With cranes scattered across the Grand Rapids skyline and new developments announced nearly every week, the area will likely see more of the same in the real estate industry in 2016. Dozens of projects are slated to finish up or break ground in the coming year, keeping developers, contractors and real estate agents busy.
According to Stu Kingma, an associate broker with NAI Wisinski of West Michigan, there’s still a lack of inventory — especially in the industrial sector.
“We’ll expect more of the same,” Kingma said. “A year ago when I looked ahead to 2015, there was a red flag, there wouldn’t be enough supply for the demand, and there was some demand we couldn’t satisfy with the supply. We had to get creative.
“That same circumstance exists today.”
Kingma largely deals in the industrial market, but as Grand Rapids becomes a more desirable market, the retail, office and residential options for customers has thinned — at least until more of the projects in development are completed.
Sam Cummings, CWD Real Estate managing partner, said the lack of inventory narrative isn’t the whole story, especially when it comes to office space. He said, overall, office occupancy hasn’t moved up much the past few years and, as a result, office space rates are trending up rather slowly.
Cummings also said that, compared to similar markets such as in Ann Arbor, downtown Grand Rapids office space is priced rather low. He said the local market is correcting itself, and the current market gives older buildings the chance to be refreshed and turned into modern spaces.
As such, CWD will continue as it has for the past 20 years, mostly rehabilitating old buildings and providing Grand Rapids with new, quality spaces, Cummings said.
“I’m the last guy to complain: Relative to where we were 20 years ago, we’re doing great,” he said. “Demand is good, but it doesn’t light the world on fire. It’s just continuing to do what we do.”
From a residential standpoint, there will be more than a thousand residential units coming on line within the next year or two, providing both low-income and market-rate apartments.
Although there is pushback in some sectors of the community about what “market rate” actually means, Cummings said Grand Rapids is extraordinarily accessible and affordable compared to other markets. Multiple reports from across the nation have listed West Michigan as a favorable place for residential real estate in the next year.
In the industrial world, Kingma said there were more land sales than usual — a sign companies are deciding to build to suit their needs. Once companies move into their new buildings, their vacated premises will open up the supply in that market.
From the developer perspective in the industrial market, Robert Grooters Development Co. is working to provide new and improved industrial space for the area.
Currently under construction is a Kraft Avenue industrial space near the Gerald R. Ford International Airport. The four-phase, 800,000-square-foot project picked up its first tenant in November with office furniture systems and parts manufacturer Compatico claiming space.
RGD needs commitments to continue construction on several properties it has in the area.
“We’re trying to push and we know there’s demand,” said Kyle Grooters, sales and marketing assistant at RGD.
“We need people to come to us and say, ‘Go build.’”