Class A: The best experience in office leasing
With the West Michigan economy booming, companies are scrambling to find office space that will accommodate growing demand for increased business.
Few segments of the market are feeling the pinch more than Class A offices in Grand Rapids’ Central Business District where occupancy rates have reached 90 percent, the highest it's been in years.
In the second quarter alone, Spectrum Health expanded its presence within Bridgewater Place and accounting firm KPMG leased more than 18,000 square feet at 99 Monroe. As demand for space continues to grow, rental rates have increased. Downtown spaces are renting at an average of $22.34 per square foot in Class A buildings.
What exactly constitutes a Class A leasing experience, and why are companies clamoring for more space? It’s the best of class for the market. Our CBD currently houses multiple Class A structures, including Bridgewater Place, 99 Monroe, the PNC Building at 171 Monroe, 45 Ottawa, and the 200 and 300 Ottawa buildings.
Five key attributes set a Class A office building apart from other office buildings:
- Location. In particular, companies are looking for space in the downtown area close to highways in the center of business activity for the community.
- Construction quality. Top-flight materials and top-flight construction companies are involved.
- Amenities and services, such as covered, secure parking. Employees don't want to walk two blocks to work. Other amenities and services to consider include health clubs/workout areas, commons areas and quality food service operations in-house.
- Professional management. There's an expectation that the building will be clean and professionally managed.
- Conference centers and meeting rooms complete with full multimedia capability.
Perhaps the demand for Class A office space downtown can be best illustrated by what has happened with the 99 Monroe building since Franklin Partners acquired it in June 2012. At the time, the building was half empty. Franklin Partners invested millions into redeveloping the space to add high-end finishes and amenities, upgrading the building to Class A space. Tenants began flocking to 99 Monroe. Today, the building is leased in full.
So what happens moving forward? With available Class A space continuing to shrink throughout downtown and most available existing buildings already having gone through remodeling, the answer appears to be new construction. Fortunately, there are several new projects under development that will address the increased demand. Construction is in progress on Arena Place at 45 Ottawa Ave. NW, a building combining Class A office space with other uses. The projected opening is February 2016. Meanwhile, city officials recently approved construction of Twelve Weston, a 12-story Class A office building in the Heartside district. Adtegrity has already signed as the building's lead tenant.
With the region’s economic growth expected to continue well into the foreseeable future, the issue of Class A office space will continue to be a challenge — one developers and business leaders are prepared to address. Look for more projects like Twelve Weston coming before city leaders in the near future.