MARKET HIGHLIGHTS – OFFICE
- Office building sales continued to improve in 2013, with the number of sale transactions up 28% over 2012.. Over 1.12 millions square feet of office space was sold in 2013, with the majority of buildings sold less 20,000 square feet.
- Sales dollar volume of office properties reflected the market trend of the sale of smaller sized properties. $117,255,092 in office space was sold in 2012, compared to $36,458,680 in 2013. The vast change is attributed to the large turnover in downtown office building ownership in 2012. While the 2012 market represented several out-of-state investors, 2013 sales showed more local owner-user activity.
- Office leasing activity is up in both downtown and the suburbs. Average gross rent rates for suburban office space range from $10 – $18 per square foot, while the average gross rent rates for downtown space is $15 – $22 for class A space. Large office construction projects such as the planned Arena Place, and renovation of buildings show exciting activity in the office market. The cost of parking is a consideration of potential owners or tenants, who are seeking buildings that can provide low–to-no cost parking options.
- Buildings formerly considered office space are being converted to residential – apartments or condominiums – which have decreased the availability of downtown office space.
MARKET HIGHLIGHTS – INDUSTRIAL
- Market conditions continued to improve in 2013, with over 2.74 million square feet of industrial space sold, compared to 2.5 million square feet sold in 2012. Available prime industrial space is scarce, as the inventory of quality industrial properties becomes smaller.
- Sales dollar volume of industrial properties also increased substantially over 2012. $56,337,030 in industrial sales were reported in 2013, compared to $42,791,475 in 2012, representing an increase of nearly 32%.
- Industrial property values have recovered much of their losses, and are approaching levels not seen since before the recession.
- Lease rates vary greatly, depending on the type, size, location, quality, and condition of the industrial property. Overall, lease rates are rising. “The availability of quality industrial properties is significantly reduced from just a few years ago,” stated Stu Kingma, SIOR, an industrial specialist with NAI Wisinski of West Michigan. “The continued expansion of the market, and the resulting lack of quality industrial properties for sale, has translated into higher demand for lease space. As a consequence, lease rates have risen noticeably in various sectors with landlords beginning to enjoy a much more favorable leasing market.”
MARKET HIGHLIGHTS – RETAIL
¨ Market conditions improved significantly in 2013, particularly in the prime retail corridors (East Beltline, 28th Street SE, and the Grandville/Rivertown area). The Grandville/Rivertown area is poised to add several new retailers planning to open in early 2014. Shoe Carnival, ArtVan Pure Sleep, and Gordman’s soon be operational. Planet Fitness has opened in the Rivertown/Grandville area and the 28th St. SE area, within recently renovated Centerpointe. The completion of the Centerpointe project has resulted in a large volume of leasing activity in the area. Another retailer new to the West Michigan area, Garden Ridge, is renovating space in Jenison, in the building formerly used by Target . A Walmart supercenter is under construction near 54th St. and 131, and expansions of the Grandville and 28th St. Walmart stores to supercenters is nearly complete. The Tanger Outlet in Byron Center is on track to open in 2015, capping a large volume of retail growth in the southern part of Kent County.
¨ Sales volume of retail properties increased by 37% in 2013 over 2012 and prices stabilized due to increased demand and quality supply being absorbed in the main corridors. Landlords are starting to regain control and increase rents. As competition for space grows, consumer confidence slowly elevates, and vacancy rates drop.
¨ The number of retail sale transactions increased 13% in 2013. The shrinking of the gap between list and sale price shows that values are rising and buyers are willing to pay more for properties than last year because greater opportunity is present in the market.
¨ Retail leasing activity is up. In the primary retail corridors, vacancy rates have fallen and “class A” available space is limited. Lease rates are slowly increasing, and there are fewer landlord concessions being incorporated into lease transactions. Secondary and tertiary markets are improving, but the pressure on pricing and concessions continues.
¨ A marked increase in new retail construction in the prime retail corridors shows a continuing of increased demand for business expansion and new business entering the West Michigan area.