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5Colliers International

GRAND RAPIDS

INDUSTRIAL MARKET

The industrial market seems to continue to grow tighter, with continued absorption and positive but modest
new construction over the last year. In 2018, we anticipate the theme of this property type will be off-market
transactions and creativity by brokers, developers, landlords, and tenants.

The West Michigan industrial market has a number of           now. What this will mean for West Michigan’s industrial
demand drivers, including furniture manufacturing and         market in 2018 and beyond is yet to be seen, but we
food processing; however, one driver we expect to             expect new companies that specialize in autotomizing
have an impact on the region in 2018 is the automotive        cars to enter the market.
industry. With a number of OEMs (original equipment
manufacturers) and Tier 1, 2, and 3 part suppliers in the     The demand for vehicles will also play a role in real estate
region, any change in the automotive industry is sure to be   decisions in 2018. Many experts think total vehicles
felt. The paradigm shift in the auto industry is complex and  produced nationwide and automotive employment will
there are a number of factors that influence the industry.     plateau if not drop in 2018, but that will be coming down
Vehicles themselves are more intricate and advanced           off near record highs. We forecast that 2017 would be
than ever, with on average more than 30,000 individual        the leveling off year, after a very strong 2016 in which
parts per vehicle. Technology within vehicles is rapidly      more than 18 million vehicles were produced, however,
increasing as well, so manufacturing for these components     manufacturers in the auto industry have largely had a
has become more sophisticated. We see that continuing         great year. The national long-term average is just under
into 2018, especially with Tesla, Ford, and Volkswagen        17 million vehicles produced, and gas prices have been
aggressively pursuing market share in the up-and-coming       favorable to production of some of the bigger and more
electrical vehicle (EV) market.                               expensive vehicles recently, so a modest correction is not
                                                              something that should take too many by surprise.
In addition, it will be interesting to watch how autonomous
vehicles progress in 2018. As this type of technology         Access to skilled labor continues to be a constraining
advances, fundamentals of how a car operates will             factor in not only the automotive industry, but also across
change. This is likely a few years away, however, prudent     most of West Michigan’s manufacturing industry. Even
auto parts manufacturers are thinking about these changes     while demand is present, production has been a challenge
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