DETROIT-The good news for the metro industrial/flex market can be summed up in two words: Momentum and growth. According to the Q3 report issued by Colliers International's Detroit office, vacancies are down, while absorption is up--the first time following four straight years of just the opposite.

On the absorption side, Q3 2005 statistics recorded six million sf of YTD absorption, a far cry from the negative 2.6-million-sf absorption level during this same time last year. And while vacancies haven't necessarily taken a nosedive, there has been a great deal of improvement, with Q3 2005 overall vacancy standing at 12.2%, a drop of 1.4% from Q3 2004's overall level of 13.5%.

The Colliers report notes a few reasons for the trend--one being that the somewhat continued, though sluggish, recovery in the Detroit metro market is having a positive impact on the industrial/flex product. The other reason, the report points out, is that not a whole lot of new supply has come online during the past three years. Year-to-date industrial space under construction, for example, has numbered 804,478 sf, while during the same period in 2004, the area was seeing 1.32 million sf under construction.

Another interesting trend to note is that location is playing a key role in the price of rental rates. In the Airport District, for example, where space is somewhat scarce, landlords and owners are asking--and receiving--close to $13 per sf. The West sectors, on the other hand, have a little more product available and are seeing quoted rates around $10 per sf.

Finally, the report notes that the Detroit market is showing a higher demand for warehouse and flex product than it is for office product. The reason for this is because of lower cap rates, which tend to have a positive effect on the ability to obtain financing.