Local Real Estate A Steady Investment

May 17, 2002
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GRAND RAPIDS — According to the Grubb & Ellis/Paramount Properties 2001 Real Estate Forecast, the West Michigan market continues to be a good place to invest in real estate. The commercial real estate broker’s report calls the market an opportunistic one.

Recent investments in the new convention center, the new county courthouse, the new downtown Grand Valley State University campus, the new Van Andel Institute and the remake of the U.S. 131 S-Curve paved the way for further investment, having dropped nearly $500 million worth of construction projects into the city’s lap.

But those high-profile investments aren’t the only ones being made in and around Grand Rapids. The revival of the Berkey & Gay, City Centre and the Ferguson Renaissance Center must also be included. As should Cherry Street Landing, which is moving forward with the downtown campus of Western Michigan University, and Celebration! Village, which will add office space, retail shops and entertainment to the city’s northeast end.

In all, new construction investment totaled $1.1 billion for 7,210 projects, according to data compiled by The Right Place Program and found in the Paramount forecast. Most were residential projects, over 6,300, but more than 800 were commercial.

How come so much and so many? Well, it’s the economy, Bill. The local economy has been blossoming for years, a factor that has made the area a good place to invest.

“Our companies are still doing fine as far as the firms in the furniture industry. They’re having a great year. Even the companies that are doing auto, we’re hearing some bad pieces, but frankly, overall the companies are doing good,” said Duke Suwyn, CEO of Grubb & Ellis/Paramount.

Suwyn characterized recent national news reports of workers being laid off in a variety of industries as being potentially beneficial locally.

“The reality is companies here are so starved for workers that some shuffling of employees, although unsettling, is going to help some of our companies. We’re still down to an almost unworkable low unemployment count,” he remarked.

In the past decade, area employment grew by 36 percent — a rate more than double the statewide growth of 16 percent over the same period. Figures from The Right Place Program show that nearly 155,000 new jobs were created in the region from 1988 to 1998, and 29,000 of those were in manufacturing, which accounted for a 20-percent growth in that sector.

Suwyn said that Paramount’s industrial and manufacturing clients are taking more space and expanding regularly.

“We’re taking market share away from other parts of the country, yet today that is still happening. Frankly, we have great companies and a great market position,” he said. “What we hear on the street and what we hear in the news are two different things.”

There will be more investment in local real estate this year. How much more remains unknown. One transaction that is expected to occur shortly is in the industrial market. First Industrial Reality Trust Inc. is thought to be close to selling its local properties to GE Capital Real Estate, a division of General Electric. At first, the closing was set for the end of 2000. Now the word is it could happen sometime this month.

Although the local market seldom makes national headlines, Suwyn felt it would continue to draw investors like GE Capital Real Estate.

He feels they won’t get flashy, bell-ringing returns on their money. But he thinks their investments will be safe and will grow here.

“With the dot-com bubble bursting, I’m not so sure that investors aren’t going to be looking at a stable economy like Grand Rapids, which is a steady, boring, consistent growth market,” said Suwyn.

“I think there is going to be some investors looking for stability. I don’t think there is a better, more stable industrial market than Grand Rapids.”

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