West Michigan Retail

Bussey

Submitted by Bill Bussey, vice president of Grand Rapids, Mich.-based Grubb & Ellis|Paramount Commerce. Posted 03-09-07.

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What area is your expertise?
• West Michigan retail real estate.

What trends do you see presently in retail development in your area?
• West Michigan continues to be an economically vibrant area with development in almost all sectors. New projects will continue to be built as long as they are matched with confirmed anchor interest. Later this year, for example, we expect to see a firm announcement that a new lifestyle center (the first in this area) will be built on Michigan Highway 37 and 3 Mile Road. The development team for this project is lead by Robert B. Aikens & Associates and its partner, CBL & Associates, and is expected to feature a number of new restaurants and retailers.

It is important to note that the retail health of any area is closely related to the overall economic health and activity of an area. One of the reasons that West Michigan has as vibrant and expanding retail market is because of our strong overall economy. We are blessed with a very balanced economy; 19 of 20 industrial groups are represented here and we are not dependent upon any one or two industries for our survival or growth. For example, unlike Detroit, automotive related businesses play a minor part of our overall gross economic product for the area. In addition, West Michigan is the home of many private companies that are doing well, such as Amway, Steelcase, Herman Miller and Meijer, which is the 28th largest retailer in the world.

The strongest office development activity is in the medical sector, which includes the world famous Van Andel Institute, the second highest endowed medical facility in the country behind Howard Hughes; a number of related research facilities; expansion of all three hospitals; etc.

What type of retail product is doing well in your area?
• Big boxes (all the following continue to expand): Wal-Mart Supercenter, Meijer, Target and Costco; Medium boxes: sports-related retailers, because there are more hunting and fishing licenses on the west side of the state than on the east side; Small: coffee retailers, restaurants and value-priced merchants.

What retailers are new to your area?
• Costco has recently come into our market with two stores. New restaurants include Texas Roadhouse (3 sites) and Longhorn Steakhouse (1 site). Cabela’s is in serious discussions with the City of Walker for tax incentives as an inducement for them to locate a second Michigan store in northwest Grand Rapids.

Who are the active retail developers in your area?
• Ramco Gershenson Properties, Robert B. Aikens & Associates, CBL & Associates, Geenen DeKock Properties and EdMark Development.

Robert B. Aikens & Associates and CBL & Associates are planning Village at Orchard Hills, a 400,000-square-foot lifestyle center, in West Michigan.

Please name one or two significant retail developments in your area. What impact will these projects have on the market?
• The most significant development will be a new lifestyle center, Village at Orchard Hills, which is proposed for Michigan Highway 37 and 3 Mile Road, and will be built by Robert B. Aikens & Associates and CBL & Associates. The approximately 400,000-square-foot retail component can be accessed via a newly created Main Street with the shops lining the street fronts of additional new roads. Parking will be available on the street as well as in abundance behind each building. The center will feature over 50 retailers, the majority of which will be familiar to those who have visited other lifestyle centers. Announced tenants so far include Barnes & Noble, P.F. Chang’s China Bistro and Biaggi.
• Ramco Gershenson Properties recently completed a 393,000-square-foot retail development at the intersection of Michigan Highway 6 and Kalamazoo, with Meijer, Target and Staples. M-6 is the new connector highway on the south side of Grand Rapids, which is spurring development at almost every interchange.
• Grand Landing, located in Grand Haven, Mich., is a mixed-use development on US-31, southwest of Grand Rapids, which will contain approximately 225,000 square feet of commercial space.
• Westshore Mall, located in Holland, Mich., has recently been purchased and is in the process of a very detailed renovation and expansion program.

Where is the majority of development taking place? Why is this area doing well?
• Along the new South Beltline (M-6): This highway connects Interstate 96, US-131 and Interstate 196 along the south side of Grand Rapids.
• 28th Street (Michigan Highway 11) at I-96: This is a high traffic area that is bounded on the west side by higher incomes. It also offers unique accessibility.
• Michigan Highway 37 between Knapp and Three Mile: This area has a new theater, several new restaurants, a number of new office buildings and other retail establishments in mixed-use developments, as well as a very successful Meijer. It also has numerous office parks in the area and soon will have a new lifestyle center at the corner of M-37 and Three Mile. This area is doing well because of traffic, daytime population and residential demographics.
• US-31 and Sternberg in Muskegon, Mich.: This has become the retail hub of Muskegon, including Lakeshore Marketplace, Barnes & Noble, a new Target, Toys “R” Us and Elder Beerman, CBL’s Lakes Mall, which features Sears, JC Penney and Dick’s Clothing and Sporting Goods, and numerous other smaller retail developments. This area is doing well because Muskegon was greatly underserved by retailers and restaurants; once development started at this location, others quickly followed. It is also very accessible near the interchange of US-31 and I-96.

