Metro Detroit’s retail industry will continue to slowly grow this year, despite continued financial tribulations in Detroit, according to a report released Tuesday.
Employment, construction, commercial occupancy and rents are all expected to increase, positive economic signs that will boost retail shopping, according to a Marcus & Millichap second-quarter market overview report.
The forecast comes after Michigan retail sales slowed in April to its lowest level since last June, according to an index maintained by the Michigan Retailers Association and the Federal Reserve Bank of Chicago. The retail group’s survey also found that a majority of state retailers — 61 percent — still expect sales in May, June and July to increase compared with the same time a year ago.
The Marcus & Millichap report said the Big Three automakers, which have reported growing sales and restored thousands of jobs, have helped boost retail sales to peak levels in the region.
But Detroit still finds itself dealing with a plummeting population, dwindling tax revenues and nearly a quarter-million dollar budget deficit, the report said.
The city’s financial difficulties could strain the retail industry because companies could remain cautious about expanding in Detroit, the report said.
The forecast comes as officials at Bedrock Real Estate Services — the company owned by Quicken Loans Inc. founder Dan Gilbert and partners — have said many retailers and small firms have expressed interest in locating in the nine downtown Detroit buildings that Gilbert and partners have bought in the past year and a half.
The retail situation will be better in the suburbs, according to the Marcus and Millichap report, where Oakland and Macomb counties attract national tenants and benefit from Detroit’s ills.
The report predicts a 1.4 percentage point gain in employment this year in Metro Detroit. Michigan’s economic output grew 2.3 percent in 2011, according to a U.S. Bureau of Economic Analysis report released Tuesday.
Construction is expected to rise 0.2 percentage points this year, and year-over-year retail completions should rise after declining the past three years, according to Marcus and Millichap.
About 400,000 square feet of construction is under way in Detroit; there is another 3.5 million square feet in the works, with a majority planned for Oakland County, the report said.
Marcus & Millichap said one of the largest contributors to the construction gains is the redevelopment of the 140,000-square-foot Novi Town Center, which will get started this summer.
Increased construction will lead to a rise in occupancy rates to 88.4 percent, the report said. Rents are expected to increase 0.3 percent.
By: Karl Henkel, The Detroit News
