Retailers hungry for prime real estate in GR
Lack of high-quality inventory forces realtors to think outside the box.
Mark Ansara, associate vice president of retail for Colliers International West Michigan, said retailers are having a hard time squeezing into prime real estate.
“Most of that activity is right around main corridors, high traffic locations, by the malls, Woodland, Centerpoint … and Rivertown Crossing. … And then some stuff on Alpine is showing a lot of activity now,” he said.
Even with Class A inventory in a crunch, Ansara said very few retailers are settling for Class B and C space based on lack of visibility from the road and proximity to other venues with high activity.
“They don’t necessarily want to be next to a Discount Tire,” he said. “They want to be where the action is and where the cars are.”
Rod Alderink, principal and associate broker at NAI Wisinski West Michigan, agreed Class A space is in high demand but said Class B and C also are getting attention as new players are drawn to the market and pre-established tenants look to expand.
“I think some of that is being driven by the name recognition that Grand Rapids is getting on a larger scale, with the low unemployment rate we have and the economy as strong as it is now,” he said.
The lack of high-quality inventory is forcing realtors to come up with creative ways to meet their clients’ needs. Ansara gave the example of the Chick-fil-A that recently opened on 2750 East Beltline Ave. SE in Grand Rapids.
“That was a parking lot. No one ever thought it could be used … they literally shoehorned it into that corner next to Krispy Kreme,” he said.
With heightened construction costs, Alderink said the retail landscape is not seeing a ton of new development, aside from the historically active retail meccas of 28th Street and East Beltline Avenue.
As Knapp’s Crossing on East Beltline Avenue continues to develop, its rental rates climb well above the market average. According to Colliers International’s retail report, East Beltline ran an average $33.69 per square foot in the first quarter.
The center attracted some higher-end lifestyle concepts in the first quarter, including Woodhouse Day Spa and Orangetheory Fitness.
Comstock Park also is seeing new retail development with the construction of a three-building shopping center at 4076 Alpine Ave. NW. The development already has secured two tenants, Freddy’s Frozen Custard & Steakburgers and Jimmy Johns, which plan to move in during late summer.
NAIWWM’s quarterly report attributed the area’s housing and population growth to the new development.
Ansara added retailers also are willing to bide their time, waiting for other players to go out of business and free up space before they expand or jump into the market for the first time. The beginning of the year, after the holiday season, is particularly volatile as holiday performance can either make or break retailers.
“When the holiday season’s up and we start getting closure announcements, and then we already have a list of who wants to be there,” he said.
Toys R Us filed for liquidation in March, forcing it to close or sell all U.S. inventory. The store on the corner of 28th Street and East Beltline Avenue now presents an opportunity for new activity, as Ansara said there already are a half-dozen retailers “chomping at the bit” to find a new use for the space.
But the building itself is obsolete and likely will be demolished. Aside from there being no retailers in the current market who want to maintain a 50,000-square-foot box, the box itself sits on an uneven grade.
According to Colliers International, overall retail vacancy in the first quarter was 8.18 percent, with an average asking rent of $14.57 per square foot. The highest vacancy was in the 28th Street SW submarket, with 14.75 percent available inventory and rent at $10.31 per square foot.
Colliers International also tracked 12 retail projects, totaling 344,539 square feet, under construction throughout West Michigan in the first quarter.
Comparatively, NAIWWM saw an overall vacancy of 6.9 percent and an average rent of $10.11 per square foot. The highest recorded vacancy was in the Northeastern submarket at 10.3 percent and $8.20 per square foot.
CBRE Grand Rapids observed a total vacancy rate of 10.5 percent and an average asking rent of $6 per square foot. The highest vacancy was in the Southwest submarket at 15.4 percent and an asking rate of $8 per square foot.