Commercial real estate markets across the West Michigan region are firmly in recovery mode today, according to the latest research from Colliers.
Colliers West Michigan recently released its second quarter market trend reports. These reports cover multiple markets and sectors. But the overall message? Commercial real estate in this region of the state is largely on the mend following the most challenging months of the COVID-19 pandemic.
As Colliers reports, Michigan has largely lifted the pandemic restrictions that had the greatest impact on businesses. For many consumers, too, life has returned to mostly normal, with many comfortable again shopping in person, dining in restaurants and traveling to hotels.
“We have seen more positivity in the second quarter than since before the COVID-19 pandemic began as people are living in a new normal,” said Jon Potvin, managing director at Colliers West Michigan. “Some of what we learned during the pandemic will continue to impact multiple sectors across Michigan, but for the most part many clients are happy to get back to business as usual.”
Michigan’s industrial sector had another booming quarter. Activity in the quarter came from both sales and leases, and Class-A and -B buildings are selling rapidly at higher prices per square foot than ever.
Retail space is also filling up quickly as users bought up vacant space in prime retail corridors during the second quarter. While the retail outlook is optimistic, staffing issues persist, making it difficult for retailers and restaurants to open at full capacity as they did before the pandemic. Many businesses are offering sign-on bonuses or increased wages to help attract employees.
“We’re seeing a decrease in vacancy rates and flat rental rates as people are excited to get out and patronize local stores and restaurants,” said Earl Clements, senior vice president at Colliers. “We are advising clients to make decisions quickly as space continues to move at a fast pace.”
Office sector activity picked up slightly after some extreme challenges during the height of the pandemic. The office vacancy rate decreased to 9.54 percent in the second quarter, with rental rates a $16.97 a square foot.
“This has been a unique quarter for the office sector because companies are bringing workers back to the office, but also assessing how to move forward, sometimes with less space or a hybrid style of working,” said David Wiener, senior vice president at Colliers. “The future of the office sector has changed significantly, but we’re seeing activity increase and look forward to continuing to find the right space for our clients.”
The Lansing, Michigan, market is emerging from COVID-19 shutdowns and social distancing as evidenced by a pickup in activity in the second quarter. Advisors are seeing more confidence and hope from buyers and tenants. Vacancy is still increasing, though advisors see it beginning to come down, while rental rates have remained steady for Class-A and -B spaces, while decreasing for Class-C.
“We’re feeling positive in the Lansing market as restaurants and retailers move to full capacity, planned redevelopments progress and deals get done,” said Shawn O’Brien, vice president with the Lansing office of Colliers. “We’re not out of the woods yet, but the pickup in activity in the second quarter has been a much-needed boost to the area.”
Second quarter activity in the Holland, Michigan, market was fueled by an equal mix of tenants and buyers. The Tulip Time festival returned this year, a sign that Holland is on a slight return to normal, though some pre-pandemic issues persist as in other areas.
“The Holland market, like others across the state, is experiencing a shortage of workers and a lack of available supply, particularly in the industrial setting,” said Drew Durham, senior associate with the Holland office of Colliers. “There are still some sore spots left over from COVID-19, but we’re thankful to be on a positive trajectory.”