Report: Class A office space tightens
Despite new downtown buildings coming online, vacancy continues to shrink.
Even as new office buildings come online, Class A office vacancy in downtown Grand Rapids continues to tighten, according to the yearly skyline report from Jones Lang Lasalle.
The report noted the overall skyline vacancy is 12.7%, down from 19% in 2018.
Rent growth 2019 continues to plateau, down 1.5% from last year to its current $21.73 per square foot average. When JLL conducted the same report in 2018, the direct average asking rent for prime office space in the core of Grand Rapids was $22.07 per square foot, and overall vacancy was 19%.
The Warner Building delivered fully leased this summer, adding 118,000 square feet of Class A inventory downtown and providing a new home for anchor tenants Warner Norcross + Judd and Chemical Bank.
Acrisure, a global insurance brokerage base in Caledonia, announced plans to occupy the office component at Studio Park.
Jeff Karger, senior vice president of brokerage for JLL, said the addition of the newly constructed Warner Tower and the promise of a new office tower connected to the ongoing Studio Park development will lead to significant changes in the central business district.
“With Acrisure announcing that they will be moving their corporate headquarters downtown, the office impact south of Fulton will be substantial,” Karger said. “Also, the Fifth Third Building will see a significant increase in vacancy when Warner moves over to Warner Tower. The move will leave a significant vacancy at 111 Lyon.”
Acrisure has major plans for the Grand Rapids CBD, according to previous Business Journal reports. The firm’s move will happen in two stages. The company has initially leased 105,000 square feet. Construction on the Studio Park office tower will begin this calendar year and should be done before the end of 2020. Acrisure’s plans also involve expansion of up to 175,000 square feet in a second building.
Warner Tower also is fully leased thanks to a new player in the Grand Rapids CBD. Van Wyk Risk Solutions in September moved into 17,000 square feet of Class A office space. The firm moved its headquarters from 2237 Wealthy St. SE.
There are two buildings with notable vacancies in the report. 250 Monroe Ave. NW, has a recorded 157,000 square feet of rentable building area. The building is 49.5% leased.
The historic building at 37 Ottawa Ave. NW, while not new, is newly renovated, and offers 80,000 square feet of leasable office space, according to CWD Real Estate, which owns and manages the building. The building reopened earlier this summer.
Long-time tenant Townsquare Media still is present at 37 Ottawa, and Detroit-based office furniture dealer MarxModa confirmed it has been in the building since mid-April.
According to the JLL report, 37 Ottawa is about 14% leased.
JLL’s skyline report is an annual highlight of the “trophy market” in 57 markets across the U.S. and Canada. The report is separate from a standard office market report and defines the trophy market as core office buildings that consistently achieve rents in the top 10% of the Grand Rapids CBD and are superiorly managed. Owner-occupied properties are excluded from the analysis.
JLL is a Chicago-based commercial real estate firm with offices in Grand Rapids and Detroit. This is the third year the firm has conducted a skyline analysis for Grand Rapids.