Metric Structures is proposing a small-format grocery store concept for its project at Wealthy Street and Fuller Avenue in Grand Rapids’ Eastown neighborhood. Metric Structures is proposing a small-format grocery store concept for its project at Wealthy Street and Fuller Avenue in Grand Rapids’ Eastown neighborhood. COURTESY RENDERING

Low vacancies, high interest remain along Grand Rapids’ traditional retail corridors

BY Sunday, June 09, 2019 07:00pm

Despite a range of threats and challenges, including very low vacancy rates market-wide, West Michigan’s traditional shopping corridors continue to thrive. 

Although retail has started reacting to technology-driven changes such as the convenience of e-commerce, brick-and-mortar businesses remain viable across West Michigan, where retailers are deploying new online strategies in addition to their physical locations, according to industry sources. 

“Retail is alive and well in West Michigan,” said Rod Alderink, partner and associate broker at NAI Wisinski of West Michigan. “Retail is evolving and when there are opportunities, they are being backfilled by local or national tenants.” 

Alderink gave the example of 3031 28th St. SE, which houses a Batteries Plus Bulbs store and, until recently, a Payless ShoeSource. Although the footwear retailer announced in February that it was closing all of its locations after filing for bankruptcy, several prospective retailers have expressed interest in the Payless space because of its location. 

Alderink expects another tenant to fill the space within a few months.

“While Payless Shoes perhaps had issues in their own company as to why they couldn’t make a go of it — in addition to online shopping — backfilling their space is not an issue,” he said.

In the Grand Rapids area, the vacancy rate on southeast 28th Street stands at 3 percent, which is on the higher end for corridors including southwest 28th Street, Alpine Avenue and East Beltline Avenue. The vacancy rate for RiverTown in Grandville was 0.27 percent, the lowest of the traditional retail corridors, while the highest vacancy, 8.1 percent, was found along Plainfield Avenue and Northland Drive.

According to research from the West Michigan office of Colliers International Inc., retail real estate activity in the first quarter of 2019 rose compared to the last quarter of 2018. The interchanges around 28th Street and East Beltline and Knapp Street and East Beltline have the most activity, with those areas attracting new developments and tenants because of their high traffic and visibility, according to the report.

New construction is taking place around the region, including a Planet Fitness on Alpine Avenue and Studio Park in downtown Grand Rapids, which is slated to open in the fall with multiple retailers and other amenities.

Another example of backfilling is the closure of Sears at Woodland Mall, which paved the way for Von Maur, REI Co-op, Cheesecake Factory and Urban Outfitters to come in and occupy space.

“We’re seeing some retailers wait it out if they want to be in a specific corridor. They let someone go out of business and then take the space,” said Chris Prins, senior associate at Colliers.

Research from the commercial brokerage determined rental rates are starting to plateau, meaning demand is catching up with supply. As well, investment rates are leveling off, as the majority of Class A retail space has already been sold.

“Those trends are a reflection of low inventory for retail space and fewer developers building new retail space because of high construction costs,” according to the Colliers report.

Meeting the market

Neighborhood shopping districts such as those along Cherry Street and Wealthy Street in Grand Rapids continue to do well, but they are reaching capacity. However, a couple of planned projects involve the construction of new buildings that include retail space.

Grand Rapids-based developer Metric Structures LLC recently proposed a two-story mixed-use building intended for a neighborhood grocery store at the corner of Wealthy Street and Fuller Avenue in the Eastown neighborhood. The firm continues to talk with a few possible operators of the store, said Jacey Ehmann, founder of Metric Structures.

The company wants to develop the project to establish a niche in the market for small-footprint grocery stores, which Ehmann remains confident the market will support.

“It’s all going to be confidence in the market, and that comes down to understanding the foot traffic and what type of demographic we’re going to be targeting,” she said.

As well, traditional retailers continue adapting their business models to the shopping habits of younger generations, Prins said. He cited as examples Meijer Inc.’s small format Bridge Street Market store at Bridge Street and Seward Avenue and Gordon Food Service’s grocery store in the Diamond Place development on Michigan Street. 

“When these retailers like Meijer see the reports of all these millennials moving back to the inner core of downtown and add something like Bridge Street Market, it’s just those retailers who are able to keep up with the times can adapt to situations,” Prins said. 

 

Read 2608 times Last modified on Friday, 13 September 2019 13:31
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