Suburban economic growth creating additional regional business impacts
Business Journal reporting this week reflects several large investments in the suburban Grand Rapids markets, including major housing projects, while new project development declines in the downtown. The reports this week reflect the trends the Business Journal noted in 2017, as banks and developers became deliberate in transitioning holdings while waiting to measure existing residential project digestion in the downtown market.
Grand Rapids’ Economic Development Office reported in January a decline in new private investment in its project pipeline, with $173 million in new private investment spread across 12 projects, compared to 2016’s reported commitments of $566 million in new private investment across 38 projects. That pipeline for 2018 includes projects already announced and/or under construction; projects coming to fruition in the next year.
During the past 15 years, the Economic Development department assisted with an average of about 38 projects per year. Orion Real Estate Solutions President John Wheeler noted the city of Grand Rapids won’t be as cautious in apartment development and will let the private developer market decide.
Wheeler explained, “We had to shift that focus a little bit. As far as downtown holdings go, we’ve got enough at this point, so we’re taking a pause on any new residential developments downtown. We’re focusing on the suburbs until all the new projects get stabilized.”
Developers are following a trail of demand in the suburban market, and it is fueled by new jobs in Caledonia, Sparta, Cascade and Ada.
Significant announcements this week included Sparta’s attraction of a Virginia-based security engineering and consulting firm investing $621,000 for its business development and 27 high-tech jobs. Such investment expands the Grand Rapids regional cluster in IT.
IT also is a driver in Caledonia, where Amazon has announced it will construct an expansive fulfillment center, nestled next to the Switch pyramid and surrounding tech operations.
Wheeler’s focus is to invest more in suburban living. He also pointed out suburban rent is cheaper on average, and vacant land supply is higher. The townhome concept has found a significant number of buyers, from families with school-age kids to young professionals and empty nesters.
Rockford Construction managing partner Mike Mraz also indicated the company was holding off on any new plans in the downtown, with more than 95 percent of its properties leased. “We’ll see what the market will look like when they are all delivered,” he told the Business Journal.
The suburban expansions, particularly in IT, bode well for regional economic diversity.