HEARTLAND SNAPSHOT, OCTOBER 2004

Lansing, Michigan

Both the office and industrial markets in Lansing, Michigan, are experiencing higher vacancy rates compared to 2003, according to Jerome Abood, senior vice president of Signature Associates – ONCOR International. Many businesses continue to be cautious about the recovering economy. “Despite this, several significant office projects and a modest number of industrial developments are expected in the Lansing area in the near future,” Abood says.

The Boji complex office building, located at Townsend and Allegan streets, is currently under construction in the central business district (CBD), only blocks from the Michigan State Capitol building. The nine-story building will add 150,000 square feet of office and retail space and a 1,450-car parking structure. “It is Lansing’s largest private development in about 20 years,” he says. “This is a significant project expected to help further the revitalization efforts of downtown Lansing.”

The Boji complex office building has signed leases with Standard Federal Bank, Dykema Gossett law firm, and the Majority restaurant. Standard Federal Bank will share the first floor with the restaurant and occupy approximately 9,600 square feet. The Majority will occupy the remaining first floor space, about 5,400 square feet. Dykema Gossett will fill the building’s top two floors, approximately 30,000 square feet. Owners of the building indicated it was 40 percent leased at the end of July.

“The state of Michigan has shown considerable interest in downtown Lansing,” Abood says. “During the past year, it has solicited proposals for moving several departments to that area.”

A building adjacent to the former Prudden Wheel factory, which sits on a 17-acre site between Saginaw and Oakland avenues, was recently redeveloped by H Inc. The building is approximately 200,000 square feet with more than 1,100 on-site parking spaces. H Inc. recently rebuilt a 17,000-square-foot industrial building along the Grand River in Lansing’s Old Town. The company also rebuilt a 17,000-square-foot building located at 212 E. Grand River in Old Town. Clark Hill PLC Attorneys at Law will be moving into this building, which is the former Race Street Mill.

General Motors Corporation (GM) is Lansing’s largest industrial presence. Construction started earlier this year on the Lansing Delta Township Assembly Plant, which will comprise approximately 2.4 million square feet when completed. Already operating at the site is the Lansing Regional Stamping Plant, described as the most modern stamping plant in North America. “GM’s commitment to development in the Lansing area is attracting first- and second-tier suppliers, and activity should increase considerably in 2005,” Abood says.

“With the anticipation of GM’s plant in Delta Township, both office and industrial developments will take place in the west submarket,” he says. “The east submarket also will experience growth in office development as the area continues to keep up with recent retail and residential growth.”

Property owners are trying to attract the first- and second-tier suppliers interested in the area because of the opening of its Lansing Delta Township Assembly Plant in 2006. Major industrial users in the area, such as GM and Meijer, own the spaces they occupy, but there are a variety of businesses that support them in their operations.

In Delhi Township, the Regional Steel Distribution Center (RSDC), a 630,000-square-foot facility that supplies GM’s stamping plants in Michigan and Indiana, was completed in 1998. The RSDC is the largest steel distribution center of its kind in North America. “This area has high expectations for future growth, and I expect the RSDC to positively impact development,” Abood says.

Holt is a prime location for future growth, especially in Delhi Township. The Delhi Technology Center, which is adjacent to the RSDC, has flexible size parcels available for corporate headquarters, research and light development, light industrial and technical research. Parcels are also zoned for office and retail. In addition, vacant land is available for development north of the Delhi Technology Center, which will be targeted as mixed-use with commercial, office and residential space.

Another industrial development located in the south submarket is Oakwood Executive Park, a 62-acre industrial park owned by Dart Development Corporation. Its newest addition is a 103,000-square-foot building.

Industrial lease rates range from $3 to $5 per square foot, per year. With high vacancy rates, landlords are finding it necessary to offer increased concessions in order to appeal to tenants. “The same holds true for office landlords, which must be creative in offering improvement allowances and determining security deposits in order to stay competitive in the market,” Abood says. Office lease rates range from $8 to $24 per square foot, per year. The highest asking lease prices are found in the east and west submarkets and the CBD.

Industrial vacancy rates average about 30 percent, with the west submarket experiencing the lowest vacancy rate, and office vacancy rates average about 20 percent, with the east submarket experiencing the lowest rate.

There are various projects underfoot for development in DeWitt, a community north of Lansing. Auto Owners Insurance Group recently purchased 300 acres of land near Interstate 69 and may move its world headquarters to the area. Looking Glass Inc. of DeWitt has plans to build an office park on Airport Road, which runs adjacent to Capital City Airport and then north to DeWitt. “Most of the DeWitt area has great access to I-69, which makes it 10 to 15 minutes from most locations in Lansing,” Abood says. “Residential growth has already been booming in the area.”

Lansing and its surrounding communities welcome development projects that enhance the quality of life and the local economy. “I am excited to be a part of the fast growing real estate market in our tri-county area,” Abood says. “The city is experiencing tremendous economic growth, which is a positive step forward for businesses and our local communities.”

©2004 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.