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No Slowdown Projection In Area Construction Forecast
GRAND RAPIDS — More industrial sites and mid-sized buildings are needed locally. The suburbs should get additional office space this year. And retail will continue to expand, most notably in the southwest corner of the county.
These are the headlines for the big three real estate markets from the 2001 Real Estate Forecast, an annual effort compiled by Grubb & Ellis/Paramount Properties of Grand Rapids.
Despite recent reports to the contrary, Grubb & Ellis/Paramount CEO Duke Suwyn said the local industrial market remains strong. The vacancy rate is solid at about 3.6 percent and the rental rate is good at $4.09 per square foot. In fact, for some uses, more space is needed.
"We don't have an overabundance of buildings for sale. So if you are a user who needs a nice 25,000-square-foot manufacturing building, there isn't a lot out there," he said.
Suwyn said that few new industrial sites have been added to the market's roster in recent years, and maybe the time has come for some more properties to be developed. But he doesn't feel that these new developments should be the standard big box. Instead developers should concentrate on building mid-sized buildings that meet the needs of manufacturers.
"We're certainly going into the year with a good mix of product. I think we're short of 25,000 to 35,000 mid-range buildings, especially manufacturing facilities, for sale. There aren't that many available for lease," said Suwyn.
"I don't think we have an overabundance of industrially-zoned land with utilities placed in the right areas. There are certainly some pockets of demand for industrial land that is hard to find. The 10-acre site that's fully approved, ready to be built on with zoning in place, we still don't have a whole lot of inventory on that right now," he added.
Suwyn said much of the industrial inventory was too far out, near 84th Street and Dorr. He would prefer that new industrial space be built near the Gerald R. Ford International Airport, an area he readily admits is fairly crammed.
"So there still needs to be some land brought online," he said. "But we're in great shape. "I think we're still going to see a pretty active market."
Paramount predicts that the hot spots for Class A office development will be in the suburbs. Quality suburban buildings in the metro area have a vacancy rate of 8.7 percent, and are not able to meet the demand for space. So look for new construction this year in two corridors: Cascade and East Paris and along the East Beltline north of I-96.
Also, opportunities for new office and industrial parks should develop along the 20-mile route of M-6, also known as the South Beltline and Paul B. Henry Freeway.
But don't expect much in the way of office expansion for the Central Business District until the current vacancies fill. Once that happens, new construction could take place on the west side of the Grand River and join Bridgewater Place in that niche of downtown.
Spillover from the Van Andel Institute could create a demand for more medical office space downtown. Another possibility for growth may come from telecom companies, which are known to fill older buildings in urban centers. The Class B vacancy rate downtown was 6.6 percent, with the average asking rate at $15.34 per square foot per year.
As for the CBG Class A vacancy rate, it was lower than the suburban rate at 4.5 percent. The average asking rates were nearly identical, though: $19.30 per square foot downtown and $19.07 in the suburbs.
In the local retail real estate market, the Paramount forecast shows more expansion for the Rivertown Parkway corridor, which spills into both Grandville and Wyoming. The former Herman Miller pavilion is being readied for a retail center that will feature a Lowe's Home Improvement Warehouse. Other area projects include a proposed store from Meijer Inc. and another retail center north of the RiverTown Crossing Mall.
Meijer also plans to open stores in Holland, Muskegon, Cedar Springs, Greenville, and in Standale at the site of the old Vista Drive-In Theater.
Centerpointe Mall, the former Eastbrook Mall, is being renovated this year, and North Kent Mall may have the same work done. In addition, construction has begun on the $55 million Celebration! Village, a unique mixed-use development that will have a new Jack Loeks 20-screen theater. One of those theaters will be the state's third IMAX screen.
By the way, the Paramount report shows that lease rates in West Michigan are the highest in the RiverTown Parkway corridor at $22 per square foot. At the other end of 28th Street, the area featuring Woodland Shopping Center and Centerpointe Mall, lease rates run about $18.50 per square foot.
Besides having the highest lease rate, Rivertown Parkway has the area's lowest retail vacancy rate of less than 2 percent. The retail stretch along Plainfield Avenue NE has the biggest vacancy at 9 percent.
For more information on the Paramount report, either go to paramountprop.com or call 774-3500.