MIDDLE MARKET HIGHLIGHT, NOVEMBER 2006

Grand Rapids
Dan Marcec

Excelsior Energy is developing an integrated coal gasification power plant on 1,200 acres in Grand Rapids.

Throughout Grand Rapids, continued growth in big box retail is predominating the commercial real estate market. In addition, the market is seeing the expansion of small-pad retail, restaurant and service-oriented businesses surrounding these big box developments. There also has been significant growth recently in healthcare-related businesses, as a new $36 million hospital, a new $6 million surgical clinic and a new 60-unit assisted living facility are set to break ground.

Some of the major industries supporting the commercial market include forest products (paper production) driven by production at UPM- Kymmene’s Blandin Mill; along with the mill, iron mining (taconite production) and tourism are the traditional mainstays in Grand Rapids. Some emerging industries that have had significant impact on the commercial real estate sector include construction equipment manufacturing (All Season Vehicles, ASV Inc.) and extruded plastic product manufacturing (Minnesota Diversified Industries).

“Economic developers work first to create a business climate that provides opportunities for growth in existing industries. We feel that supporting businesses that have made a commitment to Grand Rapids will generate the majority of job growth in the community,” says Rob Mattei, community development director for the Grand Rapids Economic Development Authority, with regards to the city’s attempts to attract development. “However, we do seek and provide incentives for new or relocating industries in Grand Rapids, and we don’t limit our interest to any specific sectors. We are looking for companies that are willing to pay a living wage and those that would either add diversity to our economic base, or those that would benefit from and strengthen our existing businesses.” 

Several development projects currently are on the board in the Grand Rapids market, all of which would impact the real estate climate significantly. For example, the Blandin Paper Mill, owned by UPM-Kymmene, has completed the state-required environmental review process for an expansion of its existing facility in Grand Rapids. This proposed expansion — which consists of new paper machine and warehouse facilities — has not yet been approved by UPM at this time, but if the project does move forward, this $800 million capital investment will enhance the future outlook of this major employer substantially.

In addition, Excelsior Energy is in the initial phases of an environmental review, and is acquiring the necessary licenses and permits for an integrated coal gasification power plant. This facility is planned to be located on 1,200 acres of land in Taconite, Minnesota, approximately 10 miles east of Grand Rapids. This project has the potential to create 1,000 direct construction jobs during its 4-year construction phase, as well as approximately 100 direct and 300 indirect jobs during operation.

On the retail side, Wal-Mart is planning to construct a new 210,000-square-foot Supercenter in 2007, and Target is expanding its existing store next year as well.

“Most of the new commercial development is taking place along Highway 169 in the southern half of the city. This is where most of the undeveloped, commercially zoned property is located,” Mattei says. “The housing market could see a sharp increase if one or more of the major industrial projects on the horizon come to be.”

©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.