July 22. 2016
By Pat Evans
No sings of impending doom mar the real estate world, according to two real estate firm market reports.
Colliers West Michigan and NAI Wisinski of West Michigan both released second-quarter market reports for the office, industrial and retail markets last week, and both continue to see positive numbers.
Colliers and NAI each reported retail vacancy rates falling below 10 percent.
Downtown and the West Side are gaining steam in retail, with a variety of projects finishing up or proposed, including major out-of-market breweries New Holland and Atwater opening up, as well as a Rockford Construction-proposed project including a near-downtown Meijer.
Switch Ltd. locating in the former Steelcase Pyramid likely will bring an increased focus on the M-6 and Broadmoor corridor, likely with “explosive growth,” according to Colliers retail advisor Mark Ansara.
Along with new areas, traditional retail corridors such as East Beltline, 28th Street and downtown will continue to grow as the city gains attention from national retailers.
“The area has gained so much publicity over recent years that the nationals are taking notice and looking at this market first before Detroit and the east side of the state,” Colliers retail advisor Chris Prins said. “But the question is still out there: With main corridors almost full, where will be the next retail hot spot?”
Both Colliers and NAI said absorption and vacancy declines are slowing, which could cause problems.
“As we move into the second half of 2016, the lack of inventory for Class A space will be the biggest challenge, unless new construction starts to pick up,” NAI partner Rod Alderink said. “Class B absorption will continue to be positive, and vacancy rates should continue to decrease across all sectors.”
July 15, 2016
By Sentinel staff
An extended-stay Hilton hotel is coming to the Holland area, according to the firm that brokered the land deal. The first Home 2 Suites by Hilton in Michigan will be located in Holland Township at 0 West Shore Drive near the Shops at Westshore, announced NAI Wisinski of West Michigan Friday afternoon.
The firm helped negotiate the sale of 2.5 acres of land in the township between the seller West Shore Investors LLC and the buyer, IMDC Acquisitions LLC.
“The Hilton extended-stay property will be located near the popular Shops at Westshore and other major retail chains and brands, so we expect Home 2 Suites guests to greatly enjoy the Holland area,” said Doug Taatjes, associate broker with NAI Wisinski of West Michigan Partner who made the deal, in a statement.
June 28, 2016
From Mlive written by Jim Harger
For the second year in a row, the Grand Rapids- Wyoming metropolitan area was ranked as the nation’s third largest place to do business by Area Development Magazine.
Grand Rapids was ranked behind San Francisco and Napa, Calif. in this year’s poll of “leading locations” by the magazine, which specializes in site selection and relocation for employers. In 2015, Grand Rapids was ranked behind Denver and Houston.
“Grand Rapids is flexing its economic strength with a number three ranking,” said Brigit Klohs, president and CEO of The Right Place, Inc. The ranking came in Grand Rapids’ second year in the “big city” category, which is any MSA with populations of 600,000 or more.
“This ranking turned a lot of heads when we jumped 39 spots last year, and now we’re getting a lot of looks by maintaining a top three position,” Klohs said. The region was ranked 42nd in 2014 and 127th in 2013.
June 9, 2016
By Pat Evans
A new day care facility for dogs is slated to be built at a seven-acre site in town this summer.
Charlie’s Canine Care is expected to open Aug. 1 in Grand Rapids, at 14105 Ironwood Dr. NW. A site plan for the land was recently approved, and construction on a $500,000 expansion is expected to begin this month. Eric Ludstrom and Rita Lusdstrom will manage the business with their daughter, Kelsey, managing day-to-day operations.
The property has an existing 1,920-square-foot building, which will feature a 480-square-foot office and be used as the initial facility for up to 50 dogs, according to Grover Real Estate’s Max Grover, who represented the property’s buyer.
Kurt Kunst of NAI Wisinski of West Michigan represented the property’s seller, H&K Investments.
Charlie’s Canine Care will add a 12,000-square-foot dog-run area with natural grass. Dog owners will also be able to view their dogs on webcams.
Real estate execs, construction and architecture firms expect growth despite interest rate concerns
By MiBiz Real Estate Marketing Staff
When Janet Yellen convenes meetings of the Federal Reserve Board this summer, the world will be
watching if U.S. interest rates rise and waiting to see if such a move will influence commercial
development across the nation.
But in West Michigan, local observers appear to be taking more of a “who cares” stance. So long as
the Fed doesn’t get reckless with a huge hike, they generally are more concerned about how they can
fill job openings with qualified people and manage backlogs of work that have hit record levels.
