The Detroit Metropolitan Statistical Areas (MSA) 33.5-million-square-foot community-neighborhood shopping center market remains in the doldrums, even as new supply has ceased. The 11.9% vacancy rate for the second quarter, is up 20 basis points from a quarter earlier on 53,000 square feet of negative net absorption, and up 20 basis points from a year earlier. In July, Reis puts the vacancy rate at 12.0%, another new high for this cycle. Net absorption is forecast at minus 151,000 square feet for all of 2012, with year-end vacancy forecast at 12.1%. The rate is expected to edge down thereafter, but only slowly, remaining above 10.0% through 2016.
Community-neighborhood shopping center retains remain weak. Although both the average asking rent and the average effective rent edged up 0.1% during the second quarter, to $16.89 psf and $14.90 psf, respectively, they remain down 0.4% and 0.5%, respectively from a year earlier. There was no change in July. Reis predicts a rent decrease of 0.3% by both measures for all of 2012. Small increases of no more than 2.9% in any year are predicted for the rest of the forecast period, but not until some time in 2016 does Reis expect the effective average to exceed its year-end 2007 level.
The second quarter power center vacancy rate is 7.7%, in metro Detroit, down 20 basis points from the prior quarter and from a year earlier. Although this is higher than the Midwest and U.S. averages of 7.2% and 6.3%, it is a good showing given the big-box boom in metro Detroit in the mid-2000s and the economic collapse that followed. The average asking rent for power centers, at $19.01 psf, was 0.8% lower than a year earlier. The 325,000-square-foot Livonia Marketplace community center in Livonia, a reconstruction, remains under construction as it has been since August 2009. It is partially open and operating. A 350,000-square-foot new lifestyle center project, The Shoppes at Gateway Park, broke ground in May at Woodward Avenue and Eight Mile Road in Detroit. In South Lyon, on Ten Mile Road, a 48,000-square-foot neighborhood center is under construction.