What area is your expertise?
Office leasing and sales.
What trends do you see presently in office development in your area?
Most of the office development in our area is in the medical services and is space that controlled by the large Hospital groups.
Who are the active office developers in your area?
Second Story, Locus Development, First Companies, AJV, Christman, Fusion Properties, and others.
Please name one or two significant office developments in your area. What impact will these projects have on the market?
The new Medical centers on Michigan Ave Hill that will include a new DeVos Children’s Hospital, Lemmen-Holton Cancer Center, MSU Medical School, Expansions to the VanAndel Institute, and the new Metro Health Village in the southwest suburbs. These new buildings signify the new “industry” of West Michigan and will impact future developments for the next 25 years.
Where is the majority of development taking place? Why is this area doing well?
As stated above most of the development in the Grand Rapids area has been related to the Health Fields on Michigan Ave Hill (known as Medical Mile) and at the new Metro Health Village in the southwest suburbs. Health care is relatively recession proof, which helps support the new developments.
What area do you expect to be the next big development market? Why?
There have been several larger new class A office complexes discussed for the central business district of downtown, but none have taken off as of yet. With the growth in the medical community it is just a matter of time before a large scale office complex is built in the Central Business District.
What areas are doing well in terms of office leasing? Which areas are struggling with office leasing?
Most areas are struggling. With the market rates being depressed during the last several years’ businesses now have the opportunity to “upgrade” their space and thus has created a good amount of movement, but new net growth.
Please give a measure of office vacancy rates. Please give a measure of available sublease space.
Overall market is in the range of 15-20 percent. With the suburbs having a slightly higher vacancy rate.
What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market in the next year?
Interest rates have been historically low for the last several years and therefore I do not see any impact from the rates in the next couple of years. However sourcing capital has become difficult because of the banking industry problems and thus is hurting sales, but not leasing.
What is the status of job growth/(un)employment rates and what bearing will it have on the office market?
West Michigan in general has remained stronger than the rest of the state, but overall is relatively flat. Without job growth the absorption of office vacancies will remain very low.
Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? What areas will be affected?
Medical has been absorbing all the new development space as mentioned above. Medical will continue to expand and the supporting business should follow suit over time.
Would you like to make any additional observations about the office market in your area?
Grand Rapids will continue to see change from the old brick and mortar industries of the past to the new medical and clean technologies of the future. However change is inevitable and thus we all better get use to it and more importantly embrace it!
Submitted by Walter Bulkowski , senior associate office advisor with the Grand Rapids, Mich., office of CB Richard Ellis. Posted 06-18-08.
Walter Bulkowski