Grand Rapids has less empty offices than rest of country

GRAND RAPIDS, Mich. (WOOD) — A new report from a West Michigan economic development organization found that office vacancy rates in the Grand Rapids area are down, retail activity is up, and the industrial and housing markets both remain tight.

The 2024 Development Report from West Michigan economic development organization The Right Place surveys the state of the region’s real estate market in four areas: office, industrial, retail and housing.

The goal is to provide potential real estate developers and those looking to invest in West Michigan — the report includes Kent, Ionia, Montcalm and Ottawa counties — with hard data about the region’s opportunities, Tim Mroz, the senior vice president of community development for the Right Place and one of the report’s authors, told News 8.

In the office space market, the report found that the level of vacancy decreased slightly over the last year, going down from 13.3% in the first quarter of 2023 to 12.7% in the first quarter of 2024.

Mroz said the office market remains in flux, as remote work remains prevalent after the pandemic. But the Grand Rapids area has a higher office occupancy rate than other areas in the country, he said. According to Moody’s Analytics , the nationwide office vacancy rate is at 19.8%.

“The downtown Grand Rapids business district is sitting … just under 13, significantly less than the rest of the country,” Mroz said.

He credited that in part to the vibrancy of the downtown Grand Rapids area.

“The city of Grand Rapids and the (Downtown Development Authority) have done a very, very good job over the last 10 years or so to make investments in downtown and make it a place where workers and employees want to be,” he said. “Also (with) the potential of what’s coming with the amphitheater and the soccer stadium and everything else … downtown continues to be a location of demand for employees and workers.”

In the industrial market, there’s not much available space, the report found. The vacancy rate rose only slightly, from 1.8% in 2023 to 1.9%, leading to asking rent jumping by close to 16%.

As companies finish construction projects, there’s also a lack of new projects breaking ground, the report says. The Right Place found there’s a high demand for sites that are build-ready.

The report highlights Covenant Business Park , a project in the Lowell area that received a $17.5 million Strategic Site Readiness Program grant with help from The Right Place. Work is underway to get the 237-acre site shovel-ready for a mix of industries to move into.

Mroz said his team was surprised to see a slight increase in leasing in the retail industry, with vacancy rates going from 4.9% to 4.8%.

“To be honest, we didn’t expect that,” he said. “We’re still looking into that number ourselves. We think that some of it has to do with the restaurant industry and some of the buy local, retail vibrancy that we have here in West Michigan. But it was certainly something that wasn’t expected to see that given the current difficult retail environment nationwide. “

The report found that the area’s housing market remains tight, especially when it comes to single-family dwellings. The average number of listings per quarter dropped from 916 to 665 between 2023 and 2024, and the median listing price grew from $390,883 to $412,793.

That comes as the area faces a housing crisis , with Kent County needing 35,000 housing units by 2027, according to a 2022 Housing Next Housing Needs Assessment . Mroz thinks that number may have grown.

“Housing continues to be one of our most difficult challenges that we have in West Michigan. We continue to be about 35,000 units short — and that number that’s been widely adopted is actually about a year and a half old, so I would imagine that number is a little higher at this point,” he said.

However, he said the area has seen “significant investment in construction starts in some of our multifamily housing … projects.”

The report highlights 16 development projects underway in the area, like the Acrisure Amphitheater and the Grand Rapids soccer stadium .

Many of those projects will bring more housing units to the market, with Mroz pointing to projects like the Studio Park Tower, which will bring 200 units to market this fall, The Current in the Creston neighborhood, a mixed-use project that will include around 70 housing units, and the Talbot Apartment Project, which will bring 150 housing units to the Bridge Street area.

“It’s always good to see cranes in the air,” Mroz said, though he said there’s still a lot of work to do when it comes to the region’s housing market.

Development in the area faces some headwinds, Mroz said. Developers continue to face high interest rates and difficulty getting financing from traditional banks. A lack of labor is also impacting construction projects, as Mroz said there’s never enough construction labor.

Mroz said local economic leaders are also watching to see the impact this year’s election season will have and development opportunities.

Still, there’s a lot of activity in the region’s real estate markets.

“Overall, Greater Grand Rapids continues to offer a dynamic and opportunity-rich market for development,” the report says.

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