As anticipated, new vacancies hit the market
At the end of last quarter, we theorized that the West Michigan retail market was in the "calm before the storm". We had seen a quarter in which transaction velocity (number of completed on-market deals) was 21% below the quarterly average over the past five years, and absorption for the three months was a modest 7,010 square feet. However, the vacancies of MC Sports and Family Christian Bookstores, among others, were looming; while at the same time pent-up demand for quality locations was at an all-time high. These factors made market conditions prime for an exciting second quarter.
As we begin the second half of the year and await the preliminary GDP estimate for the second quarter, most economists, including our own Chief Economist Andrew J. Nelson, believe that growth has accelerated this spring after another slow winter (although the Q1 GDP growth was adjusted up to 1.4% from the initial 0.7% reported). The forecast from Consensus Economics calls for 2.2% growth for the year, which would be better than the 1.6% growth we saw in 2016, but still modest by historical standards.
Retail sales, consumer confidence, housing starts, durable goods orders, and inflation all dropped in latest national reports, however are largely still above levels a year ago. These indicators follow a pattern of positive but slowing growth that we see across various industries and indexes.
The Grand Rapids metropolitan area was the fastest growing economy in the nation last year, according to Headlight Data, a company that tracks economic workforce development. The total workforce grew by 4.4% throughout the year.
Click here for the full Q2 2017 West Michigan Retail Market Report