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By Kym Reinstadler | TransActions
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WEST MICHIGAN — WANTED: Clean manufacturing facility wired for high-voltage power with high ceilings, thick floors and wide-open spaces.

It’s not easy finding that these days in West Michigan, unless you’re willing to consider an older building, says Chad Versluis, a commercial Realtor who specializes in industrial properties for NAI Wisinski of West Michigan.

There are distinct signs in the area’s commercial real estate market that manufacturing — particularly automotive and tool and die manufacturing — is on the uptick.

“I’m seeing activity and optimism returning to the market,” Versluis said. “Talk in 2009 was, ‘Are you surviving?’ It was a little better in 2010, and is a little better still in the first half of 2011.”

There are relatively few choice manufacturing sites for sale or rent in the Grand Rapids metropolitan area, although the glut that came on the market a couple years ago during the depths of the recession is continuing to suppress prices, he said.

Indeed, reduced lease and sale prices for industrial properties over the past year could be partly responsible for what looks like renewed activity in the manufacturing sector.

The average asking rental rate in Grand Rapids was $3.07 per square foot in April, the most recent month for which figures are available, according to loopnet.com, which studies market trends. This price is down 11.3 percent from the same period the year before, but up 4.2 percent compared to the previous three months.

Likewise, the median asking price per square foot for industrial properties for sale in April declined 7.1 percent from a year ago and 6 percent from the previous three months.

Throughout Kent County, average rental rates and prices of industrial properties listed for sale have also decreased slightly from a year ago, according to loopnet.com.

“Rents are lagging because we had a very large supply of commercial properties on the market,” said Rod Alderink, president of the Commercial Alliance of Realtors. “As the velocity of activity picks up, and the supply is not so great, we anticipate prices will increase.”

There continues to be an excess of warehouse and distribution space in West Michigan, Versluis said. There is modest increase in the real estate market for office space, but demand for retail space remains low, Alderink said.

Summit Marine is one area manufacturer that has taken advantage of favorable land prices and special Small Business Administration loans fueled by the American Recovery and Reinvestment Act to expand operations.

The producer of hydraulic boat lifts in December 2010 moved its operations from Comstock Park to a 40-year-old building near Ann and Turner Streets in downtown Grand Rapids that had an addition and extensive renovation five years ago.

“We needed more space and are pleased with the deal we were able to get,” said Jim Ampulski, president of Summit Marine.

The new space doubled Summit Marine’s manufacturing space to 24,000 square feet. Ampulski would not disclose how much the new digs cost the company, but said it was the lowest cost per square foot of any industrial property available at that time in Grand Rapids’ northwest quadrant.

Summit Marine spent more than $100,000 to renovate the space — previously home to Matador Tool and Die — for its uses. Nevertheless, buying this property was less than half the estimated cost of building a new structure, Ampulski said.

“We really like the location,” Ampulski said. “Being in the city puts us closer to our suppliers and gives us easy access to expressways.”

Summit Marine sought an SBA loan through three lenders, all of which eventually approved it. The business went to United Bank, a privately held institution which approved the loan application in two days, Ampulski said. The other two banks took two months or more to answer yes.

Executives with Kawasaki Precision Machinery Group considered moving out of Grand Rapids and out of state a year ago, when they decided to expand operations. To grow, KPM needed to move out of quarters at 5080 36th Street SE, which it had shared with Kawasaki Motors since 1993.

Reasonable rents were part of what ultimately made staying in Grand Rapids attractive, said Joe Klooster, operations and finance manager.

“We were able to get a fair rate, but I wouldn’t call it a bargain rate,” Klooster said, referring to a 45,000-square-foot industrial space KPM is leasing with an option to buy at 3838 Broadmoor Avenue SE. “Lower prices are available farther away, but we see advantages to staying in the (Gerald R. Ford International) airport district.”

An area suitable for KPM’s re-manufacturing of large machinery was retrofitted in the new building before the April move, but otherwise renovations were in the “freshening up” category, Klooster said.

KPM continues to share information technology and human resources services with Kawasaki Motors, now two miles away, Klooster said.

Splitting made sense, Klooster said, because the two divisions manufacture different products, use different business models, and both needed to expand to meet market demand.

Both KPM and Summit Marine used Callander Commercial adviser Pamela Collins, based in Grand Rapids. Collins said both are fairly typical deals in this market where most companies, especially manufacturers, are looking for existing space.

“I’ve not stumbled across anyone looking at new construction,” she said. “Inventory is starting to tighten up a bit. The most desirable industrial properties are in the southeast part of the city — the airport corridor. The less desirable is in the southwest. There’s quite a bit of vacancy … in those old industrial areas.”

– MiBiz Managing Editor Joe Boomgaard contributed to this report.

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TAGS:

• callander commercial
• chad versluis
• commercial alliance of realtors
• comstock park
• grand rapids
• jim ampulski
• joe klooster
• kawasaki motors
• kawasaki precision machinery group
• nai wisinski