Activity down, yet momentum remains
» Grand Rapids metropolitan area employment grew 4.4% in 2016, which led the entire nation. Manufacturing as a percentage of total employment is approximately 15% in West Michigan, compared to a national average of 8.5%.
» The second quarter saw another three months of positive space absorption; and an increase in both average rental rates and number of projects under construction.
» Out-of-market investors continue to show interest in the market, however opportunities to invest remain scarce.
» Off -market deals continue to be a quiet force in the market, driving activity despite nearly 95% industrial occupancy.
» The Southeast industrial submarket remains the strongest of the industrial submarkets, with under 4% vacancy, strong rental rates, active construction, and nearly 200,000 square feet of net absorption in the second quarter.
After an impressive start to the year, the West Michigan industrial market had another strong quarter in Q2, with 276,769 square feet of positive net absorption, bringing the market vacancy rate down to 5.12%. This compares to a national average of 5.3%, according to Colliers International’s national research team. Average weighted asking rates increased 2.6% in the second quarter, with the Northeast submarket experiencing the largest increase at 14.5%. Overall asking rates are trending strongly up over the past few quarters, in large part to several proposed projects that are being marketed but not yet underway. Construction costs have been keeping new construction somewhat limited, however the month of May saw construction input prices level off , ending four consecutive months of input price expansion to start the year. This is a positive indicator for new industrial construction outlook.
Click here to read the full Q2 2017 West Michigan Industrial Market Report