Real Estate Looks Promising
The health care industry is a bright spot in the 2006 West Michigan commercial real estate market, according to outlooks from Grubb & Ellis.
“The one really big spot is medical,” said Duke Suwyn, president and CEO of Grubb&Ellis/Paramount. “Medical is going to stay very strong, very hot, very active.”
The 2006 Economic and Commercial Real Estate Forecast took place Jan. 13, as Grubb & Ellis/Paramount and Grubb & Ellis Focus, which operate along the lakeshore, addressed community members in Grand Rapids and Holland.
For West Michigan, growth in the area primarily hinges on development of the office market through the medical field.
“We don’t see an end in sight there,” said Tom DeBoer, vice president and office and investment adviser.
With more than 1 million square feet of medical or medical office space to be completed by 2008, the health care industry is leading the area in development. Industrial, retail and investment areas also are showing promise.
Health care projects in downtown Grand Rapids in 2006 include the $78 million, 200,000-square-foot Lemmen-Holton Cancer Pavilion at Spectrum Health’s Butterworth Campus; the $190 million DeVos Children’s Hospital; and Phase II of the Van Andel Research Institute — a 280,000-square-foot project that will cost more than $120 million and bring 400 new jobs to the area.
The firm’s 2006 Real Estate Forecast-Great Lakes edition also cites medical projects anchoring the development at the recently completed M-6 South Beltline, including Metro Health’s new hospital, Saint Mary’s Health Care’s new 86,000-square-foot outpatient campus, and a new Spectrum project at Wilson and M-6.
Retail also is strong in West Michigan, with restaurants and big-box retailers eyeing M-6 for development.
Suwyn said 2005 was the second year of “positive absorption” in Grand Rapids since 2000, a reduction in vacancies that he hopes will continue for 2006.
One of the largest factors for the year will be the potential sale of Steelcase’s properties, which include nearly 206 acres and 5 million square feet of buildings, Suwyn said.
“What happens to that will have an impact on absorption,” he said.
Other industrial leaders also are having an effect on the market. Automotive supplier Lacks Enterprises completed phase one of an expansion, adding a 156,400-square-foot plating facility at an estimated cost of about $17.5 million, according to Grubb & Ellis. X-Rite Inc., a hardware and software company, also is making an impact by investing $24 million on renovating 350,000 square feet of space.
In Holland, the industrial market is showing strong signs of recovery, such as Tiara Yachts’ $14 million addition, Gentex Corp.’s $28 million new corporate headquarters, Haworth’s administrative office expansion, and ODL Corp.’s new 107,203-square-foot manufacturing plant.
Though the industrial market is still in a recovery phase, Richard Bach, national director of market analysis for Grubb & Ellis, said manufacturers that have decided to stay in the area are adjusting and learning to compete globally.
“The manufacturers that are left in this country are doing quite well,” he said. “The industrial market in general is really as hot as I’ve ever seen it.
“I’m optimistic overall for the commercial real estate investors market, but I think we may see some cooling in 2006,” he said. “I really see good times ahead for commercial real estate, especially the leasing side, for the next four years.”