News Summary
Grand Rapids is experiencing a critical shortage of industrial real estate, with vacancy rates dropping to 2.9%, well below the national average of 6.8%. The demand for industrial space has surged, leading to rising rents and challenges for companies looking to expand or relocate. Currently, 774,766 square feet of industrial space is under development, but this still falls short of previous years. Despite these hurdles, the overall market fundamentals for industrial real estate in the area remain strong.
Grand Rapids is facing a severe shortage of industrial real estate, with vacancy rates tightening and demand ramping up significantly, according to a new report released by The Right Place. The report, which represents the third annual Development Report by the organization, highlights the challenges within the local real estate market, particularly in the industrial sector.
The current industrial vacancy rate in Grand Rapids stands at 2.9%, an increase from 1.9% in the first quarter of 2024. This figure is substantially lower than the national average of 6.8%, pointing to a notable scarcity of available industrial space in the region. This tightening market reflects a broader trend, as high demand is being observed across all real estate sectors, with industrial challenges being the most acute.
In terms of construction, there are currently 774,766 square feet of industrial space under development, a significant increase from the 224,765 square feet reported in 2024. However, this is still a far cry from the 2,676,356 square feet that was under construction at the end of 2021. Consequently, the asking rents for industrial spaces have also seen an uptick, rising from $6.56 per square foot in 2024 to $6.88 in 2025.
Companies wishing to expand or relocate face numerous hurdles as available properties and land equipped with the necessary infrastructure for industrial development are dwindling. There has also been a decreasing availability of land zoned for industrial use across local municipalities, making it challenging for new developments to emerge. Nevertheless, grants from organizations like the Michigan Economic Development Corporation are available to assist in preparing sites for industrial projects.
Despite these challenges, the overall market fundamentals for industrial real estate in Grand Rapids remain healthy, even though some moderation in leasing and development activities has been reported. The office real estate market has stabilized with a vacancy rate of 13.8%, which is a slight increase from 12.7% in the early part of 2024 but is still significantly lower than the national average of around 20%. Changes in office space utilization due to the pandemic have shifted dynamics, leading to an increase in hybrid and remote working arrangements.
Considerations are also being made regarding the conversion of empty office spaces to housing, with a noteworthy development at 111 Lyon Street in downtown Grand Rapids. The multifamily housing market shows a 5.6% vacancy rate, an increase from 4.5% in 2024, while average rents have climbed to $1,466 from $1,408. The supply of single-family homes is also being impacted, with properties spending an average of 42 days on the market, up from 34 days in 2024. A recent housing study projects a need for 34,000 new housing units in the Grand Rapids area by 2029.
The retail sector is experiencing its own set of dynamics, with the retail vacancy rate recorded at 4.2%, a slight decline from 4.8% in 2024. While the trend towards online shopping persists, retail opportunities continue to emerge, as indicated by the recent acquisition of local malls, RiverTown Crossings and Shops at CenterPoint, by new owners, reflecting investment potential in the retail market.
The Right Place report emphasizes nearly 30 development projects in the area, spanning a variety of initiatives from co-working spaces to new automotive facilities, indicating sustained interest and confidence in the local market. Local market experts remain optimistic about the overall outlook for West Michigan’s industrial real estate sector, despite fluctuations and challenges.
Deeper Dive: News & Info About This Topic
HERE Resources
Steelcase Reports Strong Q1 Earnings Amid Microsoft Property Sale
Scott Wierda and Son Launch SW Real Estate Investment
China’s Retail Sales Growth Slides While Industrial Output Remains Strong
Matthew’s House Relocation Sparks Controversy in Grand Rapids
Grand Rapids Construction Projects Face Tariff Challenges
Vietnam Raises GDP Growth Target to 8% by 2025
Kentwood to Welcome New Mixed-Use Development Near Airport
Additional Resources
- Wood TV: Grand Rapids Industrial Map
- Wikipedia: Industrial Real Estate
- Crain’s Grand Rapids: Industrial Market Normalizing
- Google Search: Grand Rapids Industrial Real Estate
- Colliers: West Michigan Industrial Market Report
- Encyclopedia Britannica: Real Estate
- MLive: Grand Haven Housing Development
- Google News: Grand Haven Development
- CoStar: Commercial Investment in Grand Rapids
- Google Scholar: Grand Rapids Commercial Real Estate
- Crain’s Grand Rapids: Bridge Street Office Building Acquisition
