Amenity-rich Class A office space still in demand in GR, suburban markets
The opportunity to lease brand new office space in the heart of downtown Grand Rapids offered Van Wyk Risk Solutions the chance to grow into a new location.
This month, Van Wyk will be the first tenant to move into the new Warner Building, located at 150 Ottawa Ave. NW in downtown Grand Rapids. After outgrowing its space on Wealthy Street in East Grand Rapids, the insurance agency will occupy 17,500 square feet on the 10th floor of the Warner Building.
Although the company viewed about 20 different potential office locations, the Warner Building came out on top because of its location, quality and amenities, and because it offered the firm the chance to move into new Class A office space, said Max Van Wyk, chairman and CEO of Van Wyk Risk Solutions.
“When you’re starting from scratch in a space, I think it’s always easier and more convenient to have new space, because you can build it out the way you want it to be,” Van Wyk told MiBiz. “We needed to look at spaces where we could accommodate everyone in a central location and provide the amenities our employees deserve.”
The vacancy rate for office space in the central business district and suburban market in Grand Rapids remained below 10 percent for the first time in 30 years, according to a report from the Grand Rapids office of Colliers International.
The report highlighted the need for more new construction or renovations in older buildings, as companies continue to seek out amenity-rich offices to attract and retain their employees.
“Because employees are so valuable to companies, and real estate is such a small cost for a company, we’re seeing a flight to quality,” said David Wiener, senior vice president on the office team at Colliers. “Because of Millennials and recruiting and retaining employees, companies are much more focused on the right space, the cool space, versus standard office space.
“As the good space gets eaten up, there’s going to be a need for more construction or more renovating of the older spaces in town.”
As of January, Van Wyk Risk Solutions was the last key tenant to lease space in the Warner Building, which includes anchor tenant Warner Norcross + Judd LLP and the regional offices for Chemical Bank. The building currently is fully leased, aside from two ground-floor retail spaces, according to Jason Wheeler, public relations coordinator at Grand Rapids-based Orion Construction Co. Inc., which is developing the project via its Orion Real Estate Solutions affiliate.
Orion first pursued the anchor tenants as a way to attract other interest in the building, he said.
“By securing an anchor tenant in the Warner Building, I think that it created the interest in the market, which allowed us to quickly fill the building up,” Wheeler said.
The downtown location, with its accessibility to highways and other amenities, also served as a major attraction to tenants. The retail space on the ground floor will likely be beneficial to the workers in the Warner Building, said Wheeler, who envisions users such as a coffee shop or hair salon leasing the space.
“It was a combination between the location, the design and the area amenities in the urban core, not to mention that we designed this building and built it to be very high quality, and to be representative of the movements in efficiency, technology and visibility that our tenants seem to find at the core of their values,” he said of the company’s success in leasing spaces in the building.
Slow and steady
Wiener at Colliers expects the West Michigan office market will continue growing at a slow but steady rate with new buildings being filled as they come on the market. Even with the new inventory, office users still will have difficulty finding quality spaces, which suggests a need for new construction in both the urban and suburban markets, or the renovation of Class B or C office space, he said.
Some new office development is already in the works. Developers of Studio Park in March resurrected plans to add a $30 million office building to the entertainment complex project, as MiBiz was first to report. Olsen Loeks Development LLC of Grand Rapids and Studio C are partnering on the office development at 100 Ottawa SW.
The announcement came about five months after Grand Rapids- and Oak Brook, Ill.-based Franklin Partners LLC scrapped similar plans for a Class A office building at Studio Park, citing low demand.
Even so, Jeff Olsen, partner at Olsen Loeks Development, told MiBiz at the time that the partners in Studio Park remain confident in the market for Class A office space.
Wiener at Colliers believes the Grand Rapids market could absorb even more office space in the years ahead.
“I don’t see the office market peaking,” he said. “Because GR is more of a midsize conservative town, we haven’t overbuilt the office market. Because of that, I think we will just continue to see slow, steady growth.”
Elsewhere in the market, vacuum and floor care products maker Bissell Inc. announced plans for a $10 million, 25,000-square-foot headquarters expansion in the city of Walker. As well, First Companies already filled its recently-constructed 42,000-square-foot Class A building at 2155 East Paris Ave. SE with medical and administrative users. In Walker, Trinity Health also filled remaining vacant space with administrative offices at the former University of Phoenix building located at 318 River Ridge Drive NW.
Mary Anne Wisinski-Rosely, princical at NAI Wisinski of West Michigan, sees companies having a hard time finding space to buy given the low inventory, although they do have an easier time leasing, especially in suburban markets.
“If you’re looking for 2,000 square feet versus 20,000 square feet, there’s definitely more space available in the smaller size ranges,” she said. “As far as location, I find more activity in the suburban market.”
For the downtown market, Wisinski-Rosely said any new large-scale project would need to secure an anchor tenant before getting off the ground, in much the same way Orion secured key tenants for the Warner Building prior to moving ahead with construction.
For its part, Orion plans to pay close attention to the downtown market before jumping into another office building project, Wheeler said, noting the company will watch how infill development occurs into next year. If Orion were to consider developing another office project, the firm would probably stick to the urban core, based on how filling the Warner Building went, Wheeler said.
“We’re very pleased with the outcome of the Warner Building,” he said. “It’s brand new, Class A office space, and we had an anchor tenant in place that drew attention to the rest of the building, which just sort of infilled. We’re really happy with how Warner went, and are always looking for the next big project like that in the urban core.”
Posted By: MiBiz on July 7, 2019. For more information, please click here to read the source article.
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