The Grand Rapids commercial real estate market showed no signs of slowing down in 2016.
A steady national and local economic expansion continued to bolster the area’s office market. Health care, technology and financial sectors led the way in hiring, which led to further space utilization.
The average rental rate in Grand Rapids for Class A space is still trending up with vacancy holding steady. According to our research, here’s where Grand Rapids compares to other urban Class A office rates and vacancy rates in other regional markets.
Grand Rapids: $21.09 per square foot, 12 percent vacancy
Cincinnati: $22.83 per square foot, 12.5 percent vacancy
Columbus: $25.98 per square foot, 7.5 percent vacancy
Detroit: $23.09 per square foot, 8.4 percent vacancy
Louisville: $19.42 per square foot, 11 percent vacancy
Looking ahead, no one can perfectly predict the future. However, you can always know where to look. Here are a few things to watch in Grand Rapids commercial real estate coming into 2017 and beyond.
Urban redevelopment: With 300 Ottawa wrapped up, CWD has embarked on the redevelopment of 250 Monroe and will eventually redevelop the two Fifth Third buildings it acquired late in 2016. This, combined with the renewed public focus on Calder Plaza, should prove transformative for the area.
New construction: There are several new developments in and around the urban core that will add office square footage to the market. Orion’s new construction for Warner Norcross & Judd will not add inventory but rather leave a void behind. In addition, there is a planned office component in the new mixed use project on Area 4 and Area 5 anchored by a new cinema. Finally, there will be new office space available on the West Side development anchored by Meijer.
Outside investment: Although most of the institutional outside investors have concentrated on the multi-family market, Grand Rapids is getting noticed more and more. Do not be surprised to see more outside money coming into the market.
City property: Although speculative at this point, the city is investigating the disposition of the riverfront property that it owns at 201 Market Ave. Based on the interest and activity on this parcel, more deliveries could be coming through the pipeline from the city.
What all this means for Grand Rapids remains to be seen. However, based on the delivery dates of many of these projects, I suspect that the market velocity will be relatively flat or produce modest gains in 2017, with a spike in inventory and velocity in 2018 and 2019.
Regardless, it will be exciting to see where 2017 takes the region.