SNAPPING UP VACANT LAND
The local market for industrial and office space is booming so far this year, building on what was a very handsome 2015. Among a number of trends, one stands out like a blinking For Sale billboard: vacant land is hot. Shari Veldman, executive director for the Commercial Alliance of Realtors- West Michigan, said
statistics tracked by her organization indicate that sales of vacant land — generally a precursor to construction — are up strongly in terms of number of transactions and total square footage. The number of transactions is up a whopping 42 percent for the first five months of this year, compared with the same period for last year. Area of land sold in the first five months is up about 11 percent from the 27.2 million square feet of land sold last year for the same period.
The statistics apply to listings across West Michigan, with the majority coming from the
organization’s eight-county region of Calhoun, Ingham, Ionia, Kalamazoo, Kent, Muskegon, Ottawa,
and Van Buren counties.
CREATING NEW INDUSTRIAL/WAREHOUSE SPACE
Stuart Kingma, associate broker and industrial service provider at NAI Wisinski
in Grand Rapids, said one driver of the uptick in vacant land sales has been a pro- longed tight
inventory for industrial space.
“We forecasted about 18 months to two years ago that there would be a realneed for new product to come on the market on the industrial side, and we are seeing that happen now,” Kingma said. “We see land sales taking place to fill the gap of (industrial) inventory —inventory that no longer exists.”
Construction companies, engineering firms and architects are busy hitting deadlines with projects
that now seem more urgent to replenish the industrial, distribution and warehouse space stock.
“When you are building, you essentially don’t compare what someone paid yesterday, but what you
have to pay tomorrow,” Kingma said. In addition to factory space, the need for warehousing and distribution space is growing as
manufacturing continues to churn products and consumers begin to expect next-day or even same-day
delivery of products, based upon the Amazon marketing model. FedEx is building a
346,000-square-foot distribution center located on a 60-acre parcel along 4 Mile Road in Walker,
and Robert Grooters Development Co. is in the midst of constructing what may eventually be almost
800,000 square feet of flexible space that can be used for manufacturing or ware- housing in a
project called Area 52.
UPTICK IN OUTLOT SALES
Jenny Waugh, marketing operations director at Fishbeck, Thompson, Carr
& Huber Inc. in Grand Rapids, sees the same demand for vacant land, boosted by an additional
driver: consumer-oriented businesses that want to locate near big-box retailers.
“From what I’ve heard from other planning commission members and real estate developers, there’s a
lot more interest in the outlots that have been sit- ting there for years,” said Waugh, who has
noticed the trend both in her professional capacity and as a planning commissioner in Algoma
Township. “We are seeing just as much movement on land zoned for warehouse space and industrial use
after years of those sites sitting too. I don’t know if it’s because the economy is better now, but
there are more restaurants and retail operations that are moving into areas now.”
She also noted an uptick in hotel construction, and some empty parcels being developed for
mixed-use projects that marry office and retail uses.
RECORD YEAR FOR ARCHITECTURE, ENGINEERING & CONSTRUCTION
The pent-up demand for architectural and engineering services has put Fishbeck, Thompson on track
to meet or exceed last year’s sales, which in itself was a record year, Waugh said. The firm opened
an office in Columbus, Ohio, in February, and it is planning to open an office in downtown Detroit
in fall. Fishbeck, Thompson has added 50 full-time employees during the past year, bringing total
full-time employment to about 390 people. Established 60 years ago, the company provides
engineering, environmental sciences, architecture, and construction management services for
projects in the municipal, healthcare, retail, commercial and industrial sectors.
All of the work being done on the architectural and engineering end of new industrial projects is
translating to long backlogs for construction management companies, general contractors and
Todd Oosting, executive vice president and partner at CD Barnes Construction in Grand Rapids, said
his company is on track to post 25 percent higher revenues in fiscal 2016 than last fiscal year,
buoyed by brisk construction of office, retail and multi-family residential projects. With roots
reaching back to 1954, the construction management firm is seeing a positive trend where developers are assuming more risk by constructing larger office or retail projects where maybe only half of space is preleased. “It’s been a long time since we’ve seen that sort of activity,” Oosting said.
CD Barnes hired three new employees in the past fiscal year to bring total full-time employment to
37 people, a necessary move to handle demand for construction management of projects in West
Michigan and other markets nationally such as Florida and northern Illinois. The firm is looking to
fill two more positions internally, Oosting said, and it’s actively dealing with the dearth of
outside contractors available to work on projects. “The big problem is finding capable contractors
and suppliers right now,” he said. “For instance, we have projects that we are doing in multi-family, and we
are having a hard time even getting the subs to respond to us because they are so busy. Roofers,
framers, masons, plumbers — you name the trade — are hard to find.”
