Advantage Commercial Real Estate drops first market report

The new industrial development of Pinnacle Construction in Walker is anchored by German Auto Service. Courtesy of the Pinnacle Construction Group

Advantage Commercial Real Estate Services LLC released its first quarterly market report since it opened in early 2021.

Advantage announced last January the opening of its commercial real estate company and office location at 1575 Arboretum Drive SE, Suite 402, in Grand Rapids. The newly formed group consists of former Colliers West Michigan consultants seeking a locally owned, locally focused real estate company.

“We understand that we need to be able to make quick, calculated and local decisions to better serve the community,” said General Manager Mark Ansara. “Our decision to structure the company around our customers, the true innovators, supports those who are actively seeking growth across Michigan and beyond.”

Commercial real estate was characterized by robust demand for warehouse space, driven by the need for quick and efficient distribution of goods in the first quarter, according to the Advantage report. The pandemic further accelerated an already thriving e-commerce industry, and nearly 35% of industrial leasing activity in 2020 was directly related to it.

Protective measures in the supply chain, such as manufacturing restructuring and the desire to build and store safety stocks of products, have kept vacancy rates in the industry at all-time lows. In West Michigan, the vacancy rate is currently around 3%, according to the report. Nationwide, space demand for big box warehouses (over 200,000 square feet) rose 24.75% in 2020.

Because of these growth factors, the workforce is in great demand. However, employment growth continues a subdued gradual recovery. Because of this, automation implementation has accelerated as companies enjoy relatively cheap and easy access to finance for investment, the report said.

Benefit generally is a physical extension in terms of renovations and additions; However, the new building should recover again this year. Steel prices are at their highest level in over a decade, but experts say this is often a harbinger of an imminent economic recovery.

The results are supported by the recently released market reports from NAI Wisinski West Michigan for the first quarter. Notable activities included the construction of a 15,750 square foot industrial development project by Pinnacle Construction at 2189 Avastar Pkwy. in Walker. The project is anchored by German Auto Service with available suites from 3,000 to 6,000 square meters. Pinnacle plans to complete construction this summer.

NAIWWM reported total vacancy of 3% at an average rate of $ 4.28 per square foot.

In addition, Pfizer recently laid the foundation stone for its $ 465 million pharmaceutical manufacturing facility at 7171 Portage Road in Portage. The 420,000 square meter facility is expected to go into operation by 2025 and create around 450 new jobs in the Kalamazoo region. For the construction of the new facility, Pfizer received a 50% reduction in property tax from Portage.

Michigan-based Conveyor Concepts, a manufacturer of structural steel and materials handling equipment, is spending $ 1,303,837 to add 30,000 square feet to its existing Coopersville facility. The building is located in Midway Industrial Park on Main Street. With this expansion, Conveyor Concepts expects to create four to six new jobs in the next two years.

The office properties were characterized by fewer long-term leases and expansions. With employees either continuing to work from home or not working at all, Advantage was reluctant to sign long-term leases or expand into the office market in particular.

In West Michigan, the number of office rentals signed fell 24% year over year, according to the Commercial Alliance of Realtors. The total market activity of all property types fell by 11%.

As some employees return to their offices at some point, Advantage expects a drop in employee density per square foot and a slight reversal of the collaborative work environment trend that has shaped the office space market over the past five years.

Grand River Bank recently opened its second branch at 50 Crahen Ave. NE opens in the Grand Rapids community, as highlighted by NAIWWM in their Q1 report. The office offers a wide range of services and will employ retail bankers, commercial and mortgage lenders, operational and administrative staff. The bank planned to reopen in the summer of 2020 but was delayed due to COVID-19.

Additionally, KinetaCare Physiotherapy, an outpatient physical therapy clinic in Colorado, moved to the Byron Center in 2014 and moved to 4675 32nd Ave earlier this year. in Hudsonville. The clinic has access to regional care for clients in Grand Rapids, Traverse City, Detroit, Chicago and Indianapolis.

According to NAIWWM, the vacancy rate in the office was 5.5% and the average supply rate was $ 15.60 per square foot.

West Michigan retail is back on track after being hit by the pandemic. Retailers, especially grocery concepts, continue to face the reality of adapting to the dinner delivery and take-out model, but Advantage saw that many of these establishments weathered the storms better than expected.

In addition, landlords are offering more free rents as an incentive instead of tenant improvement grants to save cash.

Activity in the West Michigan retail market was flat in the first quarter. The number of leases signed rose 1.9% and there are few permanent closings. As the adjustments solidify, Advantage expects the West Michigan retail market to remain stable.

NAIWWM saw 7.4% retail vacancy and an average rental rate of $ 10.46 per square foot for the first quarter.