activity remains stable and is expecting too see some new faces in the area this year. Large cities across the nation are also experiencing the same issues due to factors such as fuel prices, housing lows and unemployment. Discount stores, wholesale, and dollar stores are reaping the benefits, while specialty stores, high-end merchandise stores and some sit-down restaurants are feeling the pain.

Although the big boxes have not pulled the plug on the Michigan market, they are much more cautious on which locations they choose and more price sensitive than in the past. No dramatic changes are foreseen between now and year end with the exception of mid-big boxes such as Steve & Barry’s, Cost Plus and Linen n things – they may have difficulties releasing because of big box expansions.

Most retail asking rents in the Detroit area are ranging from $9.00 - $12.00 SF depending on location and construction. Asking rental rates fluctuated since the beginning of the fourth quarter but deals are closing at 10% less due to landlord concessions offered to entice tenants in “b” type properties.

Downtown Detroit has seen a spur of activity in the entertainment and restaurant sector in the city, along with the momentum of the three new casinos and hotels. They will continue receiving moderate interest and attracting local specialty owners.

Hotspots in the Suburban Detroit area include: Canton – Michigan Ave. and Ford Rd. corridors; Troy – Big Beaver Rd.; Bloomfield – Bloomfield Park area; Macomb – M-59 corridor.

Contact Paul Gorden at 248.540.1000 for more information.

2Q 2008 Detroit Retail Report.pdf

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