market report 2015-industrial q3
TRANSCRIPT
Industrial Market ReportWest Michigan Q3 2015
100 Grandville Ave SW Suite 100Grand Rapids, MI 49503616. 776. 0100 www.naiwwm.com
*Also serving the Kalamazoo & Southwest Michiganareas from our new Kalamazoo office*
Wisinski ofWest Michigan
Office • Industrial • Retail • Multi-Family
Low Inventory generates speculative construction Quality manufacturing space remains in short supply throughout West Michigan, creating more pressure to build. We have a client who completed construction at the beginning of the third quarter on a 35,000 square foot spec industrial building in Wyoming, MI. We have already leased over 22,000 square feet of the building in the third quarter, and only have 2 units available. We have another client who purchased a 176,000 square foot manufacturing facility in Battle Creek, which was only 18% occupied, with plans to-make some improvements to the building and find tenants to lease the remainder of the facility. The lack of good available manufacturing space does create challenges. We are seeing manufacturers look at more creative solutions such as new construc-tion, purchasing buildings and adding on to the man-ufacturing space, and converting distribution facilities into manufacturing space. As a result, lease rates and industrial property values are increasing. We expect this trend to continue in the fourth quarter.
* The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.
* Source: NAIWisinskiofWestMI, CoStar Property®, & U.S. Bureau of Labor Statistics
“The West Michigan
Industrial inventory
continues to be tight in
the third quarter, and
we are seeing lease rates
and purchase prices
continue to increase. Due
to the low inventory we are
seeing some speculative
construction. We are also
seeing investors purchasing
buildings with either high
occupancy or below market
lease rates with the intent
of either filling the vacant
units or increasing existing
rents.”
GRAND RAPIDS, MI
The Market
- Chris Prins, Industrial Advisor| NAI Member
Total Employment GrowthHighlight Total Number of Jobs Added per Year
Recent Lease Transactions, July - September 2015Address Size (SF) Tenant Lease Type
2960 Wilson Court 10,000 Empire Wire & Supply New5028 Kraft Ave. SE 28,000 DHL Express New
3650 Broadmoor Ave. SE 14,400 MLB Tool & Dies LLC New5028 Kraft SE 28,000 DHL Express New
3691 Northridge NW, Suite 10 27,510 Laser Access, Inc. New
Recent Sales Transactions, July - September 2015Address Size (SF) Sale Price Price PSF Sale Date
4619 Clyde Park Ave. SW 36,022 $1,150,000 $31.92 7/2/20154647 50th St. SE 9,200 $665,000 $72.28 9/1/2015
936 Front Ave. NW 11,576 $1,225,000 $105.82 9/4/20152535 3 Mile Rd. NW 5,000 $269,500 $53.90 9/25/2015
4055 Stafford Ave. SW 20,055 $530,000 $26.43 9/24/2015
Vacancy rate went from 5.3 in the previous quarter to 4.9 this quarter.
West MI Economic Trends
Absorption, Deliveries, Vacancy
ABS
ORP
TIO
N &
DEL
IVER
IES
IN M
ILLI
ON
S (S
F)
VAC
AN
CY RATE
Rental rates ended the third quarter at $4.14, an increase over the previous quarter.
Net absorption for the overall Grand Rapids Industrial market was positive 630,959 square feet in the third quarter.
4.7
3.4
4.1
3.6
3.4
5.2
6.7
4.9
5.9
5.2
4.9
6.3
0.02 .0 4.06 .0 8.0
Newaygo Co.
Kent Co.
Ionia Co.
Barry Co.
Grand Rapidsarea
United States
Aug-14 Aug-15
Source:U .S. BLS, Local Area Unemployment
12-month percent changes in Unemployment
West MichiganIndustrial Submarket Statistics
Industrial Statistical Changes
CONSTRUCTION
CONSTRUCTION
ASKING RATES
ASKING RATES
VACANCY RATE
VACANCY RATE
NET ABSORPTION
NET ABSORPTION
2Q15 vs. 3Q15
3Q14 vs. 3Q15
2015 Q3 Industrial Snapshot Submarket Total RBA Vacant
Available SFVacancy
RateTotal Average
NNN Rate ($/SF/Yr)Total Net
Absorption (SF)Total Under
Construction SF
LakeshoreWarehouse 9,822,833 340,206 3.4% $2.79 98,168 -Manufacturing 23,789,091 1,027,642 4.3% $2.65 196,858 -Hightech Flex 989,227 16,487 1.6% $5.47 -3,093 -Total 34,601,151 1,384,335 4.0% $3.64 291,933 -NortheastWarehouse 4,836,315 486,680 10.0% $5.20 380 -
Manufacturing 7,087,136 1,142,252 16.1% $2.76 18,990 -Hightech Flex 669,606 40,620 6.0% $5.31 - -Total 12,593,057 1,669,552 13.2% $4.42 19,370 -NorthwestWarehouse 4,280,066 462,033 10.7% $3.25 900 -Manufacturing 12,822,324 555,588 4.3% $3.15 198,330 -Hightech Flex 1,232,064 500 - $7.25 - -Total 18,334,454 1,018,121 5.5% $4.55 199,230 -SoutheastWarehouse 21,935,921 969,577 4.4% $3.08 102,300 -Manufacturing 25,158,745 1,168,444 4.6% $3.98 -87,857 -Hightech Flex 2,960,161 148,150 5.0% $5.84 14,526 -Total 50,054,827 2,286,171 4.5% $4.30 28,969 -SouthwestWarehouse 8,063,603 225,109 2.7% $2.93 66,384 -Manufacturing 21,740,604 549,756 2.5% $3.40 16,381 41,250Hightech Flex 737,689 40,273 5.4% $5.04 8,692 -Total 30,541,896 815,138 2.6% $3.79 91,457 -
Total Overall 146,047,235 7,173,317 4.9% $4.14 630,959 41,250
Last Quarter vs. This Quarter
Last Year vs. This Year
Industrial Total Market Report
050,000
100,000150,000200,000250,000300,000350,000
2013Q3 2013Q4 2014Q12 014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3
$0.00$1.00$2.00$3.00$4.00$5.00$6.00$7.00
