Despite all the jokes about the dangers of living in Detroit, the city's real estate remains popular with the domestic and foreign auto industry. Michigan's industrial market, particularly in and around Detroit, is relatively saturated and stable after auto makers poured about three quarters of a billion dollars into Michigan commercial real estate. Rents are high, with the average rents for the past quarter coming in at $12 per square foot for research and development and flex space, $4 per square foot for warehouse and distribution space and $3 per square foot for general industrial or manufacturing space. There is still a slight bit of new construction industrial activity in the area.

Grand Rapids and the entire western Michigan area is thought to be on the verge of an upswing, and large investors are moving in. Western Michigan has a diversified economy and strong employment numbers, so unlike Detroit and southeastern Michigan, western Michigan's real estate isn't tied up in the declining auto industry's struggle to stay alive. Particularly hot western Michigan are medical office properties and flex/light industrial properties suitable to medical and biotech research. As well, retail is on the upswing as big box retailers move into the area.


Ann Arbor, home to the University of Michigan, is another attractive market, particularly for retail. Its an old real estate adage that when housing is down, commercial is up, and that's the case with Ann Arbor. Ann Arbor, with its wealthy, educated and cultured residents, has long topped lists of the most desirable places to live. Even so, its housing market is down, struggling to sell off a glut of condominiums and units in mixed use development units. Home sales have dropped 30% and condo sales 50% over the previous year. Retail, on the other hand, is strong, with low vacancies and high rents. Developers are looking to develop even more retail space, and they are particularly looking at the parking lots surrounding older retail developments - strip malls and large scale shopping complexes. Ann Arbor, eager to put to use some of the very trendy principles of new urbanism, is encouraging the redevelopment of parking lots. City leaders are hoping the dense, modern construction will give some of the older urban areas a vibrant, young feel. Another bright spot for Ann Arbor's retail market is the influx of national restaurant chains. The National Restaurant Association has been paying attention to Ann Arbor and is encouraging its members to do the same.