HEARTLAND SNAPSHOT, MARCH 2007

Western Michigan Industrial Market

Overall the Western Michigan industrial market is becoming healthier with increasing activity in both the sales and leasing markets. “We expect to see more manufacturing coming to the area in technologically advanced industries such as food manufacturing and life sciences, which have seen tremendous growth in the past few years,” says Matthew Abraham, an industrial advisor with Grubb & Ellis/Paramount Commerce. 

The majority of industrial development taking place is currently driven by owner-built or build-to-suit projects. These developments are mostly concentrated in the southeast submarket, which offers interstate access, a wealth of suppliers and close proximity to the Gerald R. Ford International Airport.

In 2006, X-Rite closed on a lease for a 350,000-square-foot portion of a 949,000-square-foot building, which was formerly occupied by Bosch. The facility was renovated into two buildings, one that was acquired by X-Rite and another that has 115,000 square feet of available space. “The renovation of one large manufacturing facility into two smaller buildings represents one direction that the West Michigan market is heading,” Abraham notes. “Taking larger facilities that have been designed and built without an exit strategy, and changing them into more marketable properties to attract a wider spectrum of users has been, and will continue to be, a necessary function of developers in the region.”

CenterPoint Properties and Ashley Capital have both recently moved into the Western Michigan market by either purchasing or placing under contract large portfolios of industrial property for investment and redevelopment.

Currently, the vacancy rate in Grand Rapids is approximately 9.5 percent as a result of three major buildings that were recently put on the market that account for roughly 2.5 million square feet. When these buildings become occupied or renovated to fit a wider spectrum of users, the vacancy rate will fall back down to look a bit more competitive in the national scope.

Triple-net rental rates for the region range from $2.50 to $3.50 per square foot. Landlords are focusing on a maintaining a balance between warehousing and manufacturing tenants. Recently closed leases in Grand Rapids include 99,993 square feet at 345 32nd Street, a deal for 25,280 square feet at 5079 33rd Street and a 25,800-square-foot lease at 5801 Weller Court.

Abraham suggests watching the northwest submarket for future development, “with its convenient access to the lakeshore; also, the northwest submarket, which statistically has the lowest vacancy rate of the major submarkets in the region, is poised for new growth.”


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