The current industrial market in Grand Rapids, Michigan, has begun to stabilize over the last 6 to 8 months after a period of declining activity, beginning in fall 2000. The level of industrial activity is anticipated to accelerate as the national economy regains its footing. “Grand Rapids enjoys the benefits of a diverse industrial base, which helped to moderate a significant downturn in the local market,” says Stu Kingma with S. J. Wisinski & Company. But that has not protected the contract office furniture industry from tremendous downsizing. West Michigan is home to four of the largest manufacturers of office furniture, all of which have been downsizing in conjunction with an industry wide contraction of over 30 percent. Conversely, the auto suppliers, while going through a downsizing, have not had the bottom fall out of their business.

“Grand Rapids’ northwest and southeast quadrants continue to have the most industrial activity thanks to available, properly zoned land, excellent highway access and business friendly municipalities.” Kingma says. The Walker submarket (northwest) is the site of two new industrial parks having infrastructure put in place now. One of these sites will be a new printing facility for the Grand Rapids Press and a campus for a large stamping company. Other land in the park is available for development, with some of it reserved for speculative building after economic improvement. The other northwest park, where some construction is underway, is designed for properties that have 5- to 12-acre requirements.

The southeast side of Grand Rapids (near the Gerald R. Ford International Airport) historically has been the most active submarket. “Currently an oversupply of warehousing space is due to some third-party logistics companies downsizing, dampening the climate for speculative development,” Kingma says. There are plans for two industrial parks, which are on hold until demand is evident.

Much of the property near the airport is designed for both the high-tech tenant as well as bulk warehouse operations. Other areas of the city are more distribution oriented. Many large manufacturing firms own their real estate. However, Grand Rapids has seen a greater level of interest from national companies looking for a presence in Michigan outside the metro Detroit area.

There are three major industrial developers in Grand Rapids: Robert Grooters Development, Kojaian Management and First Industrial, among a number of other smaller players.

Some of the recent major lease signings include International Paper occupying 155,000 square feet on East Paris SE; McGraw Hill occupying 200,000 square feet on South Wilson Court; and Hekman Furniture occupying 75,000 square feet on Expressway Drive. Area vacancy rates average around 10 percent with rental rates between $4.25 and $4.50 for high tech space and between $2.95 and $3.25 for bulk warehousing.

In the next 3 years, the new bypass will be complete, encouraging land development on the southeast side. But the market should be active by then since moderate growth is already anticipated for 2003.

Stu Kingma, SIOR is with S.J. Wisinski & Company.


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