The Business Journal finds reason for continued caution in the reporting of greater Grand Rapids economic forecasts for 2018 and year-end statements summarizing 2017. General perceptions of overall well-being are interwoven with warnings of weakness. City and county officials, on the eve of making major leadership decisions in hiring a new city manager and new county administrator, must heed the weak links rather than party as though there is no end to the good times. New leaders will need to navigate through what is expected to be comparatively moderate growth, which will be challenged by the ever-tightening labor and talent availability.
Kara Wood, city of Grand Rapids managing director of economic development, reported a dip in the city’s project load for 2017, as projects (related to city incentive programs) in its approval pipeline dropped. Investments include $173 million in new private commitments, spread across 12 projects. That compares to 2016’s reported commitments of $566 million in new private investment across 38 projects.
Some of the reasons for that were offered in the annual real estate forecast by Colliers International West Michigan and Grand Valley State University’s Seidman College of Business. The forecast showed the downtown office market continues to be constrained by tight inventory and limited parking — and that limits the ability of existing companies to attract and retain talent. Jeff Hainer, senior research analyst for Colliers International West Michigan, commented, “Some people don’t like to talk about it. I think the city is doing what it can, but there’s more that needs to be done, and I think we’ll see in 2018 as to where the city takes things with that.”
The forecast showed: The downtown office vacancy currently sits at 5 percent, compared to the suburban market’s 14 percent vacancy. Suburban office buildings predictably will see more attention in 2018. Construction costs may continue to discourage speculative building. Like all other sectors, construction costs and lack of labor will “challenge” new builds. Paul Isely, Seidman associate dean, also said forecast results indicated employment growth in 2018 will slow to about half of what it was in 2017.
Grand Rapids Area Chamber of Commerce surveys released last week also showed the top issues to be availability of skilled labor and talent retention, followed by parking availability and mobility.
City leaders need to stop procrastinating and prioritize solutions to these prevalent concerns.