ZEELAND — The $70,000 grant Lakeshore Advantage Corp. received this summer will go toward examining one potential solution to a problem resulting from the economic vitality of Ottawa and Allegan counties: a lack of suitable available land for industrial development.
In a market where the industrial vacancy rate stands at a little more than 1 percent, and as both Ottawa and Allegan counties continually rank among the fastest growing in Michigan, manufacturers in the region are wrestling with a lack of land for new facilities or available space in which to expand.
That shortage of industrial space, along with the cost of construction and available labor, ranked as a top barrier to growth in interviews with business executives in Ottawa County and neighboring Allegan County, according to an annual report by Lakeshore Advantage and local chambers of commerce to assess economic activity.
“There’s basically nothing that’s available,” said Jennifer Owens, president of the Zeeland-based economic development organization.
“Even if they were to expand and grow, there’s no place they can go. It’s very limited,” Owens said. “As economic developers, we need to do more to make sure that there is land and buildings available for companies to expand.”
Part of that effort involves potentially preparing for industrial development at a parcel on 56th Avenue in Allendale, in the heart of Ottawa County. The Michigan Economic Development Corp.’s Site Readiness grant that Lakeshore Advantage received in August will help cover the cost of planning and preparing the property for industrial development.
That includes conducting an environmental site assessment, a boundary/topographic survey, a title search, and initial geotechnical engineering services such as soil borings and permeability tests.
A feasibility study would gauge the potential to develop the 40-acre site for industrial use. Lakeshore Advantage also would have a conceptual budget and construction schedule prepared, as well as architectural concepts and site development plans for various scenarios for about 1.7 million square feet of space at the site.
GMB Architecture + Engineering, Lakewood Construction Co., and Driesenga & Associates Inc. are donating in-kind services to the effort, Owens said.
The Allendale Township Planning Commission last week gave Lakeshore Advantage approval to proceed with the grant. The township board of trustees will consider a resolution later this month supporting the initiative, Owens said.
As of the third quarter, the vacancy rate for industrial space in Ottawa County stood at 1.3 percent, according to the West Michigan office of Colliers International.
The commercial real estate firm’s second quarter outlook listed industrial vacancy rates across West Michigan of 0.56 percent to 2.46 percent for an average of 1.6 percent.
“The biggest challenge facing West Michigan’s industrial sector continues to be historically low vacancy rates,” according to the Colliers report. “Industrial commercial real estate is the most desired among all property types in West Michigan. Regional and national companies, especially developers, see West Michigan as an ideal region because it offers close proximity to customers, employees, distribution and transportation.”
Manufacturing accounted for $8.22 billion or 40 percent of the gross regional output in Ottawa and Allegan counties in 2018, and 30 percent of the jobs, according to Lakeshore Advantage. The manufacturing sector locally grew 20 percent from 2013 to 2018.
Nearly three-quarters of the 120 executives interviewed this year by Lakeshore Advantage indicated their companies planned to expand in the next three years. Those expected expansions average $7 million and would create 25 new jobs each.
More than one in four respondents have facilities in other states and 22 percent have locations outside of the U.S.
Facing the need for more industrial land locally, Lakeshore Advantage has been encouraging industrial employers to plan expansions sooner and to share their plans, Owens said. She hopes that by doing so, property developers can better gauge future demand for industrial space and plan projects accordingly.
“We’re encouraging companies to plan more proactively and earlier,” Owens said. “If we can arm our developers with ‘this is what we’re seeing’ in terms of expansion and trends for out-of-the-area companies and potential trends for in-the-area companies, our hope is they’ll take that information and start moving forward with spec industrial space.”
Lakeshore Advantage issues the Economic Update report annually in partnership with chambers of commerce in Allendale, Holland, Hudsonville and Grand Haven. In other results from this year’s executive interviews, 89 percent of respondents said their sales were stable or increasing, and 69 percent reported growing market shares for their key product lines.
“Things still look strong,” Owens said of the local economy.
Nearly eight of 10 companies reported issues with recruiting talent. Some employers reported increased investments in automation and technology to offset the labor shortage, improve productivity and increase capacity, Owens said.