Retail Market Vacancy Rate Low

May 14, 2002
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GRAND RAPIDS — A check of the local retail market showed a vacancy rate of only 2.4 percent across the city’s six retail sub-markets for the first quarter, and more construction is in the works.

Alpine Avenue in Walker and Grandville’s Rivertown Parkway had the lowest vacancy rates — 1.4 percent and 1.9 percent, respectively. The retail corridor along the East Beltline on the city’s far northeast side had the highest at 4.4 percent, a relatively low number considering it is the smallest of the sub-markets and is in the process of being developed commercially.

These findings come from Grubb & Ellis/Paramount Properties, one of the area’s leading commercial real estate brokers at 300 Ottawa Ave. NW.

“Actually, the retail market in all of West Michigan is wonderful. The tempo of the retail market has not changed at all, as far as companies coming to town and wanting space,” said Bill Bussey, Paramount vice president and head of the company’s retail section.

“We’re actually convincing them to come here,” added Mickey Waite, senior marketing coordinator for Paramount.

Overall, the metro area has 14.1 million square feet of retail space and only 335,313 square feet were vacant for the first three months of the year.

Of course, the stretch of 28th Street SE that runs through Grand Rapids, Kentwood and Cascade, a tract that includes Woodland Shopping Center and CenterPointe Mall, had the most retail space at more than 6.1 million square feet and a vacancy rate of 2.3 percent.

Rivertown Parkway with 2.3 million square feet of retail space was the area’s next-largest sub-market, which is home to RiverTown Crossings Mall. Alpine Avenue was the third-largest retail corridor with 2.2 million square feet.

The region’s oldest major retail sector, 28th Street SW in Wyoming, has 1.6 million square feet and a vacancy rate of 4.2 percent. Plainfield/Northtown offers 1.4 million square feet with a vacancy rate of 2.4 percent.

“The vacancy rate is more locational than anything else. You have cases where someone went out of business like Sears (Homelife) furniture. It’s a great site but there is little parking, so it’s really restricting possible tenants from going in there,” said Bussey of the site on 28th Street near Art Van Furniture.

According to Paramount Properties, more than 237,000 square feet of retail space was under construction in the first quarter, with 200,000 square feet of that space going up along Alpine Avenue. When that new space is finished, the Alpine corridor will become the area’s second-largest retail sector.

Paramount also reported that another 131,000 square feet of retail space is being planned, with more than 94,000 square feet targeted for Rivertown Parkway.

“Grandville continues to expand. Construction has started on the site across from the mall on Wilson. That will have a new La-Z-Boy (and) IHOP, and Design One has a 22,000-square-foot building they’re building there. We have three out-lots left and we already are in serious discussions about those,” said Bussey.

Retail lease rates ran from a low of $5.37 per square foot along Plainfield Avenue to a high of $28.50 per square foot on the East Beltline. First quarter sublease rates ranged from $11.17 to $18.57. But not all sub-markets sub-lease.

By the end of July, Paramount expects that new anchor tenants will be announced for CenterPointe Mall, formerly Eastbrook Mall; more restaurants will locate in the region; and a major department store will find a home at Lakes Crossing Mall near Muskegon.

Bussey said that retailers are coming here because the market is demanding more services, not because the space is available, and he felt there was enough demand for more retail.

“Grand Rapids, in fact, can sustain another mall. It would have to be something different than Sears, Penney’s and Younkers,” said Bussey. “Our economy could sustain that, provided it was different. If you look at Grand Rapids and compare it to most cities our size, we’re under-malled.

“We’re one of the fastest growing second-tier cities in the country,” he added.

Retail sales in West Michigan topped $12.5 billion last year.    

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