Office Vacancy Rate Falls
GRAND RAPIDS — The overall vacancy rate for the metro area office market stood at 11.6 percent for the second quarter. Not a good number, but an improved one, as at the start of the year that figure was closer to 15 percent.
According to Grubb & Ellis/Paramount Properties, a Grand Rapids-based commercial real estate firm, Class A offices in the central business district had a vacancy rate running about 9 percent at the end of March. In comparison, the rate for Class A and B suburban buildings and Class B downtown buildings stood near the 12 percent mark.
Overall, 2.05 million square feet of the total 17.6 million square feet in the metro market was vacant. In January, nearly 2.7 million square feet wasn’t leased.
The quarterly report showed that another 210,000 square feet of office space was under construction in early April.
Scott Morgan, Grubb & Ellis/Paramount vice president and office specialist, recently told the Business Journal that the demand for owner-occupied buildings in the suburbs has continued because of low interest rates, the lowest in four decades. He added that new leases in downtown buildings have been slow to non-existent, as many tenants renewed their contracts early and cashed in on the savings.
Morgan also said that a lot of sublease space was available in the loft office buildings, structures that were once the rage of the local market, but which have cooled off recently.
Of the area’s six major office corridors, those along East Paris Avenue and Breton and Burton had the lowest vacancy rate for the second quarter, while Centennial Park had the highest.
Office Corridor Vacancy Rate
Centennial Park 16.5%
East Beltline 11.4%
East Paris 6.6%
Excluding those six, office buildings in the general northeast sector had a vacancy rate of 10.7 percent; the northwest was at 11.4 percent; the southeast was at 14.5 percent; and the southwest sector had a rate of only 6.5 percent.
Morgan said his firm expects that leasing activity will pick up during the second half of the year, as tenants are likely to take advantage of vacancies in the downtown and suburban markets.