Jeff VanderLaan, CEO of Kent Companies Inc., said his company has a backlog as a subcontractor of
concrete work that “is the largest it has ever been and out the farthest that it has ever been.”
Founded in 1957, Kent Companies, is headed for another record year of revenues based on the first quarter results of projects in West Michigan
and other market nationally, VanderLaan said. The Grand Rapids-based full service concrete
subcontractor has operations in Detroit, Dallas, Charlotte, N.C. and Strausburg, Ohio.
Like Fishbeck, Thompson, Kent Companies is seeing a terrific backlog of work. “Subs usually have
a three-month to six- month backlog, but our backlogs are getting stretched out into
2017 and potentially 2018, which speaks to the huge demand for new construction and renovation” of
commercial real estate projects, he said. Kent Companies has more than 25 operating units
designated by geography, then by type of project ranging from the Tanger Outlet mall in Byron
Center with 361,000 square feet of foundations and slabs to home repair services that may cost
Kent Companies has had to respond to the demand by beefing up its full-time personnel and
investment in training and technology, VanderLaan said. Nationally the company employs 900
full-time people, up from the about 350 full-time employees it had two years ago. Of the current
employees now, about 300 are servicing West Michigan projects, up from the about 200 that it
employed in the area two years ago. Even with the burgeoning growth, Kent Companies is looking
for more qualified individuals, he said.
“Because the demand seems so robust and there is so much interest in development, we have greater
confidence to invest in people, technology, training, and equipment because we know they’ll be a
return on it,” VanderLaan said. “A few years ago, we knew that the growth was good, but it also
seemed more like a house cards that could collapse.”
Along with a larger payroll, Kent Companies has invested in cloud-based information management
tools that track inventories of equipment and tools, timekeeping management and 3-D laser layout
systems that reduce the time involved in planning concrete buildings and flat floors.
Construction management companies and contractors of all sizes also have benefited from the strong
growth in commercial real estate projects.
“When the economy took off, she really took off with a bang,” said Fritz Wahlfield Jr., president
and CEO of Fritz Wahlfield Construction Co. Inc. in Comstock Park. With all the work on
commercial/industrial buildings and other projects that range from new schools to an apple packing
plant, Wahlfield expects revenues for his company to increase more than 15 percent from his 2015
results, which was a record year for revenues.
Established in 1954, the general contractor and construction management company employs 12
full-time people and is in the process of hiring two more people to help with the current workload,
Wahlfield said. “When things started up after 2008, it
was more economical for companies to buy existing buildings or build additions. Now it’s time for
them to build new.”
Wahlfield said commercial/industrial projects are keeping his company busy, but he is seeing a rise
in the number of school projects in the metro Grand Rapids area. “A lot of school bonds have been
passed recently, so we are seeing movement there,” he said. “We have 13 school projects going on
right now in West Michigan.”
NEW PROJECTS IN DOWNTOWN GR
Mary Anne Wisinski, principal and office advisor at NAI
Wisinski of West Michigan, said inventory is low for Class A office space in the metro area, and
there are pockets of short- ages for office buildings for sale in downtown Grand Rapids and the
northeast quadrant of the metro area that includes the East Beltline and Cascade-Ada area. With 30
licensed brokers, NAI Wisinski specializes in commercial real estate, consulting, lease
administration, property management and other services.
She said the quarterly market report generated by her firm to track office space indicates that the
area has some of the lowest vacancy rates for Class A office space in more than
7 years. For the downtown submarket, the report showed that vacancy rates dropped to 2.4 percent at
the end of the first quarter of 2016, compared with 6.2 percent in the last quarter of 2015. In
the northeast submarket, vacancy rates dropped to 2.3 percent, compared with 5.4 percent in last
quarter of 2015.
The report highlighted some new downtown projects under construction or soon to get underway,
including the 5-story mixed use building called The Venue next to The BOB; 14-story residential
tower at 20 E. Fulton St; and a 9-screen movie theater, retail space, 187 residential units, and
900 space parking deck just south of the Van Andel Arena.
Wahlfield, Kingma, Wisinski and others said they weren’t all that concerned that a modest interest
rate hike by the Federal Reserve Board would throw cold water on the brisk business in commercial
real estate and construction.