Please describe the retail leasing activity in your area.
• Retail leasing activity in West Michigan continues to be strong, as is evident by the new developments in Grand Rapids, Muskegon, Grand Haven, Holland and many smaller towns in between. Many retailers are less aggressive than they were 3 years ago, and some require more time to make a commitment; however, demand is still high enough in the better areas that many existing retailers are seeking additional sites, and retailers new to the area are also active.

Please give a measure of retail vacancy rates. Please give a measure of available sublease space.
• Retail vacancy rates are divided into corridors that surround Great Grand Rapids. The 28th Street Southeast corridor is one of the lowest with a 5.9 percent vacancy rate, while the 28th Street Southwest corridor is higher at 15.8 percent vacancy. This is largely due to the 150,000-square-foot Rogers Department Store building coming into to the market. Alpine Avenue and the East Beltline corridor are holding steady around 5.5 percent. Plainfield/Northland Drive has a vacancy rate of 13.6 percent, while the lowest vacancy rate of 4.2 percent is the Rivertown Parkway corridor. Overall, the Greater Grand Rapids has a vacancy rate of 7.5 percent, which is the healthiest market in our area. Currently, there are only 35,500 square feet of sublease space available throughout the entire market.

What types of retailers should look into your market in the coming year? What type of retail is needed?
• We expect a positive decision from Cabela’s to select a second Michigan location in Grand Rapids — it’s first location is in Dundee, Mich., south of Detroit. This should be an excellent location for Cabela’s because the market for sporting equipment of all types is strong in West Michigan. Additionally, The Fresh Market is scheduled to open this fall and Whole Foods Market is currently evaluating the market for a possible store at the proposed lifestyle center.

Would you like to make any additional observations about the retail market in your area?
•West Michigan is a very interesting area because it has some unique features that all speak well for retail:
     • Western Michigan has the highest percentage of charity of any major city, with the exception of Salt Lake City. This is important because we have seen many millions of dollars donated to start a new historical museum, an art museum, a civic center, an arena, the expansion of the Grand Rapids Ballet Company and many others. This has yielded secondary development throughout the area and has had a very positive effect on the retention of younger people, influx of conventions and new businesses.
 • West Michigan has a median age of 34 — one of the lowest median ages in the Midwest. This compares, for example, to 36 in Indianapolis, 39 in Cleveland, 35 in Chicago and 37 for the United States as a whole. This is important because it means that young people in West Michigan are staying in this area after graduating from high school and college; more importantly, young people who come into this area for higher education or jobs are staying.
     • There are 60,000 college students in the greater Grand Rapids area, with 39,000 in downtown Grand Rapids alone.
     • Household income has risen almost 20 percent from 2000 to 2006.
     • This area is in the top 10 metro areas in the country in terms of patents issued per-capita.
     • We have a highly educated population, third only to Indianapolis and Madison, Wis.
     • The above statistics indicate to us that we have a very educated population that is in the time of life when family expenses are highest, and they do have money to spend.

Lansing Retail

Kildea

Submitted by Jason Kildea, senior associate – retail advisor with the Lansing, Mich., office of CBRE/Martin.  Posted 07-08-08.

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Unemployment Charts

What area is your expertise?
Retail leasing, sales, and development in Michigan.

What trends do you see presently in retail development in your area?
Retail development is stagnant at this time.  However, there are several planned developments that will certainly become more viable when the local economy improves. 

What type of retail product is doing well in your area? 
Neighborhood Strip Centers. 

What retailers are new to your area?
Tim Horton’s and several independent restaurants.  Since the earlier part of the decade, we haven’t had much in the way of “new” traditional retail to the market. 

Who are the active retail developers in your area?
Mostly local developers.  The Gillespie Group, Strathmore Development and The Eyde Company. 

Please name one or two significant retail developments in your area.  What impact will these projects have on the market?
East Village near the MSU Campus in East Lansing.  Currently in planning stages only and no tenants named at this point.  Will encompass 250,000 square feet of retail, with a movie theater, a hotel, 100,000 square feet of office and both for lease and for sale residential units.  Encompasses over 20 acres.  Numerous planned projects around the Eastwood Towne Center but nothing definite at this point.

