HEARTLAND SNAPSHOT, APRIL 2008

Grand Rapids, Michigan Retail Market

Things are starting to slow down in Grand Rapids, with slightly increased vacancies and a decrease in construction activity. But even with a softening retail market, expect activity in the Grand Rapids area to continue at a moderate pace.

The city of Walker, located in the northwest quadrant of Grand Rapids market, was set up for major expansion with the development of the Cabela’s-anchored Orchard Park mixed-use project. But the outdoor retailer has scaled back its expansion plans, putting construction of what would be its second Michigan location on hold. This has sent Orchard Park back to the drawing board, and the center may be scaled down once construction finally gets underway. When the Cabela’s is built, though, it is bound to have a huge impact on the market. The Cabela’s in Dundee, Michigan, is presently the Number 1 tourist destination in the entire state, drawing millions of people per year.

The pace of strip center construction was moderate last year, with just under 150,000 square feet constructed, comprising 1 percent of the total market. Much of the new construction is centered in the southwest area of the market, which is home to 46 percent of the new development. This area is already heavily retailed, as Grand Rapids’ three regional malls are located in the southwest and southeast submarkets.

Throughout Western Michigan, most recently completed developments have been smaller, neighborhood centers. In Grand Rapids, three such projects were recently completed, including the 21,000-square-foot Sav-A-Lot center; the 35,000-square-foot Design 1 Plaza, located at 68th Street and Kalamazoo Avenue; and The Corner Shops, a 22,000-square-foot center located at 28th Street and East Beltline Avenue. Other projects include the 17,400-square-foot Shops at 52nd Street in Kentwood; a 31,354-square-foot strip center located at the corner of Wilson and 56th Street in Grandville; and the 27,200-square-foot Rivertown Market, also in Grandville.

Specialty grocery store The Fresh Market opened its first Michigan location in August 2007. The 20,000-square-foot store is located inside Waterfall Shoppes on 28th Street in Grand Rapids. The chain joins restaurants Gandolfo’s Delicatessen and Johnny’s Lunch in opening its first location in the Western Michigan market. Even with the entrance of these new tenants, several restaurants have had trouble over the last year, and now several prominent freestanding sites, as well as end-cap locations, are available throughout the market.

Plans are also underway to build a new Meijer in Jamestown Township, which could dramatically expand the development plans for several other parcels in the vicinity of this M-6 interchange. In nearby Byron Center, Metro Health Hospital recently held its grand opening. The hospital is part of the planned 170-acre Metro Health Village; 200,000 square feet of retail space has already been master-planned in the development, and additional retail development in the area is likely. These two projects make the M-6 retail corridor an area to watch in the future.

— Robert Lotzar is a vice president and retail advisor with the Grand Rapids, Michigan, office of CB Richard Ellis.

Grand Rapids Retail Center Race A race is underway to develop the city’s first mixed-use lifestyle center, and three projects are currently in contention. The question remains, though, can Grand Rapids support two or three similar projects located in such close proximity to each other? The Village of Orchard Hills. The Village of Orchard Hills is a 60-acre development that will be located at the corner of East Beltline Avenue and Three Mile Road in northeast Grand Rapids. The project, which will top out at well over $100 million, is set to include 475,000 square feet of retail and 130 condominiums. It is being developed by a joint venture involving Robert B. Aikens & Associates, Grand Rapids-based BDR and Chattanooga, Tenn.-based CBL & Associates. The project will be designed as a main-street lifestyle center, similar to The Village of Rochester Hills, which was completed by Robert B. Aikens in Rochester Hills, Mich., in 2002. The project has received all of the necessary approvals, and expects to break ground this June. Completion is slated for summer or early fall 2009. The tenant roster should be revealed soon. Until recently, The Village of Orchard Hills’ primary competition was Orchard Park, a 220-acre project located just outside of Grand Rapids in Walker, at the intersection of Interstate 96 and Walker Avenue. Orchard Park is being developed by a partnership that includes Fort Worth, Texas-based Trademark Property Company and Chicago-based Urban Retail Properties. The project received a big boost when outdoor retailer Cabela’s signed on as the anchor tenant, but the present economic climate forced the retailer to scale back its expansion efforts, and postpone the opening of the Grand Rapids location until at least 2010.  This has halted development of the project, as the developers decided not to proceed with a public hearing scheduled with the city of Walker to discuss a revised site plan. According to Robert Lotzar, a vice president with CB Richard Ellis, Orchard Park is considering revising its plans, which may include scaling back the development to a junior box development rather than a lifestyle center. It would now appear than the Village of Orchard Hills has no direct competition in the market, but according to Lotzar, Evergreen Properties has recently rezoned its development located at the corner of East Beltline and Knapp Street to better compete with Orchard Hills. This site benefits from a prime location directly across the street from Celebration Cinema. It remains to be seen which one of the projects will cut the ribbon first, but with a collection of retail projects in the pipeline, Grand Rapids will soon offer a multitude of retail options to its residents.  — Coleman Wood

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