HEARTLAND SNAPSHOT, DECEMBER 2005

Grand Rapids, Michigan Retail Market

The West Michigan retail environment has proven to be an increasingly stable real estate sector over the past few years. Mirroring the region's market dynamics, the Grand Rapids, Michigan, retail market has flourished as the area's economy and population have grown at a pace well above national averages.

“Retail continues to be a very strong segment of the economy and is expected to remain so for the foreseeable future,” says Bill Bussey, vice president of Grand Rapids-based Grubb & Ellis|Paramount. “We continue to see an influx of new retailers and restaurants as well as current national tenants seeking additional locations. As a result, land costs and rents are continuing to escalate.”

The weighted asking rent for retail in Western Michigan is $11.75 per square foot. Presently, there is 1.03 million square feet of vacant available space, and the region's vacancy rate stands at 6.5 percent.

There is a wealth of new retail development around Grand Rapids, with a number of projects underway in the new South Beltline (the new Highway M-6 on the south side, which completes the loop around the city). According to Bussey, there are projects recently completed or underway at four different interchanges in this emerging corridor. The largest development was recently completed at the intersection of Kalamazoo Avenue and M-6, where Ramco-Gershenson Properties Trust has built the 400,000-square-foot Gaines Marketplace, anchored by Target and Meijer. Just north of M-6, Jack Loeks Theatres has opened a new 16-screen theater and numerous national restaurants have opened their first Grand Rapids locations. Robert B. Aikens & Associates is working hard to develop its proposed lifestyle center on Highway M-37 at Knapp's Corner and Evergreen Builders, a local developer, has built a number of smaller centers and is proposing its own lifestyle center across from Celebration Cinema at the intersection of M-37.

Other interchanges along M-6 to watch for development include Byron Center Avenue, where the new Metro Health Hospital is under construction; Wilson Avenue, which is 2 miles south of the Rivertown Crossings Mall area; and M-37.

Along the 28th Street corridor, local developer Edmark is building Waterfall Shoppes, a 50-acre retail center anchored by Costco, Target and Staples. Also in the 28th Street corridor, Woodland Mall has experienced an expansion with the addition of a new 16-screen Cinemark Theatre and two 6,000-square-foot restaurants.

According to Bussey, Grand Rapids is expecting its first lifestyle center in the coming year as well. “There are three competing sites: two along the East Beltline (M-37) and one to the north [of the city] on Walker and Three Mile Road,” he says.

As far as the retailer activity in the market, “the story of Grand Rapids is of new retailers [entering the market] and of the continued expansion of existing companies, primarily big boxes and restaurant chains,” Bussey says.

Costco has opened two new stores, one on 28th Street SE and another across from General Growth Properties' RiverTown Crossings Mall in Grandville. Target has replaced one of its locations on 28th Street with a large-format store and added a fourth local store at Kalamazoo Avenue and M-6. In Muskegon, Dick's Sporting Goods has opened a new store at The Lakes Mall. Wal-Mart and Meijer both continue to add locations. Three new Staples stores have come online this year and restaurants such as Noodles & Company, Moe's Southwest Grill, Pizzeria Uno, Red Robin, Applebee's and Panera Bread are expanding within the market.

Bussey expects to see sustained growth as the current economic momentum encourages continued development along the major retail corridors in and around Grand Rapids. “The Grand Rapids MSA is blessed with a balanced economy, with no single industry taking a predominant role,” Bussey notes. “As a result, retail has been stable through the years and continues to perform well and grow. This growth, along with the increase in downtown housing stock, is adding new pressure for more downtown restaurants and a moderate expansion of retail.”

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