Commercial Real Estate Report
Industrial and manufacturing properties! Wait, I know what you're thinking: "Did he just really say industrial and manufacturing properties?" Yes I did. I know it may be hard to believe because everything you hear in the news regarding Michigan and manufacturing would lead you to believe otherwise. But the phenomenon of industrial growth is happening, and it's happening here.
Credit in part the resiliency of companies in Traverse City and their ability to retool and search out new markets for their products. That resiliency, coupled with depressed prices and a large pool of skilled labor, not only has enabled several companies to expand it also has caught the attention of companies desiring to relocate here.
Just within the past year we have seen the purchase of the old Tower Automotive building by American Waste; the three-pronged transaction between Century, Inc., National Vacuum, and Grand Traverse Stamping; and the purchase of the Kellogg Wholesale building. These deals alone have accounted for absorption of 372,000 square feet of commercial real estate. (And that number doesn't take into account the other leases that have been put in place within this property type in recent months.)
According to Three West's commercial lease market update, the industrial and manufacturing properties are the only sector to have seen absorption over the past six months. It is also the only market sector to see the average price per square-foot rate increase over that same time period.
Even with this great activity, the real excitement is in the increased volume of activity and interest in this market that is sitting on the sidelines waiting to enter the game. Phil Franzo with the Traverse City Area Chamber of Commerce EDC tells me that of the 30 current and ongoing projects the EDC is involved in, there are 22 projects in the pipeline that promise either an expansion or investment into established companies.
He also says that of those projects, 13 require additional manufacturing or commercial space. These projects range from small additions to entirely new facilities or substantial construction. Beyond these expansions there are four companies interested in relocating to the area and currently searching building sites, plus another four projects that are new start-up companies.
Translation: It's possible that out of these projects, another 300,000 square feet of industrial and manufacturing space could be absorbed in the very near term.
What does this all mean for the Grand Traverse area? Well, a lot of things. Expansions and relocations of manufacturing companies create good jobs for our residents and for people moving to the area. The people filling these jobs purchase houses, cars, and other goods from other local companies, which will assist in boosting our local economy.
It also means that those companies sitting on the sidelines and in need of a new facility better step up and join the game while the inventory still exists. With all of the components critical to manufacturing businesses operations – think: overhead doors, loading docks, radiant heat, overhead cranes, high ceilings, clear-span construction, just the right amount of office space, and more – those who wait may run the risk of settling for a sub-par property that will possibly force them to adjust their operations. I think the lyrics from Centerfield by John Fogerty sums it up very well, "Put me in Coach; I'm ready to play … today."
Endres is co-owner and Realtor of Three West Commercial Real Estate and Consulting. 231.929.2955, firstname.lastname@example.org