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the investment is largely in equipment, not personnel. This is
causing management and technical positions to gain value, yet entry
level jobs are seeing wage stagnation, making it much harder to
attract the new wave of workforce. Many industrial businesses who
are hiring are complaining about a drained talent pool as a result.
To fill the talent pipeline, new education programs are
being developed to teach youth about the benefits of a career in
manufacturing. Schools are also making professionals available to
answer questions and share successful career stories of the past.
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
to expand the ability to do so, this issue will need to be continually
addressed in 2017.
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
CORE PORTFOLIO
INVESTMENT
Industrial property has been a favored sector for
investors and developers in West Michigan and, according to The
Urban Land Institute’s 2017 Emerging Trends in Real Estate survey,
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.
8 - COLLIERS INTERNATIONAL -
-10 0 %
-80%
-60%
-40%
-20%
-0%
Sell / Hold / Buy Sell
Hold
Industrial Investment Buy
Recommendations
Source: Emerging Trends in Real Estate 2017 Survey
(based on U.S. respondents only)
In 2016, West Michigan saw a large industrial portfolio
change hands when the 1.1-million-square-foot Crosslake Portfolio
was sold to an out-of-state investor. Previous owners had purchased
the six-building portfolio in 2013 with various short term and rolling
leases resulting in about 70 percent occupancy. This created an
opportunity to add value. Sellers spent time and money to stabilize
the asset, bringing it to 95 percent occupancy, and sold it this past
September. This was the largest transaction of the year in the region
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.