Demand is rising while available space becomes limited.
Rising rental rates, longer lease terms and fewer concessions are trends that should continue until at least fall in both the office and retail markets, according to a recent report issued by Colliers International|West Michigan.
As inventory for both specialty groups continues to decrease, construction of mixed-use buildings such as Arena Place, Twelve Weston and Fulton Place present creative solutions to growing vacancy scarcity in the central business district.
“The introduction of mixed-use developments to the West Michigan marketplace, particularly those within the downtown Grand Rapids CBD, are addressing a wide array of concerns as demand continues to increase and available space becomes more limited,” said Mark Ansara, retail advisor for Colliers.
“With the appeal of an urban-living landscape growing, providing space to incorporate a retail component will only help attract residents and tenants to vertical spacing,” he said.
Location and functionality are driving office space decision-making, with price point becoming secondary to talent acquisition and retention, according to the Colliers report.
With Grand Rapids being ranked the No. 2 city in the country for finding a job by Forbes during the second quarter, the re-evaluation of what matters most when creating an office space is a more important factor than in previous years, said David Wiener, principal and office advisor for Colliers.
Wiener said flexibility and a transitional environment have become paramount as those multitasking in collaborative environments desire reduced distractions.
“Trends in the way people work will always change,” Wiener said. “The shift we are currently seeing in the marketplace is adaptability — not of the employee, but of the employer.
“Companies are acknowledging that different individuals thrive in different environments. Instead of pigeon-holing everyone into a cubicle, companies want a space that can offer everything — collaboration, independence and all that exists between.”
Outside the central business district, redevelopment and rental activity also are on the rise for both office and retail.
After sitting idle for several years, the 516,305-square-foot Steelcase Pyramid building in Caledonia was purchased by a Nevada investor and put back on the market as competitive inventory.
Suburban vacancy rose to 22.9 percent from 19.7 percent in response to that single transaction.
The report indicates the East Paris corridor leads the suburban market with 89.5 percent occupancy. The Heritage Pointe campus, which is in that area, recently expanded with three new buildings totaling approximately 80,000 square feet.
The retail market is expanding with the addition of such popular brands as Dave & Buster’s, Trader Joe’s and Leo’s Coney Island making their West Michigan debuts.
Also scheduled for completion at the end of this month is Tanger Outlet, which will bring 80 stores and nearly 1,000 jobs to the Byron Center area.
Closer to the lakeshore, Westshore Mall announced de-malling plans modeled after those at The Shops at CenterPointe in Grand Rapids, and an entrepreneur-focused contest that will give one business owner a storefront in addition to $10,000-plus in media and marketing support.