Where is the majority of development taking place? Why is this area doing well? 
Near Eastwood Towne Center, but all is planned at this point. 

What area do you expect to be the next big retail development market? Why?
East Village, because of its location and mixed-use aspect. 

What major leases have been closed recently?
Furniture Row, 50,000 square-foot build-to-suit, located on Market Place Drive, Lansing.

Please give a measure of retail vacancy rates and a measure of available sublease space.
Lansing overall market is about 15 percent. 

What types of retailers should look into your market in the coming year? What type of retail is needed?
Discount stores, furniture/home improvement, and food users. 

Would you like to make any additional observations about the retail market in your area?
Our market is stagnant at this point and in need of new development to attract new retailers. 

 

Detroit Industrial

Lansing Industrial

Grand Rapids Industrial

Grand Rapids Multifamily

Mikolay

Submitted by Edward Mikolay, senior associate with CBRE | Grand Rapids. Posted 09-08-08.

What area is your expertise?
Greater Grand Rapids, Michigan.

What trends do you see presently in multifamily development in your area?
From 2002 to 2007, we had a tremendous amount of condo construction. Those projects are finishing up and a few new projects are being announced. Several condo projects that were announced have been pulled due to insufficient sales. Apartment construction has been moderate over the past few years. A few new projects have broken ground this year. Student driven markets like Allendale (Grand Valley University) have seen consistent deliveries of new units the past several years — and more units will be added to the market in 2008. Condo conversion projects started in 2006 are still selling out.

Who are the active multifamily developers in your area?

Condos — Second Story Properties, Parkland Properties, McKay Tower Partners LLC, Moch International, Kegle Construction, Robert Grooters Development, Eastbrook Homes, Redstone, and Epcon Communities.

Apartments — Miller Valentine Group, Hof Investment Group, IPA, Copper Beech, and Fusion Properties.

Please name one or two significant multifamily developments in your area. What impact will these projects have on the market?

River House Condominiums — Robert Grooters Development: 207 units, Downtown. Under construction, estimated completion date 4/2009. High-rise tower on the west side of downtown with views of skyline.

Icon on Bond Condominiums — Moch International: 108 units, Downtown. Finished construction, marketing units. Nine-story mid-rise in Monroe North area. Now also renting units.

Park Row Condos — Kegle Construction: 34 units, Medical Mile. Finished construction, 60 percent sold.

Where is the majority of development taking place? Why is this area doing well?
Downtown. Most developers are attracted to downtown because of the growth in the medical industry. More than $1 billion in medically related development is occurring in Grand Rapids’ Medical Mile.

What area do you expect to be the next big development market? Why?
The west side of downtown. Grand Valley State University has a large presence on downtown’s west side. The west side has numerous historic buildings, nightspots and restaurants. Growth from the Medical Mile, along with the completion of RiverHouse, will translate into growth on the west side.

What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing?
Apartment leasing across the market has improved. Concessions, though still largely present, are being burned off. Some owners, especially at the bottom end of the market (Class B-/C properties) have even begun to report rent increases. Rent for Class A projects struggles to maintain rent premium over Class B properties.

Please give a measure of apartment vacancy rates.
Market wide occupancy averages approximately 90 percent for Grand Rapids.

Please give a measure of condo sales activity in the area.
Sales velocity for condo projects averages 2 to 4 units per month in the downtown area, suburban projects are slower.

What impact do current interest rates have on the apartment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in the next year?
The issue for apartment owners and condo developers will likely be capital availability rather than interest rates. Since the lending environment for homeowners has gotten considerably more difficult, I would expect apartment occupancies to improve and that condo developers would have a harder time selling units. However, dramatic improvement in the apartment sector will likely be held back by shadow rentals (unsold condos being rented), slowing job growth, and younger people opting to reside with parents for a longer period of time.

What is the status of job growth/(un)employment rates and what bearing will it have on the multifamily market?
Job growth has remained stable during 2007 and first half 2008, but as is true in any market, growth in apartment demand will be determined by the number of jobs the local economy can generate. Grand Rapids is well positioned to generate positive job growth in the future.

Detroit Multifamily

Dillon

Kevin P. Dillon, associate partner with the Detroit office of Hendricks & Partners. Posted 09/21/07.

What area is your expertise?
• My area of expertise is in multifamily advisory and brokerage throughout Michigan.

