What area is your expertise?
My area of specialty is the office market in Lansing, Michigan
Who are the active office developers in your area?
TMN Builders, Boji Development, among others.
Please name one or two significant office developments in your area. What impact will these projects have on the market?
The 2900 Building was completed within the last 12 months and is a 80,000 square foot suburban office structure at the US-27/Lake Lansing Road interchange. Developed by 501LLC, it was a 5-story, Class A building that leased within 15 months after completion. Most of the users were already located within the mid-Michigan market area but this project did show that good quality space was in demand at that time.
Where is the majority of development taking place? Why is this area doing well?
Most new development is occurring at the U.S. 27/Lake Lansing Road interchange. This area is doing well due to a recent surge in retail development and the availability of land along a highway interchange route.
What areas are doing well in terms of office leasing? Which areas are struggling with office leasing?
The entire market is struggling to some degree. Areas that do see some degree of activity are the US-27 Lake Lansing Road interchange and the Jolly/Okemos Road interchange.
Please give a measure of office vacancy rates. Please give a measure of available sublease space.
Current office vacancy rates of the entire area are approximately 18 percent. This covers the greater Lansing Michigan area. The total size of the market is 9.3 million square feet.
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 minimal effect on our market because there is little new development occurring and this trend should continue for the next few years.
What is the status of job growth/(un)employment rates and what bearing will it have on the office market?
Our market is geared to three major employers, the State of Michigan, Michigan State University and General Motors. The strength of these dictates much of what occurs in the office market. Currently, all three are fairly stable thus job growth should be neutral for the next few years, therefore creating a stable office environment.
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?
The insurance industry does have a significant impact in our market. The areas defined above should benefit from this to some degree.
Would you like to make any additional observations about the office market in your area?
Lansing is a third tier market dependent on those businesses listed above. Although the vacancy rate is significantly higher than the national average, it has stabilized and should remain this way for the next few years. The direction of the Michigan economy over the next few years will dictate the path the office market will take. We feel a bottoming out has occurred or is close to occurring and market statistics should remain in the range they are in for this period of time.
Submitted by Eric Rosekrans , senior vice president with the East Lansing, Michigan office of CB Richard Ellis/Martin. Posted Online 05-13-08.