Slow and tedious. That’s not what you want to hear about your market’s commercial real estate recovery. But those are the words that CBRE used in the company’s most recent retail report covering Grand Rapids, Mich.
To sum up the report: The retail sector in Grand Rapids is improving. But the recovery in this particular sector is frustratingly slow. As CBRE puts it: “Market recovery is expected to be a slow and tedious journey.”
Some of this is due to national trends. CBRE points out that an aging United States is predicted to hurt retailers. This is because Baby Boomers are entering their retirement years. This generation of more than 80 million people, then, is expected to slow its spending.
In Grand Rapids in particular, the retail vacancy rate stood at 18.2 percent for the second half of 2012. That’s higher than the national retail vacancy rate during this same time of 12.8 percent.
In Grand Rapids, retailers are making adjustments. CBRE points to the 14,000-square-foot former Emerald Leisure Source retail building. This underperforming asset has been converted to a daycare center, Adventures Learning Center. Watsons revamped its 103,600-square-foot single-user super-store to make room for a 30,000-square-foot tenant, SkyZone. CBRE also cited Lormax Stern’s decision, one with a price tag of multiple millions of dollars, to convert the 900,000-square-foot Centerpointe Mall to a 550,000-square-foot retail power center.
Despite the sluggish retail market, Grand Rapids has seen some recent success stories. World Market now occupies 19,068 square feet, while ULTA Beauty has filled 10,412 square feet. Ross Medical Education Center and a new Dress Barn have also filled in some of the area’s previously empty retail space.
The area has also benefitted from the recent opening of a 134,000-square-foot Target and 93,000-square-foot Cabela’s in nearby Grandville, Mich.
But despite the good news, the fact remains that retail vacancies in Grand Rapids are above the national average. And, as CBRE says, while vacancies should fall in 2013 and 2014, they certainly won’t plummet.
As the company says, this particular recovery is a slow one.