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Market Report Greater Kalamazoo | Q2 - 2017
Office • Industrial • Retail • Multi-Family
Wisinski ofWest Michigan
KALAMAZOO, MI
The Market
During the 1st half of the year, Kalamazoo’s Commercial Real Estate Market continued to experience a tightening of inventory, leaving very limited quality options for Buyers and Tenants looking for space across all product types. This shortage of inventory has resulted in an increased amount of vacant land sales as well as a rise in pricing in both sales and leases during the first six months of the year.
The Office Market in Southwest Michigan is showing steady activity, particularly outside of Downtown Kalamazoo where the cost of occupancy is lower. With higher construction costs in today’s market compared to 10 years ago, rental rates and existing product costs are much higher; a reality Tenants and Buyers are having a tough time facing as they look to renew or expand. Three flagship projects are currently under construction in Kalamazoo by local developers: Hinman/AVB’s 120,000 SF speculative Class A LEED certified office building at their Trade Centre development off I-94, Treystar’s Foundry development featuring a collaborative work environment on the edge of the CBD, and Phoenix Properties/Plaza Corps’ mixed-use Exchange development. Once these projects are delivered, we anticipate a shift of Tenants within the marketplace. This shift could result in large blocks of Class B space in the CBD opening up, putting some downward pressure on rates for 2nd generation spaces.
Activity in the Retail sector of the market has been robust, with very limited large blocks of space available in the major retail corridors. In the Westnedge corridor, Watson’s Home Store took approximately 25,000 SF in the former ABC Warehouse space at Portage Crossings shopping center and Home Goods will occupy a 19,000 SF building to be constructed next to Earth Fare. Some larger blocks of space have recently opened up in the Westnedge district with the bankruptcy announcements of Family Christian Stores, MC Sports and Gander Mountain. This may put some pressure for a reduction in rental rates in the near term; however, the demand for this corridor has historically been strong and we anticipate a fairly steady absorption of these availabilities over the next 12 months. The West Main and Stadium Drive corridors also continue to experience healthy activity with the recent announcements of Trader Joe’s, Orange Theory & Firehouse Subs opening at the Costco development. Additionally, AVB has announced a large scale mixed use development inclusive of hotels, junior boxes and restaurants along the east side of US-131 & West Main.
Industrial inquiries are steady in the Kalamazoo area, with limited existing options available for occupiers of any size. Users are being forced to look at purchasing land and building new to meet their expansion requirements. Summit Polymers is near completion on their 260,000 SF facility on N Avenue. TecNiq is also finishing up their new 100,000 SF building in the Comstock Industrial Park. Stryker recently announced a $130 million-dollar investment in a new corporate campus including a product development lab in Portage. Zoetis announced a $64.5 million dollar expansion at their Kilgore Road facility over the next 3 years. All new development in the Industrial sector has been by owner occupants. Developers remain leery to return to speculative development with the cost of construction and fairly stationary rental rates.
In summary, all economic indicators show the local commercial real estate market is on the up-swing, and we anticipate positive trends for the remainder of 2017 into 2018.Information above is based on statistics
provided by the U.S. Census Bureau, and Southwest Michigan First for Kalamazoo County.
$47,695Median Household
Income
15,676Companies in
Southwest Michigan
Workforce with Bachelor’s Degree
35.1%
34.2Median Age
Greater Kalamazoo Market Trends
Committed to West Michigan. Connected to the World.
3.3%Unemployment
Rate
262,866Population
NET ABSORPTION
Office Submarket StatisticsMethodology: The Office Market Report includes office buildings within each of the defined submarkets. Excluded are government buildings and institutional properties.
Q2 - 2017 Office Snapshot Submarket Vacancy Rate Total Average Rate ($/SF/Yr) Total Net Absorption (SF) Total Under Construction (SF)
Total Downtown 3.36% $13.96/SF -1,625 60,100
Total Suburban Kalamazoo 12.09% $13.99/SF 24,612 283,375
ASKING RATESVACANCY RATENET ABSORPTION
Office Statistical Changes 2Q16 vs. 2Q17
Suburban Kalamazoo
Downtown
Retail Submarket Statistics
Retail Statistical Changes 2Q16 vs. 2Q17
Methodology: The Retail Market report includes community, neighborhood, and strip retail buildings within each of the defined submarkets.
ASKING RATESVACANCY RATENET ABSORPTION
Westnedge Ave.
Stadium Dr.
West Main.Gull Rd.
Industrial Submarket StatisticsMethodology: The Industrial Market Report includes all industrial building types such as warehouse, flex / research development, distribution manufacturing, industrial showroom, and service buildings, in both single-tenant and multi-tenant Kalamazoo
CountyCalhoun County
South Counties
Lakeshore
Industrial Statistical Changes 2Q16 vs. 2Q17
ASKING RATESVACANCY RATENET ABSORPTION
Q2 - 2017 Retail Snapshot Submarket Vacancy Rate Total Average NNN Rate ($/SF/Year) Total Net Absorption (SF)
Total Westnedge Ave. 11.10% $15.89/SF 6,197
Total Gull Rd. 1.5% $14.00/SF 0Total West Main 4.70% $16.51/SF 5,000Total Stadium Dr. 9.00% $13.00/SF 10,000
Q2 - 2017 Industrial Snapshot Submarket Vacancy Rate Total Average NNN Rate ($/SF/Year) Total Net Absorption (SF)
Total Kalamazoo County 8.09% $4.00/SF 192,675Total Calhoun County 7.25% $3.63/SF 4,000Total Lakeshore 7.86% $3.00/SF -136,732Total South Counties 16.89% $3.35/SF 12,800Source: CoStar
Retail Market Activity › Watson’s opened its first location in Kalamazoo County in late May. Watson’s took over the former
ABC Warehouse space that measures nearly 25,000 SF. The Cincinnati, Ohio based retailer sells pools, spas, indoor & outdoor furniture.
