Grand Rapids office market remains among the steadiest in Michigan
Posted By: CoStar on April 11, 2025. For more information, please click here to read the source article.
Grand Rapids has been among the most stable office markets in the Wolverine State since the pandemic.
The metropolitan area’s average vacancy rate increased around 170 basis points from the end of 2019 to a peak of 7.1% in early 2023. That was the second-smallest move for markets with at least 10 million square feet, trailing only South Bend’s increase of 125 basis points.
A measured pace of inventory expansion before the pandemic and a labor pool dependent on service sectors tied to population growth help explain the resilience of office demand across Grand Rapids.
The education and health services sector is the third-largest employment segment in the Grand Rapids metropolitan area, with 101,000 workers. It trails only manufacturing (112,000) and trade, transportation and utilities (106,000).
Additionally, positions in education and health services have steadily grown over the past decade, registering the second-biggest increase behind mining and construction jobs.
Corewell Health, a nonprofit health system, is the area’s largest employer. It provides health care and administrative jobs across its 22 hospitals and over 300 outpatient locations. Its largest presence in Grand Rapids is at the Spectrum Health Brain & Spine Tumor Center, where it occupies nearly 123,000 square feet.
Elsewhere, the public sector has led Grand Rapids in annual employment gains over the past year with nearly 3%. Government positions total 52,000 here, with the largest concentrations of government offices found in the Central Grand Rapids node.
The Grand Rapids metropolitan area has enjoyed a healthy supply-demand balance over the past decade. Net absorption, or the change in occupied space, averaged 344,000 square feet annually since 2015, compared to new supply additions of 223,000 square feet. That helped keep the average vacancy rate at 6.1% over this period, far below Detroit’s average of 11%.
Looking ahead, CoStar expects a mostly depleted construction pipeline and continued growth in employment in the education and health sectors to keep vacancies anchored at 6.4% for the rest of 2025. That’s in stark contrast to Detroit, whose vacancy rate is projected to edge up to 12.3% by year-end.
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