HEARTLAND SNAPSHOT, JULY 2005

GRAND RAPIDS OFFICE MARKET

The continued trends in Grand Rapids’ office market are office condominium development and office condominium sales, which is just another tool in the landlord coffer to fill up space, according to John Mundell II, vice president and managing director for CB Richard Ellis in Grand Rapids. Grand Rapids’ central business district (CBD) is currently experiencing more redevelopment than new development, although some medical office development is underway. For example, RDB and Chrisman Construction are currently developing a 700,000-square-foot medical facility on five acres at 21 Michigan Avenue.

In CBD office redevelopment, older, Class B office buildings are being converted to loft offices, as evidenced by buildings such as 15 Lewis (80,000 square feet), One Ionia (25,000 square feet), 168 Louis Campau Promenade (16,000 square feet) and 180 Monroe (24,000 square feet).

In the Grand Rapids suburban office market, speculative office development is active again in the northeast corridor, which ironically has the most challenging occupancy in the marketplace, according to Mundell. Also, more speculative development is occurring along Kenmoore.

The majority of office development is taking place in the southeast and northeast. “The second largest segment of the market is the southeast corridor, and it’s always been a stronghold of development,” Mundell says. “Northeast has been developing and pushing further north during the past 3 to 5 years.” Both have served the majority of the Forest Hills/Grand Rapids area.

According to Mundell, the southwest submarket by the Rivertown Crossings is the area to watch in the near future, especially in the areas surrounding the new Metropolitan Hospital. “It has a lot of opportunity for new development,” he says. The southeast and northeast will continue to develop as well.

“Overall, we are seeing some new tenants considering Grand Rapids from out of market,” Mundell says. “The market has done well in absorbing what has been thrown in during the last 3 to 5 years with this new speculative development. We are seeing a steady improvement in activity.”

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