Rates plateau, new inventory added downtown
The Grand Rapids office market remains on solid ground after another quarter of positive absorption. This marks 31 consecutive quarters in which more office space was filled than vacated. As the economy continues to stretch out the tail end of the longest recovery in history, companies are preparing for the reality of market cyclicity, and they are making real estate decisions now that will position them for the next decade.
Unemployment in the metropolitan area dropped to a stunningly low 2.7 percent by the end of August, marking the lowest reading in nearly 20 years. This is despite the fact that the population of Grand Rapids has grown 5.8 percent since 2010. Attracting and retaining talent continues to be a main focus for employers, prompting companies to invest in quality, attractive office space. Developers are taking notice of this demand, resulting in moderate but consistent construction. At the end of the third quarter, Colliers was tracking nine office construction projects that will add roughly 567,000 square feet to the market.
Nationally, jobs numbers continue to meet or beat expectations, averaging just around 200,000 new nonfarm payroll jobs per month. New office space under construction fell slightly in the first half of the year, partly due to continued high costs and supply of materials and labor. Of Colliers offices in the United States, 67 percent of them reported positive absorption in the second quarter, up from 59 percent in the first quarter. We anticipate roughly two thirds to again report a positive number for Q3, as all signs point to continued stability.
Click here for the full 2018 Q3 Office Market Report.