Economic Development and Real Estate

All three real estate markets show gains

Fourth quarter figures for industrial, office and retail were up.

February 22, 2013
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All three real estate markets show gain
The office vacancy rate in the Central Business District is at 23 percent.
While the area’s industrial real estate market showed strong signs of activity during the fourth quarter of last year and the office market showed steady and slow growth, Colliers International of West Michigan said the retail market had a banner quarter.

Colliers International reported that retail had its most positive absorption of space in a single quarter since the recession began to make itself felt in 2007. Almost 70,000 square feet of vacant space was utilized over the year’s final three months. More than 166,000 square feet were leased or purchased for the entire year, a figure more than double 2011’s absorption.

The firm said the good result didn’t come as a complete surprise because activity in the market had been picking up over the previous quarters. Colliers International highlighted two factors that fueled interest in the sector.

One was the positive press the new Ionia Avenue Downtown Market has received. The other was the Grand Rapids Downtown Development Authority having hired consultant Robert Gibbs of Birmingham, Mich., to evaluate the future of retail in the district last summer. Gibbs concluded that downtown could support another 566,000 square feet of new retail.

“Downtown demographics are attracting more national tenants who are now realizing the potential of what Grand Rapids has to offer,” read the Colliers report.

At the fourth quarter, the overall vacancy rate in the retail market was 12.9 percent across nearly 16.5 million square feet of total space. But the Rivertown corridor in Grandville only had a vacancy rate of 8.6 percent with a new Cabela’s opening in CWD Real Estate Investment’s Bucktown in a few weeks.

Over the last three months of the year, Colliers International reported the office market showed positive space absorption for the eighth straight quarter. That absorption rate, however, slowed at the end of last year to 59,200 square feet, down from the 66,735 square feet that came off the market in the previous quarter.

Despite the slower absorption, the overall vacancy rate still fell to 22.9 percent at the end of December. Office vacancy is the lowest in the East Paris Corridor and in the southwest sector where the rates have ranged around 18 percent. The Central Business District was at 23 percent. The market has 17 million square feet of space.

Colliers also reported the industrial market carried on its third-quarter momentum through the final three months of the year as it absorbed 370,600 square feet. The year-ending period marked quite a turnaround from the final three months of 2011 when 127,000 square feet was vacated.

“The resurgence of manufacturing, particularly in the automotive industry, is driving the continued recovery of the West Michigan economy. The majority of corporations that are increasing their space requirements are located in the southeast quadrant,” read the Colliers report.

The overall vacancy rate at the end of last year for the industrial market was at 7.3 percent. The industrial market has 108 million square feet of space.

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