Downtown Grand Rapids Inc. is in office space at 29 Pearl St. NW, a site that had been vacant for years. Courtesy Colliers International of West Michigan
Space continues to be gobbled up in the office real estate market.
Colliers International of West Michigan reported the recently completed third quarter marked the 11th consecutive quarter the vacancy rate fell: 226,523 square feet were absorbed from July through September.
The downtown market started the positive net-absorption trend, but the Colliers report said the office sectors in the Cascade, East Beltline and southwest districts have held their own.
Over the past three months, 105,578 square feet of office space became occupied in the Cascade sector. More than 28,500 square feet were taken along the East Beltline district, and over 25,000 square feet was leased in the southwest sector.
The downtown market saw 27,242 square feet absorbed with the new Downtown Grand Rapids Inc. taking over roughly 5,000 of that square footage in ground floor space at 29 Pearl St. NW. The site had been vacant for years.
The Colliers International report described the third quarter’s absorption rate as “even.”
“The even distribution of absorption across submarkets speaks to the user interest-level shift in our market. The traditional class A buildings, such as 99 Monroe and Bridgewater Place, are still widely seen as the ‘places to be’ in the Grand Rapids area,” read the report.
“However, occupant interest has risen in suburban spaces such as the East Beltline, Cascade and East Paris.”
Overall, the report said activity and absorption declined during the third quarter compared to previous three-month periods, especially for class B buildings because of low inventory for that space. Transactions also leveled off in the third quarter.
Colliers International was involved in three office sales during the last quarter, with two occurring in the southwest sector and one on 28th Street SE. The largest office address sold had 24,210 square feet, while the smallest was 8,500 square feet.
“Investment opportunities in West Michigan are continually becoming less readily available with the majority of office properties changing hands in the past 18 months. Investment properties are still generating overwhelming interest from local and national firms,” read the report.
The market has 634 office buildings with 16.1 million square feet. The overall vacancy rate is 20.6 percent. A year ago that number was closer to 25 percent.
“New construction projects are monopolizing the commercial real estate rumor mill in West Michigan since it is the only option for most users seeking upper echelon space. The Cascade area is seeing its first new class A office construction in five years at 4362 Cascade Road,” read the Colliers International report.
“Another new project is starting on the East Beltline and projects are being discussed for Glenwood Hills and Kenmoor, as well as several new downtown office buildings.”