› Owner/Developer, Hinman Co. broke ground on a 19,000 SF store for HomeGoods, Inc. at the Westnedge@Kilgore shopping center. Construction is expected to be completed in the spring of 2018.
Industrial Market Activity › Animal health company Zoetis, Inc. will spend around $64.5 million over the next 3 years to expand
its manufacturing capabilities in Kalamazoo. Renovations of its 524,000 SF facility on Kilgore Road are expected to be complete by early 2019.
› The groundwork for a 140-acre development has started to take shape at the former TGI Friday’s restaurant on West Main Street. Construction of three hotels, four restaurants and a cluster of retail stores along West Main & US-131 is being led by developer, AVB Inc.
Office Market Activity
› Construction is underway of the long awaited Exchange Building in downtown Kalamazoo. The $52.7 million, 15-story commercial and residential structure broke ground in April. Developer Phoenix Properties teamed up with PlazaCorp on the 340,000 SF project. Anticipated delivery date of early 2019.
› Construction commenced on the third Trade Centre office building in Portage along I-94 near South Westnedge Avenue. The five story, class A building is owned by Hinman Company and AVB. Construction on the +/-100,000 SF building is slated to be complete by the end of 2017.
› Summit Polymers, a plastic injection molding company, is near completion of their 260,000 SF facility on N Avenue in Kalamazoo.
› TecNiq, a LED lighting products manufacturer, is finishing up their new 100,000 SF facility in the Comstock Industrial Park. The new facility will help support the exponential growth it has experienced over the past 3 years.
Word on the Street...
› Watson’s opened its first location in Kalamazoo County in late May. Watson’s took over the former ABC Warehouse space that measures nearly 25,000 SF. The Cincinnati, Ohio based retailer sells pools, spas, indoor & outdoor furniture.
› Owner/Developer, Hinman Co. broke ground on a 19,000 SF store for HomeGoods, Inc. at the Westnedge@Kilgore shopping center. Construction is expected to be completed in the spring of 2018.
› Animal health company Zoetis, Inc. will spend around $64.5 million over the next 3 years to expand its manufacturing capabilities in Kalamazoo. Renovations of its 524,000 SF facility on Kilgore Road are expected to be complete by early 2019.
› The groundwork for a 140-acre development has started to take shape at the former TGI Friday’s restaurant on West Main Street. Construction of three hotels, four restaurants and a cluster of retail stores along West Main & US-131 is being led by developer, AVB Inc.
› Construction commenced on the third Trade Centre office building in Portage along I-94 near South Westnedge Avenue. The five story, class A building is owned by Hinman Company and AVB. Construction on the +/-100,000 SF building is slated to be complete by the end of 2017.
4023 Douglas Ave.2,450 SFBuyer: To be announced
68028 US-131, White Pigeon 9,000 SFBuyer: To be announced
7247 S. Pipestone Rd.15,000 SFBuyer: To be announced
2720 Sprinkle Rd.1,890 SFBuyer: Motor Cars of Kalamazoo
SOLD
3800 Covington Rd.2,400 SFBuyer: Molly Maid
237 S. Broadway 16,069 SFBuyer: To be announced
SOLD
202 S. State St., Gobles1,760 SFTenant: Allegan Community Federal Credit Union
151 S. Rose St.7,865 SFTenant: Walker Parking Consultants
8145 Valleywood Ln1,600 SFTenant: Awakenings Christian Counseling
LEASED LEASED
LEASED
SOLD
Notable Kalamazoo Sales & Leases Q2 2017
SOLD SOLDSOLD
101 Clinton Ave., St. Johns900 SFTenant: Domino’s Pizza
802 E. Front St., Buchanan2,240 SFTenant: Michigan Total Hearing Center, LLC
45 N. Main St., Three Rivers4,872 SFBuyer: To be announced
LEASED
SOLD
LEASED › Summit Polymers, a plastic injection molding company, is near completion of their 260,000 SF facility on N Avenue in Kalamazoo.
› TecNiq, a LED lighting products manufacturer, is finishing up their new 100,000 SF facility in the Comstock Industrial Park. The new facility will help support the exponential growth it has experienced over the past 3 years.
NAI Wisinski of West Michigan was formed in the spring of 2011 when NAI West Michigan merged with The Wisinski Group. This merger brought together two successful, reputable companies to form what is now the largest independently owned commercial real estate firm in West Michigan.
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NAI Wisinski of West Michigan is headquartered in Grand Rapids, MI and maintains a second location in Kalamazoo, MI. Our company provides all facets of commercial real estate services, including brokerage and property management, throughout the entire West Michigan region.
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Office • Industrial • Retail • Multi-family
Wisinski ofWest Michigan
Kalamazoo Team Marc Tourangeau, MBAAssoiciate Broker269 207 [email protected]
Kara SchroerRealtor Associate704 526 [email protected]
Jeremy VeenstraAssociate616 617 [email protected]
Bailey AivarsAdministrative & Marketing Assistant 269 459 [email protected]
Dane DavisAssociate Broker269 217 [email protected]
Joshua Jacobs Associate Broker914 374 [email protected]
Teresa CampbellOffice Administration 269 353 [email protected]
