Real estate reports show slow positive growth



Some speculative industrial construction is just around the corner in Western Michigan. Meanwhile, retailers are struggling to fill vacant positions in the wake of the 2020 pandemic, and many large and national companies are still hesitant to send people back to the office.

The Western Michigan industrial market continued to perform well despite last year’s troubles. The Western Michigan-based NAI Wisinski has a 3.3% overall vacancy rate for its second quarter, up slightly from the end of 2020, which ended at 2.7%.

NAIWWM industrial specialist Andrew Kapanovski said the slight increase in job vacancies appears to be related to the Southeast Grand Rapids and Lakeside submarkets and is likely to be due to speculative construction.

The second quarter average rental rate is $ 4.76 per square foot, higher than the triple first quarter average rental rate of $ 4.28.

“These numbers represent the all-time high demand we are seeing in the industrial market in Western Michigan and that there is no inventory available for rent,” Kapanovski said. “We expect these rates to remain high until 2021, but should begin to decline as new construction emerges and demand is met.”

New construction is expected to continue until 2021 as continued inventory shortages keep demand at an all-time high. However, skyrocketing construction costs are forcing some developers to wait until costs come down again before embarking on new projects.

Kapanovski added that many trades continue to take place outside the market, and many of these OTC trades take place before the signs disappear and are based on relationships within the brokerage community. Quality buildings that hit the market tend to grow rapidly, he said.

Some notable market activities in the second quarter included the completion of a Mission Design & Automation project for a new 50,000 square foot facility at 9898 Black River Court in Holland.

The industrial automation and robotics company has invested more than $ 5 million in expansion and plans to add at least 109 high-tech jobs in Western Michigan. The company receives financial support for vocational training from Michigan Strategic Fund, Michigan Economic Development Corporation and West Michigan Works!, As well as a 12-year industrial tax exemption at Holland Charter Township.

In addition, Autocam Medical, a global contract manufacturer of precision surgical and medical components and devices based in Kentwood, is investing $ 60 million by 2024 to build a new headquarters and manufacturing facility in Kentwood. The new facility will be 100,000 square feet located at Broadmoor Avenue and 36th Street and will be ready to move in in January.

After much uncertainty in the second quarter of 2021, we are beginning to see how the effects of the pandemic and job restrictions have impacted the Grand Rapids office market. More immediate concerns were about how the office market would react to the lifting of these restrictions on work that took place this quarter.

“There were more cars in the parking lots than in the last 15 months, but they are still not full. Some businesses are back to normal before COVID, while some are cautiously returning to personal work and others are still working remotely, ”said NAIWWM partner and office specialist Mary Ann Visinski-Rosely. “The trend we are seeing is that small local businesses are returning to the new normal, while many large national / global companies are still working remotely, limiting themselves to personal work.

“Some companies are looking to return to the office 100%, while others believe telecommuting is possible as a full-time or hybrid model.”

The vacancy rate has increased slightly as companies decide how to move forward. Some have abandoned their premises altogether, while others have reduced their current location or moved to a smaller space if their rent allowed. There are several companies that have actually increased their space requirements in order to better distribute their employees.

In the second quarter, the total vacancy rate was 6%, up from 5.5% in the first quarter, and the overall average rate per square foot was $ 15.58, slightly down from $ 15.60 in the first quarter.

The only market segment that saw a slight decrease in vacancy rates was the Southeast Grand Rapids Class B&C market – 6.3%, up from 6% in the first quarter. Suburban markets seem to do better than downtown markets in general. In addition, rental rates increased slightly in all areas, with the exception of the office real estate market in the North-West region, where rental rates decreased slightly.

Vitreo-Retinal Associates, an eye clinic providing eye services in Grand Rapids, Kalamazoo, Muskegon and Ionia, announced plans to double the area of ​​Kalamazoo in 2022 in June. It is currently located on an area of ​​4,800 square feet at 1080 10th latitude north. Ul., The new location will be a new single-family building at 1060 N. 10th St. at West Pointe Office Park.

In 2022, MCPc will also move to 1601 Madison Ave. SE. The Cleveland-based technology logistics and data security company will replace a building that has been empty for decades and began a new project in July. This move to downtown Madison Square is expected to bring about 100 new jobs to the local community.

Retail, undoubtedly the hardest hit during the 2020 pandemic, picks up steam in the second quarter, but this growth is hampered by a shortage of employees. Retailers in many cases offer more than minimum wages and signature bonuses to attract much needed help. Some restaurants still only serve takeout or have very limited opening hours because they do not have staff to meet consumer demand.

“The good news is that leasing activity in our market is growing,” said Bob Lotzar, NAIWWM Senior Vice President and Retail Specialist. “The demand for smaller retail space has grown significantly over the past month. National retailers are also emerging for the first time in Western Michigan. ”

The total vacancy rate is 7.4% and the average asking rate is $ 10.52 per square foot. Those numbers are virtually unchanged from the first quarter, when the total vacancy was the same and the average asking rate was $ 10.46 per square foot.

Whole Foods is being built on 28th Street SE opposite Woodland Mall. Ross Dress for Less is currently visiting Grand Rapids for the first time. Other retailers such as Tropical Smoothie Café and B2 Outlet Stores are looking to expand into the local market.

According to Lotzar, it is difficult to find quality A-class premises in the most famous shopping corridors. Available locations still have pre-COVID rental rates. The dynamic in the Western Michigan retail sector is likely to continue through the end of the year, but will depend to some extent on the ability of business owners to fill vacancies.

The new Grove gourmet restaurant from Essence Restaurant Group will open this fall. Located at 919 Cherry St. SE, Grove has been closed due to COVID-19. During closure, it was converted into a temporary takeaway place and later into a private dining room. When it reopens, Grove will have a refreshed interior and a new menu with 13-15 daily seasonal offerings.

Sparrows Coffee Boutique Cafe, located in Grand Rapids, is opening a new location at Kingma’s Market in Creston / Cheshire Village (2225 Plainfield Ave. NE). The new store is approximately 600 square feet and offers a spacious outdoor patio. Sparrows are open from 7:00 am to 4:00 pm daily. Sparrows will also partner with local vendors such as Rise Bakery, Lively Up Kombucha and Atucún Chocolate.