First quarter seemed to be the eye of the retail storm
There is a storm of activity surrounding the West Michigan retail market, both positive and negative. 2016 was a strong and active year, with more than 215,000 square feet of retail space absorbed. The overall number of transactions completed was approximately 6% higher than it was in 2015, and average listed rental rates grew nearly 20% over the past four quarters. Major development projects took shape and had success, and the downtown retail market showed growth even with concerns over parking. Despite the positives, the last couple of months were characterized by troubling announcements from some major retail brands. Poor holiday sales, decreasing revenue, and bankruptcy filings have left many questioning the health of brick-and-mortar retail. Many variables are to blame for this trend, but to be certain, the retail landscape is changing.
The first quarter of 2017 ended up being the eye of the storm, at least in terms of trends playing out in the market. Market activity dropped more than 15% from the last quarter of 2016, largely due to an occupancy rate in the main retail corridors that is now more than 91%. Total net absorbed space equaled a mere 7,010 square feet in these corridors, with tenants both filling and vacating relatively small spaces. A number of companies are preparing to vacate large blocks, however they have not physically done so yet. When this happens in the months ahead, an extremely tight market will sprout new opportunities for retailers eagerly waiting to backfill these prime locations. West Michigan has great market fundamentals, so because of these new opportunities, we expect the balance of 2017 to be an active one. Look to see a number of new retailers entering or expanding in the market, who have been waiting for the right opportunity.
Click here to read the full Q1 2017 West Michigan Retail Market Report