Practically every report looking back at the economics of 2014 in West Michigan points to growth, and the Commercial Alliance of Realtors West Michigan report is no exception.
CARWM, which recently released its 2014 Commercial Real Estate Market Review, combed through last year’s industrial, office and retail sectors of the community and reported business growth, with some numbers finding their way back to where they were before the Great Recession.
The Industrial Specialty Group of the Commercial Alliance of Realtors prepared the report.
In the industrial sector, the report found that it’s currently a “landlord’s market.” In 2014, the industrial transactions in West Michigan increased by 38 percent over 2013, a growth that will likely lead to a shortage of inventory and the demand for new developments.
2014’s sales dollar volume increased by 33 percent: $67,829,735 over 2013’s $59,337,030. Rents are also increasing, with the lease rates ranging from $1.50 to $5.50 per square foot.
“Property values are very close to where they were prior to the recession, and in some cases, coming in higher,” said Bob Horn, vice president and industrial advisor at CBRE|Grand Rapids.
The report showed the most notable transactions for the year were the sale of the former Steelcase property at 5565 Broadmoor Ave. SE, Grand Rapids, to Franklin Partners; the sale of the last suite available at Avastar Park, 2150 Alpine Ave. NW; and the Dicastal deal in Greenville.
In the office sector, the report found office leasing increased, with much of the growth around the edge of downtown areas and suburbs. In 2014, leased office spaces increased by 43 percent over 2013, and sales transactions were also up by 6 percent. Currently, the average lease rates in the downtown market area are about $16 to $23 per square foot.
“Many of the buildings that sold in 2013 have completed renovations and updates and are now quickly being absorbed by tenants, indicated by the large increase in leasing activity,” said Jeff Karger, director of office services at CWD Real Estate Investment.
Many CARWM members also commented that a number of clients are seeking downtown office space in order to attract young talent, who generally prefer to work downtown. This, however, has not deterred additional interest in suburban office space, which is deemed more beneficial for parking.
“The suburban office market is experiencing a consolidation of medical space, as more medical groups are becoming part of hospital groups,” said Jason Makowski, office service provider at NAI Wisinski of West Michigan.
“That being said, we are seeing new office development occurring in the suburbs, which hasn’t happened in quite a while,” he added.
In the retail sector, the report found that combined sale prices reported for retail properties for 2014 increased by 53 percent over 2013. In 2014, retail property sales hit $55,516,977, compared to $36,253,140 in 2013.
Additionally, retail sale transactions increased by 34 percent in 2014 from 2013, and there was a 49 percent increase in lease transactions. Lease rates for current structures are ranging from $8 to $20 per square foot, with newly constructed retail properties headed upward from $25 to $35 per square foot.
The report concluded that “high consumer confidence” drove retail in 2014, noting holiday sales reached a rate that hadn’t been seen in years, up by 4.1 percent.
Rod Alderink, commercial realtor at NAI Wisinski of West Michigan said low gas prices also helped and named East Beltline Avenue, Alpine Avenue and the area surrounding RiverTown Crossings Mall in Grandville as primary corridors for retail expansion and desirability.
“Grand Rapids is a place that out-of-state investors see value,” said Earl Clements, principal at Colliers International | West Michigan.
“The big boys, who could invest anywhere in the world, are choosing West Michigan. And it has been fun to show off this area.”