What trends do you see presently in multifamily development in your area?
• Multifamily development continues to be extremely limited in the Detroit Metropolitan Area and it could be a few years before developers really return to the market. We are expecting approximately 550 units to be completed in 2007, up slightly from the 484 units completed last year. As condominium sales have cooled with the slow down in the single-family housing market, several condominium developers have resorted to finishing their developments as apartments. Condo conversion has all but stopped.

Who are the active multifamily developers in your area?
• The most active multifamily developers in the Detroit Metropolitan Area have been Buzz Silverman of Silverman Companies, Gary Grewal of Singh Development, and Jonathan Holtzman of Village Green Companies. Each of these developers has built several new properties over the past five years, though Village Green has focused on the redevelopment and repositioning of older assets in the market as well as development.

Please name one or two significant multifamily developments in your area. What impact will these projects have on the market?
• The most notable new apartment development is Cider Mill Village in Rochester Hills, Mich. Constructed by Singh Development, this 339-unit community is located in a growing neighborhood and should be one of the more desirable properties as the market continues to improve.

Where is the majority of the development taking place? Why is this area doing well?
• The majority of the developments have been taking place in Oakland County. Oakland County is one of the wealthiest counties in the country and a majority of the business growth in the Detroit Metropolitan Area has occurred in this area. More specifically, the Interstate 75 corridor, including parts of Troy, Auburn Hills, Rochester Hills, and Clarkston, have experienced a large portion of the development to the north; while Novi and Wixom, along the I-96 corridor, have experienced growth to the west. Other western communities that have recorded growth have been along the I-275 corridor and include Northville, Plymouth and Canton. The majority of the growth has been through urban sprawl, which is contracting with the slowing of the single-family home sales. This contraction will deter certain developments in the furthest outlying communities.

What area do you expect to be the next big development market? Why?
• The next big development markets will be the continuation of the urban sprawl in the Clarkston, Wixom, Milford, and South Lyon areas. These communities continue to be among the stronger growing and stronger performing areas in the metropolitan area. Macomb County is also an area to watch, as developers are planning some larger projects in this submarket.

What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing?
• While the overall apartment market continues to struggle, there are pockets of areas where leasing activity has recently shown improvement. The Southeast Oakland County submarket recorded vacancy of 6.4 percent in first quarter 2007, down 90 basis points from first quarter 2006. Vacancy in the Southwest Wayne County submarket is down 60 basis points during the same period to 6.9 percent. Conversely, the Northwest Wayne County continues to struggle, with vacancy recorded at a metro-high 11.9 percent in first quarter 2007.

Please give a measure of apartment vacancy rates and please note the city/state these apply to.
• Vacancy was recorded at 7.3 percent for the Detroit Metropolitan Area in first quarter 2007, up 30 basis points from one year prior. Vacancy is expected to remain in the low- to mid- 7 percent range for the remainder of the year as little new development and an improving economic outlook help to stabilize the apartment market.

Please give a measure of condo sales activity in the area and please note that the city/state these numbers refer to.
• Rising interest rates and the slowing single-family home market have significantly cooled condo sales activity in the Detroit Metropolitan Area. Many condo developers have lowered their expectations and we are starting to see condo units return to the rental inventory.

What impact do current interest rates have on the apartment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in the next year?
• The interest rates have a severe impact on the apartment and condominium market throughout the Michigan market. Rising rates have helped the rental market, as foreclosed homeowners are forced back into the rental pool and potential home buyers are remaining on the sidelines. Unfortunately, the increased cost of capital is also keeping some potential apartment investors on the sidelines as well.

The rising interest rates have already greatly affected the condominium market. Condominium sales slowed to a point where many developers have stopped the construction of new buildings. Condo prices have dropped precipitously through developer concessions such as prepaid taxes for twelve months, no common area maintenance dues for the first year, and even covering interest costs for buyers for the first twelve months

What is the status of job growth/unemployment rates and what bearing will it have on the multifamily market?
• The labor market in the Detroit Metropolitan Area has recorded substantial losses over the past several years, however, relief may be on the way. The unemployment rate in Detroit was recorded at 6.9 percent in May of 2007, down from 8.0 percent recorded in January of 2007. Job growth is expected to turn positive as early as 2008, which would reverse a trend dating back to 2000. Job growth would likely help begin to stabilize the multifamily market as new construction is expected to remain limited.

Would you like to make any additional observations about the multifamily market in your area?
• While still struggling, the Detroit apartment market has several factors working it its favor. A combination of limited new apartment development, improved economic conditions, a slumping housing market, and rising interest rates should present a more favorable environment for apartment owners and investors. It might be a little premature to call for a recovery in the next year, but it may be time to start taking a closer look at upside properties in this area.

