Boom during the bust, Muskegon's commercial construction bustling

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Dave Alexander, The Muskegon Chronicle, Article at


If the real estate market is the cause of the current economic upheaval in America, some may drive through downtown Muskegon and scratch their heads upon seeing all of the new construction.


The fact that commercial real estate development continues belies common perceptions. But the problem with real estate — especially in West Michigan — now seems to be limited to the residential market, hammered by the subprime mortgage crisis, falling housing prices and record numbers of home foreclosures fueled by job losses.


Residential real estate woes have been caused by poor lending practices, while commercial real estate continues to perk along based on strong businesses, especially here in West Michigan. But that is not to say that a severe economic recession nationwide or continued downturns in the Michigan economy won’t sap the energy out of the current West Michigan commercial real estate market.


“The message to begin this year is hug a manufacturer,” Grubb & Ellis Paramount Commerce President Duke Suwyn said of a continued strong industrial presence in the region. “We have laid the building blocks for our future in West Michigan. Despite what is happening on the other side of the state, things have been steady and stable in West Michigan.”


Regional commercial real estate experts from the Grubb & Ellis, a commercial real estate firm, remain cautiously optimistic that momentum in the commercial real estate industry will continue through 2008. That was the message from Grubb & Ellis at a recent West Michigan commercial real estate forecast conference.


“We’ve been hearing doom and gloom the past two years, but I think the state of Michigan has hit bottom and flattened out … We’re ready to go up,” said Tom DeBoer, an office real estate specialist with Grubb & Ellis. “For West Michigan, 2007 was a good year and 2008 is looking good again.”


That is good news for Muskegon County, which despite all of the economic uncertainty continues to show positive signs in commercial development. Construction continues on two “city center” office buildings in downtown Muskegon this winter and efforts continue on at least a half dozen other sites on the former Muskegon Mall property.


Elsewhere in Muskegon County, the Eastowne development in Norton Shores continues to progress, Meijer Inc. will start a major renovation of its Henry Street store and leasing continues for small retail spaces along Harvey Street near The Lakes Mall.


“Muskegon is blessed with a great lake and is capitalizing on it in a way that will have long-term positive effects,” said Bill Bussey, a Grubb & Ellis retail real estate specialist who has worked extensively in the Muskegon market. “Downtown Muskegon is happening. I think Muskegon is preparing itself for a bright future.”


West Michigan has received plenty of national attention for the health care and life science developments along the “medical mile” in downtown Grand Rapids. That has drawn new real estate investment interest from outside of the state of Michigan, including such places as Washington, D.C.; California; Massachusetts and the state of Washington, according to Grubb & Ellis investment group chief Colin Kraag.


Even Muskegon is seeing such interest. DeBoer said a Florida-based investor should complete the purchase of the former AmeriBank building in downtown Muskegon. Located at Clay Avenue and First Street, the five-story 27,000-square-foot building has been underutilized the past few years as the Scottsdale, Ariz., owner has not begun expected renovations.


DeBoer said the Florida investor plans to renovate the facility into offices and then offer them for sale in a condominium arrangement. The former AmeriBank building’s real estate deal could close by the end of March, he said.


“We had more activity in the last quarter of 2007 than we have had in a long time,” DeBoer said. “I see some new businesses coming into downtown Muskegon this year.”


In the retail and restaurant sectors, Bussey said Muskegon can expect some new entrants as 2008 progresses. The new businesses will be chains that serve “value-based” shopping and dining customers in Muskegon, he said.


Grubb & Ellis officials say that several dozen retailers and restaurants are looking for new locations throughout West Michigan. Among them include CVS Pharmacy, SportsClips and The Fresh Market on the retail side and Sonic, Panera Bread and Biggby Coffee on the food side.


In Muskegon, Target’s move from a smaller store on East Sherman Boulevard at U.S. 31 to a new, larger store in the Lakeshore Marketplace along Harvey Street has presented the East Sherman area with a major challenge. Still the home of a Wal-Mart, Sam’s Club and Lowe’s, the East Sherman area may have difficulties filling both the Target building and the adjacent former Circuit City space, Grubb & Ellis officials said.