The West Michigan State of the Market Report
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West Michigan is not only the birthplace of the nationally known Founders Brewing Company, it is also home to more than 130 international companies and well-known corporations such as: Amway, Bissell, Pfizer, Stryker Corporation, Steelcase, Herman Miller, Bell’s Brewery, Arcadia Brewing, Meijer, and Kellogg’s. Primarily made up of the cities of Grand Rapids, Holland, Kalamazoo, and Muskegon, West Michigan was formerly known as a furniture manufacturing mecca but is now one of the most diverse regions in the state.
With the median age of 37.8 years old, West Michigan residents are younger than the state (40.2 years old), and the nation (38.3 years old). Residents here are also well-educated and well-compensated with over a third of the population having an associate degree or higher. Because of a 2.7% increase in population over the past five years, multifamily developers have delivered approximately 3,800 new apartment units into the market since 2016 with an additional 800+ apartment units expected to be completed in 2019. Looking forward, with an expected population growth rate of approximately 3.3% over the next five years, growth in demand for additional multifamily options will likely continue.
The manufacturing, information technology (IT), life sciences, aerospace and defense, and food processing industries are the main sectors driving the growth of West Michigan. Of particular note, manufacturing companies make up roughly 15% of all jobs in the region and have been heavily investing capital into new equipment and technology to help propel their organizations into the future.
Commercial Office Market Highlights
The combination of new mixed-use construction, building renovation projects, acquisition, and construction costs have been key drivers for the increase in lease rates within this region. Since 2016, more than 1.6 million square feet of office space has been added to the market, with 9.84% of that occurring in 2018.
Commercial Retail Property Highlights
The West Michigan region is experiencing heightened investments at shopping malls and grocery-anchored developments. In Grand Rapids, the availability of parking combined with a walkable environment has been a key driver of growth in neighborhoods that link to the Central Business District where asking rates have jumped from $16.00 to $22.00 per square-foot (NNN).
Industrial Real Estate Highlights
West Michigan’s industrial real estate market continues to thrive as numerous companies have begun or are planning to begin expansion projects. In 2018, the positive business climate resulted in the expansion of more than ten companies, increasing the region’s industrial footprint by approximately 1 million square feet.
Multifamily Market Highlights
The West Michigan multifamily market consists of roughly 402 properties totaling more than 72,000 units. With the changing housing preferences of the growing Millennial population, the construction of new apartment units has exploded in the West Michigan market over the past several years. From 2015 to 2018, more than 4,400 new units have come online, and more impressively, 50% of those new units were constructed in 2018 alone. At the end of 2018, more than 1,200 apartment units were under construction and expected to be completed in 2019. There continues to be a healthy indication of unit absorption for the market.