The outlook for the West Michigan industrial real estate market remains optimistic due to consistent levels of sales and leasing activity, according to Colliers International. The industrial market has recorded six successive quarters of positive absorption despite the market seeing a major shortage of high-quality inventory. Some 522,717 square feet was absorbed during the fourth quarter alone, lowering the vacancy rate to 6.57 percent.
With options for space becoming more limited every day, new construction is an important consideration for many companies. That option, however, requires vacant land on which to build.
Consequently, vacant land sales have emerged as the focus of many industrial real estate transactions.
Construction of industrial space has reached its highest level in eight years — 419,000 square feet completed in 2013 and 792,000 square feet underway and projected for 2014. We’ve experienced more land sales in the last six months than we’ve seen in the last six years. Our industrial team has recently closed or put under contract more than 150 acres of vacant land, and much of that acreage is slated for new construction.
Ambitious Plans
Several projects have already begun, including the 110,000-square-foot expansion that Undercar Products Group began occupying in November 2013, and the new freezer facility Gordon Foods is constructing on 50th Street, which is scheduled for completion by this spring.
But there are many more projects in the pipeline. Alliance Beverage, an alcoholic beverage distributor, recently purchased 35 acres on 60th Street in Caledonia, where it plans to build a 274,600-square-foot facility.
Meanwhile, Gourmet International, which acquired 12.75 acres on Patterson Avenue, intends to construct a new 115,000-square-foot distribution facility. Gourmet International is a leading importer and distributor of gourmet food items, specializing in European products.
RPM Machinery, which specializes in the agricultural and construction equipment industries, purchased 14 acres in Dorr, Mich. The deal marks the first purchase in the Door Commercial Park since it was built more than nine years ago. RPM Machinery plans to build a 40,000-square-foot Case IH dealership on the site. Case IH is a manufacturer of a wide variety of farming equipment.
Arrowaste Inc., a solid waste (trash/refuse/garbage), recycling, transportation and disposal service company, purchased 20 acres at 1330 Chicago Drive in order to consolidate its operations in a single location.
The greater Grand Rapids area’s public transportation authority — The Rapid — has also been active, buying land to support the development of its Division Avenue Bus Rapid Transit (BRT) and SilverLine project.
These projects, though driven by separate companies and plans, support one main trend: Land sales and new construction are building the future for West Michigan’s industrial sector.
— By John Kuiper, SIOR, CCIM, Principal | Industrial, Colliers International | West Michigan. This article originally appeared in the March 2014 issue of Heartland Real Estate Business magazine.