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Sunday, 17 August 2014 22:00

Solid quarter for West Michigan commercial real estate

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Judging by the second quarter real estate market reports from Colliers International’s West Michigan office, the region can expect to see reasonable growth and increasing rents in the months ahead.

While the reports didn’t signal any significant changes from the first quarter — nor warn of any rapid changes coming up in the third quarter — they did reveal plenty of positive momentum across all commercial real estate sectors in West Michigan.

Most notable, perhaps, is that limited inventory has become more of an issue, especially in the retail segment. Key development areas such as Rivertown Parkway in Grandville and the 28th Street SE corridor have seen positive momentum recently that’s resulted in landlords and developers with Class A space having the flexibility to pick tenants.

While sales and leasing activity on the industrial side is coming back after a slow start to the year, manufacturing is not seeing rents rise at the same rate experienced in the retail sector. This can primarily be attributed to the existence of a limited manufacturing inventory, said Matt Abraham, a principal with Colliers.

Additionally, the report noted that much of the current industrial activity involves new construction.

“Many owner-occupants are starting to see the need to spend the extra $10 to $15 per square foot to build new, which will allow them exactly what they want and where they want it,” Abraham said.

Office space in the Grand Rapids area also had a strong quarter “led by strong tenant activity downtown” where the market absorbed more than 53,800 square feet of space, according to Colliers. Vacancy has declined in every quarter since the start of 2011.

Additionally, renovated facilities like the CWD Building on Louis Street have brought new space to the market.

“Activity in the second quarter of 2014 reinforces the escalating interest in West Michigan office properties from both buyers and tenants,” the report said.

However, there was some bad news for office tenants: Landlords will increasingly be in the driver seat going forward. That means improvement-related concessions will likely fall off and that rates will start to steadily rise, Colliers said.

Read 36656 times Last modified on Saturday, 16 August 2014 23:14

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