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Repositioning a building is not cheap, however, and is part     $ 14 0 . 0 0
of the reason rental rates have climbed. Exterior changes are what is       $12 0 .0 0
visible, but within those buildings, physical layout of office space has    $100.00
changed as well. A newer generation of workforce is disrupting the
status quo and traditional work environments are being transformed           $ 80.0 0
into culture and collaboration facilitators. This is key in the battle for   $ 60.0 0
talent. Companies are investing significant capital into finishes              $40.00
and amenities, and landlords who do the same are finding                      $20.00
significant success compared to those who are not.
                                                                               $ 0.0 0
            Tenants who renewed low rates during the downturn are
now forced to face realities of a much higher market, and many are                        2014  2015                         2016
doing whatever they can to extend longer. This is part of the cause for
a decrease in overall completed new transactions in 2016.                                 Avg. Asking PSF  Avg. Final PSF

            Furthermore, parking downtown continues to be a concern         Office Sale v. List Price
for many. However, as previously mentioned, part of acting like a
major market is finding solutions to this problem. We are far below our      Kent & Ottawa Counties 2014-2016
peer cities (Madison, WI; Norfolk, NJ; Richmond, VA; Salt Lake City, UT;
and St. Paul, MN) in terms of public transportation usage by residents      10.7% difference between list and final sale price in 2016
and workers downtown. So emphasizing alternatives to driving will
be key going forward. Almost all new office development contains            Health Care & Social Assistance                        11,0 0 0
a parking component, however, for rehabilitations like TWENTY 5             Manufacturing                                          10,000
in which no new parking could be added, a creative parking stipend          Retail Trade
program was implemented for Spectrum Health’s nearly 400 staff              Prof., Scientific & Tech.                                9,000
members who now occupy the building. Further programs like this             Finance & Insurance                                      5,600
will also be instrumental in absorbing continued demand to locate           Transportation & Warehousing                             5,10 0
businesses downtown.                                                        Accommodation & Food Services                            4,800
                                                                            Administrative & Support                                 3,900
                                                                            Educational Services                                     3,800
                                                                            Other Services                                           2,400
                                                                                                                                     1,70 0

                                                                            Top Industries

                                                                            Job Openings, Grand Rapids-Wyoming MSA

                                                                            Source: Burning Glass International Inc. (2016)

SUBURBS                                                                     workers in West Michigan on a co-location basis initially, with
            In West Michigan, 2016 will be remembered as the year data      eventual permanent locations established in the future. Ancillary
                                                                            benefits of more office workers being in the area will be more retail,
server-provider Switch started its multi-billion dollar investment          hoteling, and residential rooftops.
in the West Michigan region. Leasing the former Pyramid-shaped
Steelcase headquarters building in Gaines Township, the company                         As mentioned, the downtown office market has seen a
committed to contributing more than 1,000 new jobs to the region            renaissance over the past decade, however, the suburban market
over the next decade. More than half of those jobs are expected to          has seen far less capital investment in updating and building
be with companies other than Switch. This means that Switch and             new space. Heading into 2017 we see significant opportunity
economic development organization The Right Place, who helped               in peripheral office submarkets for developers and owner-
bring Switch to the area, are planning on more than 500 jobs to come        users to create high-quality office spaces. Access to parking
from companies Switch provides its services to.                             gives suburban buildings an advantage over their downtown
                                                                            counterparts, so those who build great space to couple with
            We expect this to have a massive impact on the suburban         ample parking should see significant interest. We have seen
office market. While 2017 might be too early to see many of these           suburban development such as Heritage Pointe on East Paris
jobs come to fruition, we expect a number of companies to locate

                                                                                          - COLLIERS INTERNATIONAL -                    11
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