2013Q1 2013Q22 013Q32 013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3
Triple Net Rental Rates
Triple Net Rental Rates- Warehouse Triple Net Rental Rates- Manufacturing Triple Net Rental Rates- Hightech Flex
-1000000
-500000
0
500000
1000000
2013Q32 013Q42 014Q1 2014Q2 2014Q3 2014Q4 2015Q12 015Q22 015Q3
RBA Delivered Warehouse RBA Delivered Manufacturing RBA Delivered Hightech Flex
0.00%
2.00%
4.00%
6.00%
8.00%
2013Q3 2013Q42 014Q12 014Q2 2014Q32 014Q4 2015Q12 015Q2 2015Q3
Vacancy Rate
Vacancy Rates- Warehouse Vacancy Rates- Manufacturing Vacancy Rates- Hightech Flex
Methodology | Definitions | Submarket Map
Rental RateThe annual costs of occupancy for a particularspace quoted on a per square foot basis.
Under ConstructionBuildings in a state of construction, up until they receive their certificate of occupancy. In order for CoStar to consider a building under construction, the site must have a concrete foundation in place.
Existing InventoryThe square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned,under construction or under renovation.
Vacancy RateAll physically unoccupied lease space, either direct or sublease.
Flex Building A type of building designed to be versatile, which may be used in combination with office (corporate headquarters),research and development, quasi-retail sales, and including but not limited to industrial, warehouse, and distribution uses. A typical flex building will be one or two stories with at least half of the rentable area being used as office space, have ceiling heights of 16 feet or less, and have some type of drive-in door, even though the door may be glassed in or sealed off.
Industrial Building A type of building(s) adapted for a combination of uses such as assemblage, processing, and/ or manufacturing products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities.
Absorption (Net)The change in occupied space in a given time period.
Available Square FootageNet rentable area considered available for lease; excludes sublease space.
Average Asking Rental RateRental rate as quoted from each building’s owner/management company. For office space, a full service rate was requested; for retail, a triple net rate requested; for industrial, a NN basis.
Net Rental RateA rental rate that excludes certain expenses that a tenant could incur in occupying office space. Such expenses are expected to be paid directly by the tenant and may include janitorial costs, electricity, utilities, taxes, insurance and other related costs.
Price/SFCalculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA).
Multi-TenantBuildings that house more than one tenant at a given time. Usually, multi-tenant buildings were designed and built to accommodate many different floor plans and designs for different needs.
Price/SFCalculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area (RBA).
RBARentable Building Area -Mainly used for office and industrial
Southwest
Northeast
Southeast
Northwest
Lakeshore
All Industrial building types are included, including warehouse, flex / research development,distribution manufacturing, industrial showroom, and service buildings, in both single-tenant and multi-tenant buildings, including owner-occupied buildings.
Methodology
Doug Taatjes, CCIM, SIOR616 292 [email protected]
Chris Prins616 242 [email protected]
Kara Schroer 269 459 [email protected]
David Smies, CCIM, SIOR616 242 [email protected]
Jeremy Veenstra616 242 [email protected]
Chadwick Versluis, SIOR616 242 [email protected]
Stanley Wisinski III, SIOR, CCIM616 575 [email protected]
Marc Tourangeau269 207 [email protected]
Meet Our Team
Industrial SpecialistsJim Badaluco, SIOR616 450 [email protected]
Dane Davis269 459 [email protected]
Stuart Kingma, SIOR616 575 [email protected]
Kurt Kunst, SIOR, CCIM 616 242 [email protected]
In the spring of 2011, two successful and reputable companies, The Wisinski Group and NAI West Michigan merged. The merger represents collaboration, rich traditions, innovative technologies, unique cultures and diversity of skills and specialties which ultimately benefit our clients. We’re going back to our fundamentals, strengthening our core and becoming stronger in the services we provide our clients. Our focus is simple, building client relationships for life by offering market appropriate advice and then executing. Our success is a direct result of its unwavering commitment to providing the best possible service to each and every client. Our Brokers, with their 562 plus years of combined experience (20.1 years average), possess the knowledge and expertise to manage the most complex transactions in industrial, office, retail, and multifamily specialities throughout West Michigan.
Through our affiliation with NAI Global, we can also assist you with your commercial real estate needs throughout the US & globally right here from West Michigan.
NAI Wisinski of West MichiganAt a Glance
Achieve More.Local Knowledge. Global Reach.
100 Grandville Ave SW Suite 100Grand Rapids, MI 49503616. 776. 0100 www.naiwwm.com
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nai-wisinski-of-west-michigan
Wisinski ofWest Michigan
Office • Industrial • Retail • Multi-Family