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6 Colliers International

recently and it’s also affecting real estate decisions. Many                                                                                                      can offer. Demand for skilled labor is so high that many
people growing up and newer to the labor force were told                                                                                                          companies are paying individuals to undergo training and
that the traditional college route was the best way to earn                                                                                                       apprenticeships. This will be a theme in 2018.
gainful employment. Now, companies in West Michigan
are trying to shift that way of thinking. Skilled trades are                                                                                                      Because of this, we still see construction costs being
more in-demand than ever and are garnering salaries                                                                                                               prohibitive to many. In 2017, we saw more than 2 million
above what many jobs that require a four-year degree                                                                                                              square feet of new space delivered to the market, however,
                                                                                                                                                                  with an overall industrial vacancy rate around 5 percent,
U.S. LIGHT VEHICLE SALES AND INVENTORIES                                                                                                                          the market is demanding more. Long lead times and high
                                                                                                                                                                  costs will still make companies consider becoming more
Source: Bureau of Economic Analysis (BEA)                                                                                                                         efficient with space, tempering production goals or just
                                                                                                                                                                  building onto existing buildings rather than constructing
Seasonally adjusted annualized sales (millions)  20                                                                       1,400          Unit inventories (000s)  new. Speculative building has taken place, such as 5300
                                                 18                                                                       1,200                                   Broadmoor Avenue SE, which started as a 50,000-square-
                                                 16                                                                       1,000                                   foot Class A facility and was completely leased to two
                                                 14                                                                       800                                     25,000-square-foot tenants by the end of the year. The site
                                                 12                                                                       600                                     has additional room to add onto, and we expect to see
                                                 10                                                                       400                                     some movement at that site in 2018. Additionally, Robert
                                                 8                                                                        200                                     Grooters Development Company has been working on their
                                                 6                                                                        0                                       speculative development project near the Gerald R. Ford
                                                 4                                                                                                                international Airport, dubbed “Area 52” and is actively
                                                 2         2013  2014                 2015                    2016  2017                                          building speculative warehouse space.


                                                           Total light vehicle sales  Unit inventory


Source: Michael A. Dunlap & Associates

MADA Index                                       64                                    Index of Grand Rapids                        130  Index of employment      As we see a shift towards more efficient use of space,
                                                 62                               metro furniture employment                        120                           automation has been a solution many are turning to. Rather
                                                 60                                                                                 110                           than invest in new real estate, some are investing in machines
                                                 58        MADA index                                                               100                           that can be more productive, for longer hours, in the same
                                                 56                                                                                                               amount of square footage. Mark Ermatinger, Vice President
                                                 54        2013  2014                 2015                    2016                   90                           of Sales at Zeeland-based Industrial Control Services Inc.,
                                                 52                                                                                  80                           a provider of automation equipment, expects upwards of
                                                 50                                                                                  70                           a 300 percent increase in automation investment in 2018
                                                                                                                                     60                           from clients. We have seen technology and its effects on all
                                                  2012                                                                    2017                                    industries grow exponentially, so we expect this to play a
                                                                                                                                                                  major role in the coming year.

CHANGE IN CONSTRUCTION COSTS                                                                                                                                      Although we have a long lineage of manufacturing in
Sources: Engineering News-Record; Bureau of Labor Statistics                                                                                                      West Michigan, as the industry becomes more advanced,
                                                                                                                                                                  we will need to continue to not only retain companies
8%                                                                                                                                                                we have currently, but attract new, and innovative ones
                                                                                                                                                                  as well. That is precisely what is happening at Site 36 in
6%                                                                                                                                                                Wyoming, former home to the General Motors Stamping
                                                                                                                                                                  Plant. Although the site was demolished and sat vacant
4%                                                                                                                                                                for a number of years, the City of Wyoming, development
                                                                                                                                                                  partner Franklin Partners and Colliers brokers are actively
2%                                                                                                                                                                looking for the next “advanced manufacturer” that will not
                                                                                                                                                                  only occupy real estate, but will also bring in new, high-


-4%                                                                                                                       2017
 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

                                                 Consumer price index Building cost index   Construction cost index
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