“While no one likes to see interest rates increase, they historically are still pretty low,”
Kingma said. “And incremental adjustments, so long as they are prudent, won’t have a significant
negative impact on what it is we’re doing.”
“If they do it within reason, I don’t see a big issue with an interest rate increase,” Wahlfield
said. “This is my 40th year in business and I remember back in the ’80s when the interest rates are
jumping more than 3 percent in a year. That’s not good for our economy. But a one-eighth to
one-quarter points increase isn’t going to hurt anybody.”
May 29, 2016
By Nick Manes
GRAND RAPIDS — Commercial real estate brokers say the sale of two fully-leased, recently renovated office buildings in downtown Grand Rapids points to a healthy local economy, even if the transactions are far from the norm.
The buildings in question — 99 Monroe Ave. NW and 25 Ottawa Ave. SW — netted Naperville, Ill.-based Franklin Partners LLC approximately $50 million.
According to Kent County property records, 99 Monroe sold for $31.95 million, while 25 Ottawa fetched $19.55 million. The sale prices were roughly three times what Franklin Partners paid for each building when they were acquired in 2012 and 2014, respectively.
Local real estate industry executives think those are fair prices for the projects.
“Simply put, when you have two strategically located buildings like those two where owners have put in money and they’re fully-leased … — with the tenants they were leased to — they were super-attractive,” said Jason Makowski, a principal and office adviser at NAI Wisinski of West Michigan, with a focus on the downtown Grand Rapids market.
“It’s simple math at the end of the day,” Makowski said of the prices paid for the two buildings.
Neither Makowski nor anyone at NAI Wisinski were involved in the transactions.
The retail market vacancy rate has gone down from the last quarter with an overall total of 10.5%. This is partially due to all the new apartment buildings being built downtown. Some of these buildings include Diamond Place, which will include 4 retail buildings, Baker Lofts with 15,000 square feet of retail space and Fulton Place with 10,000 square feet of retail space available. These new developments are allowing for more retailers to have the opportunity to locate downtown.
In addition to the new apartment space being available, there are also multiple new developments happening downtown that will allow the retail market to continue to strive. Rockford Construction’s New Holland Brewery development on Bridge Street is introducing new retail opportunities to the market. Third Coast Development has a new 150-unit multifamily development on Michigan St. with potential to open a 15,000 square foot grocer. Also, The Studio C! movie theater will be built south of the arena which will include 38,000 square feet of new retail space. Overall, the retail market has some exciting opportunities and continues to break ground in the downtown area.
Now there’s a lot less bank work and a lot more traditional real estate deals.
By Mike Nichols
There’s a trend in the Grand Rapids-area industrial market that Stu Kingma is keeping his eye on.
With this year’s rough winter now in the rearview mirror, Kingma, an associate broker with NAI Wisinski of West Michigan, has seen a spike in industrial real estate growth and construction.
During the Great Recession, the local industrial market was troubled, but as “that ship righted itself,” he said, demand for industrial space began picking up.
A lot of the work Kingma was doing during the recession was for bank assignments — when a bank had taken a building back because of non-payments and needed it disposed of.
Those days, however, are much rarer now.
“That was a significant part of the market for two or three years running. There were a lot of bank properties on the market, a lot of distressed real estate, a lot of borrowers underwater, and so our business model shifted a bit from helping companies who were growing and needing space, to working for banks that took back buildings they didn’t want,” he said.
“That part of business has shrunk dramatically. Now the vast majority of our business is no longer entirely driven by bank work.”
Italian company plans $17.6M plant, 109 jobs
An Italian plastics mold maker is investing $17.6 million in the area and plans to create 109 jobs in the process.
San Polo di Piave, Italy-based INglass-HRSFlow recently agreed to terms with NAI Wisinski of West Michigan to purchase land to make hot-runner systems for plastic injection molding in Byron Center Township, at 720 74th St. SW, according to The Right Place, a regional economic development nonprofit, on Wednesday.
The company plans to create 109 over the next four years.
INglass, formerly named Incos, was founded in 1987. The global company is a simple supplier of molds and hot runner systems.
Dr. Peter Linneman, NAI Global’s Chief Economist, authored his newest white paper titled “The Tale of Two Cycles”.
This paper includes:
- Why every real estate cycle is similar yet different.
- Why in the crashes of the early 1990s and 2009, there was an abundance of supply for too little demand.
- Why both crashes offer distinctive features and lessons for the future.
- How development booms were fueled by easy money.
- Why, in any crash, there are winners and losers.