by Dan Rafter
Tom DeBoer, senior vice president with the Grand Rapids office of Colliers International, has worked in commercial brokerage for more than 25 years. He’s seen both good times and bad ones in his market of West Michigan, including in the busty cities of Grand Rapids and Kalamazoo. He considers today to be one of the good times in this region, as the commercial real estate market here fuels a rebirth in this formerly struggling slice of the state.
DeBoer recently spoke to Midwest Real Estate News about both his long career and the commercial real estate rebound he now sees in West Michigan.
Midwest Real Estate News: How long have you worked in the commercial real business?
Tom DeBoer: I’ve been in the business about 27 years, in the office market in West Michigan. I deal with a lot of unusual projects during my career. People will ask me, ‘How in the blazes did you get that building sold?’ I like to find creative, different ways to approach projects. I’ve sold some very large product in the last 10 years, properties that a lot of people didn’t see much hope for. It’s been fun. It’s been challenging, too. There are so many opportunities out there.
MREN: Can you give me an example of one of the more unusual buildings you’ve sold?
DeBoer: Probably the most famous was the former Steelcase building in Grand Rapids. That’s a pretty well-known property. It does look like a pyramid. It’s a large space that’s not at all easy to sell. The building had sat empty for six years. I got close a few times. I almost had it sold to an educational organization. That ended up not going anywhere. I did find a client who likes big empty buildings and turning them around. I gave him a call and he was able to buy the building. We closed the deal in 10 days after I introduced him to the property.
That client was able to sell the building to Switch, a company that runs data centers. Switch is turning the pyramid into a data center. It’s a big project for the area. That property is so big, more than 600,000 square feet. The right stars had to align to make that deal work.
MREN: You have plenty of experience in this market. How has the West Michigan market changed since you started working it?
DeBoer: I came into the market in 1990. It was a tough time. Market rents had taken their first big hit. The market steadily built itself back up, but then came the infamous 2009 period where the market truly tanked out. It happened across the nation, of course, but it was particularly rough here in Michigan.
We’ve lived a little bit of a sheltered life in West Michigan for years here. We have been fortunate because our business community is so diverse. When things finally did fall apart in 2009, we persevered. It was so difficult to even talk to people about coming to Michigan. People had a bad feeling about Michigan. They’d say, ‘I’d never want to be in Michigan.’ You’d almost get instant hang-ups on the phone when talking to people. That is changing now. Detroit is rebranding itself. West Michigan is thriving.
Even in those difficult times, when we complained about the market getting tight, we never did take the big hit that a lot of major cities experienced. That’s largely because we are so diversified. We have manufacturing and service industries here, financial institutions and tech start-ups. We never took as big of a hit as you saw in some other bigger markets across the country.
MREN: What is behind the strength of the commercial real estate industry here?
DeBoer: It has taken a while to get back to this point. But I really credit the leadership we have in this area. The thing that has helped drive this recovery is the effort made by the city fathers. They have given so much back to the community to make it what it is today. Their efforts have helped the region thrive. Today, West Michigan is going exceptionally well. The leadership we’ve had in the municipal and private sectors has been committed to investing back in the community to make it special.
MREN: Looking back at the Steelcase deal you closed, how important was it for the area that a major tech company such as Switch chose Grand Rapids?
DeBoer: The leadership at Switch didn’t even know where Grand Rapids was or what it was about. The leaders of the company where here during ArtPrize, one of our annual events, one focusing on art and artists. These guys were walking around downtown Grand Rapids at 11 at night and were amazed at all the people and things going on. They were completely blown away. I think the word is getting out that Grand Rapids is a great place to do business. Having companies like Switch set up shop here makes a big difference, too, in our efforts to bring new businesses here.
This is a stable environment for businesses. We are being noticed. The goal now is to figure out how to manage and continue our growth without getting out of control.
MREN: How attractive is downtown Grand Rapids for companies today?
DeBoer: The younger generation increasingly wants to live in downtown areas. That’s true in Grand Rapids, too. They don’t want to buy cars. They want to walk everywhere or take public transportation. That whole generation wants to live and work in the same environment. It’s hard for me to fathom, but that’s what they want. Grand Rapids, then, is seeing a huge growth in the residential sector of the market in the core area and in downtown. We still need even more apartment units. The numbers are staggering, though, when it comes to new multifamily units. I’m not sure when that is going to stop.
From an office standpoint, with all those people wanting to live downtown, we are seeing an influx of office development in downtown Grand Rapids in the last eight years. Our office market is extremely tight. We are down around 10 percent of 11 percent vacancy in the downtown Grand Rapids office market.
MREN: How have the actual office spaces in the region changed over the years?
DeBoer: It used to be that 20 years ago, an office was an office. Now it’s all about the collaborative environment. There are open-office environments. Amenities have become more important. Some have fitness facilities so that their workers can go on the treadmill for a half-hour whenever they want. They might have a coffee shop on site, preferably a Starbucks that can charge $8 for a cup of coffee. There are places to sit and relax, outside seating areas. The office of today is a friendlier place than it was 20 years ago. The most successful office buildings today are the ones adding those amenities.