market report q3 2016 office
TRANSCRIPT
100 Grandville Ave SW Suite 100Grand Rapids, MI 49503616. 776. 0100 www.naiwwm.com
Wisinski ofWest Michigan
Office • Industrial • Retail • Multi-Family
Office Market ReportWest Michigan Q3 2016
*Also serving the Kalamazoo & Southwest Michigan areas from our Kalamazoo office*
Parking Remains A PressingIssue in Downtown GRA challenge that the office market is facing in the Downtown area is the lack of available parking. Existing tenants are start-ing to get frustrated with the availability of parking close to their office buildings. Most ramps are at or near capacity. This is becoming a challenge in attracting new office users to the downtown market as well. We believe that due to the current parking constraints some existing tenants in the downtown area will likely start shopping for space in the suburbs at the end of their existing lease terms.
Overall the West Michigan Office market remains stable. Three notable multi-tenant investment transactions that closed in the 3rd Quarter were the sale of 2504 Ardmore, 436 44th St, and 7740 Byron Center. Each of these three multi-tenant of-fice buildings were fully leased at the time of sale. One notable single-tenant investment transaction was the sale of 3145 Prai-rie St SW to a local investor. The Seller (Trivalent Group) signed a new 10- year absolute net lease with the Buyer prior to close. We believe that the demand for fully leased single tenant and multi-tenant office buildings will remain strong throughout the remainder of 2016 and on into 2017.
Leasing activity continues to remain stable in the SE and Downtown submarkets with the SW submarket experiencing an uptick in activity during the third quarter. We are still seeing Landlords giving less concessions, especially in the form of free rent. Tenants have been willing to sign longer term leases in exchange for the Landlord giving more in tenant improvement allowances. Lease rates have stabilized in all segments of the market.
* 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
GRAND RAPIDS, MI
The Market
- Mary-Anne Wisinski-Rosely, CCIM,SIOR Principal
“The demand for office
space to purchase con-
tinues to grow with a
limited supply of build-
ings available. There
continues to be a de-
mand for smaller, own-
er occupied properties
in the 4,000-10,000
square foot range.
Sale prices per square
foot are also continu-
ing to increase in the
SE, NE, & NW submar-
kets. There was also
strong demand for fully
leased single tenant
and multi-tenant office
buildings.”
OfficeSales & LeasesQ3 2016
3145 Prairie9,120 SF2.32 Acres
SOLDCommercial Real Estate Services, Worldwide.
Wisinski ofWest Michigan
7740 Byron Center Ave. SW9,717 SFSale Price: $1,125,000
SOLD
756 & 806 Fulton St. 12,000 SFSale Price: $870,000
SOLD
77 Monroe Center NW6,427 SFTenant: Independant Bank Corporation
4100 Embassy Dr. SE5,260 SFTenant: Hanover Insurance Company
818 Butterworth St. SW5,311 SFTenant: Auxiliary Inc.
LEASED
LEASED
LEASED
West MichiganOffice Submarket StatisticsMethodology: The office market report includes office buildings within each of the defined submarkets. Excluded are government buildings and institutional properties.
Office Space Statistical Changes Year-over-Year and Quarter-over-Quarter
CONSTRUCTION
CONSTRUCTION
ASKING RATES
ASKING RATES
VACANCY RATE
VACANCY RATE
NET ABSORPTION
NET ABSORPTION
3Q15 vs. 3Q16
2Q16 vs. 3Q16
Q3 Snapshot Submarket Total RBA Vacant
Available SFVacancy
RateTotal AverageRate ($/SF/Yr)
Total Net Absorption (SF)
Total Under Construction SF
DowntownClass A 1,496,586 144,888 9.7% $21.57 -6,810 -Class B & C 7,655,504 507,961 6.6% $16.14 51,453 -Total 9,152,090 652,849 7.1% $17.03 44,643 -NortheastClass A 294,197 6,830 2.3% $17.39 - -Class B & C 3,145,260 149,541 4.6% $13.03 9,501 20,000Total 3,439,457 156,371 4.6% $13.40 9,501 20,000NorthwestClass B & C 2,473,594 148,176 6.0% $11.62 421 -SoutheastClass A 1,091,208 46,588 4.3% $15.39 15,332 -Class B & C 9,655,222 969,547 10.0% $11.16 37,055 -Total 10,746,430 1,016,135 9.6% $11.59 52,387 -SouthwestClass B & C 2,916,592 269,156 9.2% $9.68 50,051 -
Overall Total 28,728,163 2,242,687 7.7% $13.35 157,003 20,000
*Disclaimer: Historical data figures are subject to change based upon the timing of when CoStar receives market information. NAIWWM uses the numbers available at the time each quarterly report is published.
