Grand Rapids’ industrial market is heading towards its first year of negative space demand since 2019
Posted By: CoStar on September 9, 2025. For more information, please click here to read the source article.
Following a jolt of move-out activity early in 2025, the Grand Rapids industrial market has continued to see move-outs outpace move-ins, pacing the year for the weakest annual demand reading since the onset of the pandemic.
Net absorption, or the change in occupied space, totaled negative 1.4 million square feet in the first quarter, the weakest quarterly tally since the depths of the Great Financial Crisis in 2009. This year’s largest move-outs included 507,020 square feet at a distribution center in Grand Rapids and 453,960 square feet at a facility in Holland.
Total industrial space listings across Grand Rapids more than doubled from 3.3 million square feet early in 2023 to 6.7 million square feet currently in September. The Base Case forecast estimates move-outs to pick up in the fourth quarter, leading to a projected absorption reading of negative 2 million square feet this year.
Despite the rise in available space, the metropolitan area compares favorably to its geographic peers. CoStar analyzed the largest industrial markets in Michigan, or those with inventories of at least 30 million square feet. Of those seven markets, Grand Rapids has the second-lowest availability rate at just 3.4%, trailing only Lansing’s 2.6%.
A measured pace of inventory expansion kept the average vacancy rate in Grand Rapids in a tight range between 2.4% and 3% from the start of 2021 through the end of 2024. However, as more space is returned to landlords, the vacancy rate has increased to 3.5% heading into fall, marking a new decade high.
Industrial occupiers have been contending with a notable slowdown in economic growth this year, driven by a slump in manufacturing output. Oxford Economics reports that manufacturing remains the largest employment sector in Grand Rapids, but it has shrunk nearly 2% over the past year, the weakest showing of all categories.
Manufacturing employers are expected to be under pressure over the next 12 months, an outlook weighing on real estate decisions. Most recently, snack maker Utz Brands announced it’s closing its Grand Rapids facility as it consolidates its manufacturing footprint to cut costs and streamline operations.
Activity at the 250,000-square-foot property is being phased out, and the facility will close on May 26. Utz announced it will offer transition assistance to its affected 75 employees at the location.
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