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DETROIT-A continued emphasis on a search for good deals highlighted the office and industrial markets during 2005, both from the investment and leasing sides. Experts are telling GlobeSt.com that more of the same is likely to occur in 2006.

Gary Grochowski, senior vice president of L. Mason Capitani Inc. in Troy, notes that much of 2005′s activity on the office side focused on tenants seeking new space, due to lease expiration. “I was involved in 15 possible deals in which those tenants ended up staying in their existing spaces,” he adds. “Typically, the landlord came back with a very aggressive deal, or ended up shuffling other tenants around to accommodate them.”

Meanwhile, leasing on the industrial side went through some ups and downs, according to Jack Williams, senior vice president with Colliers International’s Southfield office. Many companies, in the automotive industry especially, “felt the need to right-size their businesses,” Williams says. “Companies that have had too much space for the last five years are downsizing, while companies that picked up work from bankrupt competitors have been forced to expand.”

Overall, both agreed that investment sales were on the rise in both sectors. “There were a lot of banks competing for commercial loans, especially real estate backed loans,” Grochowski says. “Also, there was and continues to be an increase in good-quality, fair-priced buildings for sale.”

Both Williams and Grochowski indicate that more of the same will occur in 2006, while noting the powerful impact of automotive industry announcements and activity on both office and industrial. Grochowski notes that the “right-sizing” announcements from both Ford and GM during the latter part of 2005 impacted not only those directly involved with the companies, but local suppliers as well. “Other businesses, such as marketing, advertising and legal, have typically thrived on servicing these core businesses,” he explains. “But with much of the manufacturing and engineering going overseas, I don’t foresee much of this business coming back any time soon.”

However, he continues, it doesn’t necessarily mean the demise of the auto industry. “Some of the greatest success stories I have witnessed are the auto suppliers that have been able to transition from a manufacturer, producing parts, to a distributor,” he says. “If I had to guess, this trend will continue.”

Williams, in the meantime, believes that the area will continue what he calls “the painful process of changing from a blue-collar town to a white-collar town.” While manufacturing jobs disappear, he says, engineering and R&D positions will rise up in their place, while smart and efficient manufacturing facilities remain in place. “I would not be surprised to see major global corporations announce new technological centers and campuses in 2006, like Hyundai just did,” he says.

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