Office Demand Remains Strong
A vast array of new office space is becoming available in the tri-county area, with new developments planned or taking shape in downtown Muskegon along the waterfront, in Grand Haven and in Grand Rapids. While some worry that the building "boom" could leave some projects without tenants, others see a pent-up demand for space in particular areas.
What may be most significant, however, is the array of types of office space that will be presented to the market, ranging from medical offices and labs to the more classic type of office space.
In this issue, Matthew Abraham, research manager for Grubb & Ellis|Paramount Commerce, notes a particularly strong demand for Class A office space, especially in downtown Grand Rapids. And that will drive lease rates further upward. The average rate in the city's Central Business District is $21.74 per square foot; Class B structure rates were $16.76 in the same area. Abraham notes the higher rates also are the influence of more buildings under consolidated ownership (see the story on page 15).
Abraham's office market survey showed the stretch of M-6 linking I-96 and I-196 is drawing a great deal of interest among office developers, particularly those awaiting the opening of the new Metro Health Village.
The "Medical Mile" of Michigan Street — home to the Van Andel Institute, Spectrum Health facilities and the Grand Valley State University Cook-DeVos Center for Health Sciences — has drawn several new office building plans, including those for the Women's Health Center of West Michigan, Mid Towne Village, and Michigan Street Development, the largest office development in the city since construction of Bridgewater Place.
The $150 million Michigan Street Development will open in phases beginning this year, boasting at least three medical office towers, with 100,000 square feet reserved for lab space.
Another project along Medical Mile, Mid Town Village, includes brownstone residences as well as office, retail and medical office space.
As this issue was going to print, the Michigan State University Board of Trustees was expected to announce where it would situate the new MSU West Michigan Medical School, and Michigan Street Development was among the "top sites" under consideration.
Abraham noted that existing building use and conversion to apartments and condominiums is squeezing office potential in the finite business district in downtown Grand Rapids, a factor that may also push rates upward. Or it may create demand for another large office project, perhaps like that proposed several years ago by Dan DeVos for the current Ellis parking lot across from the Trust Building.
In any case, demand remains strong and that's good news for this regional economy.
— Carole Valade