Kent County StatisticsTotal Market Report
C-50000
0
50000
100000
150000
200000
250000
2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q22 015Q32 015Q4 2016Q1 2016Q2
RBA Delivered Class A RBA Delivered Class B&C
0.00%
5.00%
10.00%
15.00%
2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q12 016Q2
Vacancy Rate
Vacancy Rates Class A Vacancy Rates Class B&C
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q12 016Q2
Triple Net Rental Rate
Rental Rates Class A Rental Rates Class B&C
2
2
2 2
2 2
-50,000.00
0.00
50,000.00
100,000.00
150,000.00
200,000.00
250,000.00
0.00
100,000.00
200,000.00
300,000.00
2014Q1 2014Q2 2014Q32 014Q42 015Q1 2015Q22 015Q3 2015Q4 2016Q1 2016Q2 2016Q32 2 2
Methodology | Definitions | Submarket Map
SF/PSFSquare foot/per square foot, used as a unit of measurement.
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.
DeliveriesBuildings that have their certificate of occupancy and are allowed to be moved into by the tenant/purchaser.
Vacancy RateAll physically unoccupied lease space, either direct or sublease.
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.
Building ClassClass A Product is office space of steel and concrete construction, built after 1980, quality tenants, excellent amenities & premium rates. Class B product is office space built after 1980, fair to good finishes & wide range of tenants.
RBARentable Building Area - Mainly used for office and industrial.
NortheastNorthwest
SoutheastSouthwest
Downtown
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, build-ing 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 Bro-kers, with their 630 plus years of combined experience (20 years average), possess the knowledge and exper-tise to manage the most complex transactions in industrial, office, retail, and Multi-Family specialities throughout West Michigan.
Achieve More.
Doug TaatjesCCIM, SIOR616 292 [email protected]
Marc TourangeauMBA269 207 [email protected]
Jeremy Veenstra616 242 [email protected]
Kara Schroer269 459 [email protected]
Mary Anne Wisinski-RoselyCCIM, SIOR616 575 [email protected]
Stanley J. Wisinski, IIICCIM, SIOR616 575 [email protected]
Russ Bono616 242 [email protected]
Dick Jasinski616 575 [email protected]
Meet Our Team
Office SpecialistsRod Alderink616 242 [email protected]
Jason Makowski616 575 [email protected]
Hillary Taatjes Woznick616 242 [email protected]
Local Knowledge. Global Reach.
Through our affiliation with NAI Global, we can also assist you with your commercial real estate needs throughout the US & globally from right here in West Michigan.
Doug TaatjesCCIM, SIOR616 292 [email protected]
Marc TourangeauMBA269 207 [email protected]
Jeremy Veenstra616 242 [email protected]
Kara Schroer269 459 [email protected]
Mary Anne Wisinski-RoselyCCIM, SIOR616 575 [email protected]
Stanley J. Wisinski, IIICCIM, SIOR616 575 [email protected]
Russ Bono616 242 [email protected]
Dick Jasinski616 575 [email protected]
Office SpecialistsRod Alderink616 242 [email protected]
Jason Makowski616 575 [email protected]
Hillary Taatjes Woznick616 242 [email protected]
Cameron Timmer616 485 [email protected]
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