Lansing Multifamily

Mikolay

Submitted by Edward Mikolay, senior associate with CBRE | Grand Rapids.  Posted Online 05-21-08. 

What area is your expertise?
Greater Lansing

What trends do you see presently in multifamily development in your area? 
Over the past several years, most new development in the metro area occurred in and around East Lansing, and much of it was University related, either student rentals or condos marketed to recent grads or retirees.  Much of this growth occurred along the northern tier, near Lake Lansing Road and Chandler.  More recently, much attention has been drawn downtown where new apartments have been delivered and condos are slated to be built.

Who are the active multifamily developers in your area? 

• Condos — Robert Grooters Development, Gene Townsend, Gillespie Group, and Biersbach Development
  Apartments — Gillespie Group, DTN Management, Atlantis Development, and Strathmore Development.

Please name one or two significant multifamily developments in your area. What impact will these projects have on the market?

• Capitol Club Tower Condominiums — Robert Grooters Development – 175 units, Downtown.  Planning stages, 50 percent reserved.  First high-rise tower in Lansing.
• Kalamazoo Gateway — Gene Townsend – 120 units, Downtown.  Planning stages.  Mixed-use retail/apartments/condos.
• The Stadium District — Gillespie Group - 50 units, Downtown.  Project completed, currently leasing/selling.  Mixed-use retail/apartments/condos.

Where is the majority of development taking place? Why is this area doing well?
Downtown.  Most developers are attracted to downtown Lansing because it has largely been ignored and they believe there is pent-up demand for residential downtown.  Additionally, economic development incentives are available that help make downtown projects work.  Developers believe in the viability of downtown Lansing largely because of the three stabilizing forces of State Government, Michigan State University (MSU), General Motors, and the growth of the insurance industry.

A flurry of condominium and apartment construction is also taking place in in-fill locations near MSU to cater to students and recent grads.  These are typically smaller projects that involve adaptive re-use or the razing of existing structures to make room for better-use developments.

What area do you expect to be the next big development market? Why?
I think East Lansing will continue to evolve and will be the center of some market changing projects.  Traffic patterns may even change as a result of better land use.  Obsolete retail will get razed or converted to office or residential.  Old housing or apartments will get razed in favor of retail or office.  Old office will be gutted or razed and converted to residential or retail.  There is tremendous market potential in East Lansing and a lot of underutilized properties – this will create opportunities for some developers.

What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing?
East Lansing student apartments have held constant but have yet to fully digest the delivery of some 4,000 units between 2001 and 2004.  Older stock that competes on price seems to perform better than newer lease by-the-bed properties. 

Lansing market properties have struggled in recent years.  Northern (DeWitt) and southern (Mason) suburban areas are performing well.  Rentals in Okemos/Meridian Township have struggled recently.

Please give a measure of apartment vacancy rates.
Greater Lansing market averages:
Student market — 90 to 95 percent
Conventional market — 85 to 90 percent

Please give a measure of condo sales activity in the area.
Sales velocity for condo projects averages is hard to gather, but seems pretty slow.  According to developers, Capitol Club Tower is 50 percent reserved after 10 months of marketing.

What impact do current interest rates have on the apartment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in the next year?
The issue for apartment owners and condo developers will likely be capital availability rather than interest rates.  Since the lending environment for homeowners has gotten considerably more difficult, I would expect apartment occupancies to improve and that condo developers would have a harder time selling units.  However, dramatic improvement in the apartment sector will likely be held back by shadow rentals (unsold condos being rented), slowing job growth, and younger people opting to reside with parents for a longer period of time. 

What is the status of job growth/(un)employment rates and what bearing will it have on the multifamily market?
The unemployment rate for the Lansing MSA stands at 6.1 percent as of first quarter 2008.  This is better than the State of Michigan overall (7.2 percent), but worse than the U.S. average of 5.1 percent for the same time period.  Job growth has remained stymied, but the region has retained employment due to the three-prong nature of its economic base.

Lansing Office

Rosekrans

Submitted by  Eric Rosekrans, senior vice president with the East Lansing, Michigan office of CB Richard Ellis/Martin.  Posted Online 05-13-08.

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What area is your expertise?
The office market in Lansing, Michigan

Who are the active office developers in your area? 
TMN Builders, Boji Development, among others.

