HEARTLAND SNAPSHOT, MARCH 2006

Western Michigan Industrial Market

In the Western Michigan industrial market, former manufacturing facilities of more than 500,000 square feet in size are being redeveloped into facilities with added amenities that meet the needs of the current market. Multi-tenant spaces that utilize the great infrastructure provided by the manufacturing facilities are particularly popular. According to Duke Suwyn, president and CEO of Grubb & Ellis | Paramount in Grand Rapids, Michigan, the needs of the current industrial market include smaller spaces ranging from 50,000 to 200,000 square feet. “[Another] trend is the continued interest in industrial condominiums of all sizes coming on the market,” Suwyn says.

The airport submarket continues to be hot, with the majority of industrial development taking place in that area. The completion of the new M-6 South Beltline corridor has opened up many new tracts of land for industrial development. The availability of fully infrastructured and zoned land makes the area ripe for expansion and development. “Anything industrial that's near the new interchanges on M-6 will certainly start to become very active in the very near future,” Suwyn says. The redevelopment of the 206-acre, 4.7 million-square-foot Steelcase Campus in Grand Rapids represents approximately 4 percent of Western Michigan's total industrial inventory. “Whether the site stays industrial or becomes a mix of industrial, retail, office, multifamily or other, it will have a great impact on the west Michigan market,” he adds.

Chicago-based Franklin Partners is the newest developer in west Michigan. “Franklin Partners has been active in multiple projects,” Suwyn says. Most recently, Franklin acquired the 915,000-square-foot former Bosch facility, which it redeveloped into two separate buildings. Both buildings have since been sold and leased.

According to Suwyn, manufacturing tenants are the target for new developments. Western Michigan's strong manufacturing and entrepreneurial employee base is an additional asset to industrial development. “We see many new companies looking for the entrepreneurial-type employee as they compete in the global marketplace,” Suwyn adds. “Western Michigan is also using this manufacturing base to produce products not typically thought of when you think of manufacturing, such as food, medical devices and other unique consumer products.”

While no major tenant is absorbing the majority of space, the larger spaces being leased are often companies consolidating their operations under one roof. Recent major leases include Intertek ETL Enteka taking 96,000 square feet at 4700 Broadmoor in Kentwood and Lacks occupying 200,000 square feet at 3739 Patterson in Grand Rapids.

General industrial rental rates are approximately $2.75 to $3.50 per square foot, depending on the type of product. Smaller multi-tenant R&D flex type space ranges from $4.50 to $5.50. For the warehouse and industrial market, vacancy is around 15 percent. General manufacturing space is somewhere in the 8 to 9 percent range.

Both employment and population numbers continue to grow in Western Michigan. “[The area] has utilized its unique employee base to attract growth companies that need to be quick, flexible and accessible,” Suwyn says. “Western Michigan continues to reinvigorate itself through its life science, bio-science, pharmaceutical and technological initiatives, which have been responsible for its success in the past.” The city of Grand Rapids continues to change and grow in order to adapt to the market through utilizing the manufacturing base.

©2006 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.