Blockbuster industrial deal has chain reaction
With less than two months left in the calendar year, this deal could very well qualify as one of the biggest industrial transactions of 2011 — if not the biggest.
To begin with, R.L Adams Plastic Inc. last month leased nearly 100,000 square feet of space at 7377 Expressway Drive SW, near the intersection of 76th Street and Division Avenue.
R.L. Adams manufactures foam products for commercial and residential use, and also specializes in the production of extruded polystyrene goods.
John Kuiper, a principal with Colliers International/West Michigan, represented the company in the transaction. “It is part of a bigger deal, and it’s one that has been kind of under the radar. But this is part of a larger transaction,” said Kuiper.
Kuiper explained that he and Steve Marcusse, also a principal at Colliers, helped Lumbermen’s Inc. purchase a 200,000-square-foot building on 20 acres at 8715 Byron Commerce Drive in Byron Township in late September. That purchase started a chain reaction.
When Lumbermen’s bought the building for its own use, the purchase displaced some tenants. One was R.E.D. Stamp Inc., which has been making cigarette tax stamping equipment here since 1998. The company ended up leasing 46,000 square feet at 3800 Patterson Ave. SW in Grand Rapids Township. Another displaced tenant was R.L. Adams Plastics.
In all, the transaction’s domino effect allowed Colliers to create three deals in a trio of structures that absorbed nearly 350,000 square feet of industrial space.
“That was a deal that was in the works for quite a while. It was pretty quiet. But at the end of the day, you end up with a 200,000-square-foot sale, a 46,000-square-foot lease, and a 100,000-square-foot lease,” said Kuiper, who added that Duke Suwyn, Colliers CEO, represented the landlord in the Expressway Drive lease.
“There were a lot of moving parts from a competitive standpoint. In the southwest side of the market, that was a huge positive, because all of a sudden you take 350,000 square feet of competitive product and take it off the market with one transaction,” he added.
Ronald L. Adams founded the plastics company in 1978. Today, its chairperson is Lilo Adams, Ronald’s wife, and the firm’s CEO is Ronald’s son, Craig Adams. Ronald Adams passed away in 1982 and the family not only held on to his start-up firm but grew the company.
Lumbermen’s has been in business since 1955 and serves much of the Midwest from its base in Grand Rapids and through offices in Indiana and Ohio. It is owned by its employees and offers the construction industry a broad range of building supplies.
“They’ve been better, faster and smarter than anybody else in their field. They’ve been growing and reinvesting, obviously, in buying a building like this while others in their industry are either going out of business or are hurting,” said Marcusse of the company’s national competition such as North Pacific Lumber, which filed for bankruptcy protection.
“If you look at the national companies that are involved in building supplies and distribution, Michigan hasn’t been high on their lists. In fact, ProBuild has shut down a lot of locations; 84 Lumber has shut down locations,” said Kuiper. “So you’ve had a lot of the national players in that market that have absolutely shrunk their footprints or removed their footprints from Michigan, and Lumbermen’s has been on pretty solid ground.”
In a separate transaction, Kuiper and Marcusse represented the landlord of 5079 33rd St. in Cascade Township, an industrial site that saw a medical device manufacturer agree last month to a 10-year lease for 85,000 square feet. “It was a good, solid deal and another huge positive sign that our local manufacturers are doing well, growing and reinvesting back in the market,” said Kuiper.
Marcusse pointed out that quite a few manufacturers have taken impressive steps forward over the past few years. Kuiper noted that the gains being made locally in the industrial market will likely spill over into the office and retail sectors in the future.
“I do think the industrial side of the market is extremely active. It has a refreshingly positive atmosphere where people are moving forward and making decisions,” said Kuiper. “We see that as a huge step in the right direction.”