Please name one or two significant office developments in your area. What impact will these projects have on the market?
The 2900 Building was completed within the last 12 months and is a 80,000 square foot suburban office structure at the US-27/Lake Lansing Road interchange.  Developed by 501LLC, it was a 5-story, Class A building that leased within 15 months after completion.  Most of the users were already located within the mid-Michigan market area but this project did show that good quality space was in demand at that time.

Where is the majority of development taking place? Why is this area doing well? 
Most new development is occurring at the US-27/Lake Lansing Road interchange.  This area is doing well due to a recent surge in retail development and the availability of land along a highway interchange route.

What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? 
The entire market is struggling to some degree.  Areas that do see some degree of activity are the US-27 Lake Lansing Road interchange and the Jolly/Okemos Road interchange.

Please give a measure of office vacancy rates. Please give a measure of available sublease space.  Current office vacancy rates of the entire area are approximately 18 percent.  This covers the greater Lansing Michigan area.  The total size of the market is 9.3 million square feet.

What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market in the next year? 
Interest rates have minimal effect on our market because there is little new development occurring and this trend should continue for the next few years.

What is the status of job growth/(un)employment rates and what bearing will it have on the office market? 
Our market is geared to three major employers, the State of Michigan, Michigan State University and General Motors.  The strength of these dictates much of what occurs in the office market.  Currently, all three are fairly stable thus job growth should be neutral for the next few years, therefore creating a stable office environment.

Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? What areas will be affected? 
The insurance industry does have a significant impact in our market.  The areas defined above should benefit from this to some degree.

Would you like to make any additional observations about the office market in your area? 
Lansing is a third tier market dependent on those businesses listed above.  Although the vacancy rate is significantly higher than the national average, it has stabilized and should remain this way for the next few years.  The direction of the Michigan economy over the next few years will dictate the path the office market will take.  We feel a bottoming out has occurred or is close to occurring and market statistics should remain in the range they are in for this period of time.

Grand Rapids Office

Submitted by Walter Bulkowski, senior associate office advisor with the Grand Rapids, Mich., office of CB Richard Ellis.  Posted 06-18-08.

Bulkowski

What area is your expertise?
Office leasing and sales.

What trends do you see presently in office development in your area? 
Most of the office development in our area is in the medical services and is space that controlled by the large Hospital groups.

Who are the active office developers in your area? 
Second Story, Locus Development, First Companies, AJV, Christman, Fusion Properties, and others.

Please name one or two significant office developments in your area. What impact will these projects have on the market?
The new Medical centers on Michigan Ave Hill that will include a new DeVos Children’s Hospital, Lemmen-Holton Cancer Center, MSU Medical School, Expansions to the VanAndel Institute, and the new Metro Health Village in the southwest suburbs.  These new buildings signify the new “industry” of West Michigan and will impact future developments for the next 25 years.

Where is the majority of development taking place? Why is this area doing well? 
As stated above most of the development in the Grand Rapids area has been related to the Health Fields on Michigan Ave Hill (known as Medical Mile) and at the new Metro Health Village in the southwest suburbs.  Health care is relatively recession proof, which helps support the new developments.

What area do you expect to be the next big development market? Why? 
There have been several larger new class A office complexes discussed for the central business district of downtown, but none have taken off as of yet.  With the growth in the medical community it is just a matter of time before a large scale office complex is built in the Central Business District.

What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? 
Most areas are struggling.  With the market rates being depressed during the last several years’ businesses now have the opportunity to “upgrade” their space and thus has created a good amount of movement, but new net growth.

Please give a measure of office vacancy rates.  Please give a measure of available sublease space.
Overall market is in the range of 15-20 percent.  With the suburbs having a slightly higher vacancy rate.

What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market in the next year? 
Interest rates have been historically low for the last several years and therefore I do not see any impact from the rates in the next couple of years.  However sourcing capital has become difficult because of the banking industry problems and thus is hurting sales, but not leasing.

What is the status of job growth/(un)employment rates and what bearing will it have on the office market? 
West Michigan in general has remained stronger than the rest of the state, but overall is relatively flat.  Without job growth the absorption of office vacancies will remain very low.

Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? What areas will be affected? 
Medical has been absorbing all the new development space as mentioned above.  Medical will continue to expand and the supporting business should follow suit over time.

Would you like to make any additional observations about the office market in your area?  
Grand Rapids will continue to see change from the old brick and mortar industries of the past to the new medical and clean technologies of the future.  However change is inevitable and thus we all better get use to it and more importantly embrace it!