The West Michigan lakeshore office market has remained relatively stable during the COVID-19 pandemic compared to larger cities like Grand Rapids, Detroit and Chicago, according to city officials and real estate experts.
“It seems really grim when you read about the future of office space, but most of that news is geared toward skyscrapers in Manhattan or Chicago,” said Drew Durham, brokerage associate at Colliers International’s West Michigan office.
Still, businesses that have offices in lakeshore communities are being cautious about what their future needs are going to be, Durham said. Lakeshore markets are currently seeing activity particularly in medical office, insurance and financial sectors, he added.
“I’m working with a client who is looking to downsize their office and move it to downtown (Holland). That way, people can work from home but — when they do want to come in — they have an office space downtown around amenities,” Durham said. “They are looking to decrease their overall square footage but move to a more desirable spot.”
Durham said it’s still uncertain whether this kind of downsizing and relocating will be a trend, but it shows that there is a chance downtown office space along the lakeshore could be even more desirable post-pandemic.
“From an office standpoint, every community is a little different. But areas that are on the shoreline have a truly distinctive feature for people and may be a recruiting opportunity for talent and opportunity to offer something different than a traditional central business district in a metro area because of that resort atmosphere,” said Jeffrey Tucker, senior managing director of brokerage and principal at Bradley Co.
The lakeshore also has the potential to lure workers from major cities with remote working becoming more common. Bradley Co. Adviser Drew Nelson sees the possibility for drop-in or co-working spaces being more popular long term along the lakeshore.
Among lakeshore communities, Holland has the most office space, most of which is on upper floors of established businesses downtown and in the city’s core.
Holland Downtown Development Coordinator Amy Sasamoto has increasingly noticed workers splitting their time between offices and working from home. Overall, Holland’s office vacancy is up slightly but has remained relatively steady during the pandemic.
“We’re waiting to see the full effect, but we do have a lot of people that come downtown that don’t work here, so I think we can still be supported by that,” Sasamoto said. “We still see a big influx of people when the weather is nice.”
JLL Inc. Senior Vice President Jeff Karger believes a majority of workers want to return to an office but that the pandemic’s full effect on the region’s office market won’t be seen until the third or fourth quarter this year. Holland has a high level of engineering and manufacturing space with a small office market overall, he said.
However, Karger recently listed a 132,000-square-foot office building located at 10717 Adams St. in Holland Township, the former site of Huntington Bank before the company consolidated and opted not to renew its lease in 2017.
“It’s vacant and came on the market recently,” Karger said. “It’s a big building for that area and will be interesting to see how it’s used by owners and users.”
‘One less thing to worry about’
Office space has never comprised a huge piece of downtown Muskegon’s real estate, but city officials have seen a slight loss to the office footprint, said Dave Alexander, business development manager at Muskegon’s Downtown Development Authority.
“In the last year, year and a half, we lost three banks out of the downtown that moved into suburban sites and just left behind (ATM machines),” Alexander said.
PNC Bank, Fifth Third Bank and Huntington used to have 25 to 30 people total working out of downtown before they relocated. It’s not a significant loss, Alexander said, and opens up space for other uses.
Having a downtown that does not rely as heavily on office workers gives Muskegon “one less thing to worry about” as officials work on recovering from the COVID-19 pandemic, Alexander said.