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the investment is largely in equipment, not personnel. This is                                                                -10 0 %
causing management and technical positions to gain value, yet entry                                                           -80%
level jobs are seeing wage stagnation, making it much harder to                                                               -60%
attract the new wave of workforce. Many industrial businesses who                                                             -40%
are hiring are complaining about a drained talent pool as a result.                                                           -20%
                                                                                                                              -0%
            To fill the talent pipeline, new education programs are
being developed to teach youth about the benefits of a career in           Sell / Hold / Buy      Sell
manufacturing. Schools are also making professionals available to                                Hold
answer questions and share successful career stories of the past.         Industrial Investment  Buy
West Michigan is a community in which much pride is taken from the
products we produce, so in order to allow companies who are wanting       Recommendations
to expand the ability to do so, this issue will need to be continually
addressed in 2017.                                                        Source: Emerging Trends in Real Estate 2017 Survey
                                                                          (based on U.S. respondents only)
            Many questions remain for 2017 across the entire regional
and national economy, but balancing a new paradigm of how
companies operate with an aging workforce and depleted employee
pipeline will be key to sustaining the growth we have seen over the
past half-decade.

  1269 EAST MOUNT GARFIELD                                                            In 2016, West Michigan saw a large industrial portfolio
  CORE PORTFOLIO                                                          change hands when the 1.1-million-square-foot Crosslake Portfolio
                                                                          was sold to an out-of-state investor. Previous owners had purchased
INVESTMENT                                                                the six-building portfolio in 2013 with various short term and rolling
            Industrial property has been a favored sector for             leases resulting in about 70 percent occupancy. This created an
                                                                          opportunity to add value. Sellers spent time and money to stabilize
investors and developers in West Michigan and, according to The           the asset, bringing it to 95 percent occupancy, and sold it this past
Urban Land Institute’s 2017 Emerging Trends in Real Estate survey,        September. This was the largest transaction of the year in the region
it is again the favored sector heading into 2017. This is largely due to  and represented a 9.46 percent cap rate.
being lower risk relative to the other property sectors.
                                                                                      This year we saw a 10.7 percent difference between average
                                                                          listed for-sale price and final transaction price in our market, 190
                                                                          basis points less than in 2015.

                                                                                      Going forward, we see investment opportunities still
                                                                          available in the industrial market. Smaller R&D/Flex space
                                                                          recovered slower from the downturn, so cap rates still remain
                                                                          inflated. Additionally, some opportunities exist to repurpose
                                                                          functionally obsolete buildings, as submarket vacancies rates across
                                                                          the region are at historical lows and users are hungry for space and
                                                                          are willing to be creative.

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