Will she? Won't she? Who cares?
When Janet Yellen convenes a meeting of the Federal Reserve Board this week, there will a deluge of media reports that try to predict when interest rates will rise.
But West Michigan appears to be taking a "who cares" attitude to what the Fed does, at least with regard to the commercial real estate market.
So long as the Fed doesn’t get reckless with a huge hike, local companies generally are more concerned about how they can fill job openings with qualified people and manage backlogs of work that have hit record levels.
“If they do it within reason, I don’t see a big issue with an interest rate increase,” said Fritz Wahlfield Jr., president and CEO of Fritz Wahlfield Construction Co. Inc. in Comstock Park. “This is my 40th year the business and I remember back in the ‘80s when the interest rates are jumping more than 3 percent in a year. That’s not good for our economy. But a one-eighth to one-quarter points increase isn’t going to hurt anybody.”
Wahlfield is looking to fill two positions at his company and keep all the balls in the air on projects that range from industrial additions to new schools.
“While no one likes to see interest rates increase, they historically are still pretty low,” said Stuart Kingma, associate broker and industrial service provider at NAI Wisinski in Grand Rapids. “And incremental adjustments, so long as they are prudent, won’t have a significant negative impact on what it is we’re doing.”
Kingma said the floodgates have opened on building new industrial space, and the demand for vacant land is hot right now.
“We forecasted about 18 months to two years ago that there would be a real need for new product to come on the market on the industrial side, and we are seeing that happen now,” Kingma said. “We see land sales taking place to fill the gap of (industrial) inventory — inventory that no longer exists.”
Jenny Waugh, marketing operations director at Fishbeck, Thompson, Carr & Huber Inc. in Grand Rapids, sees the same demand for vacant land, boosted by an additional driver: consumer-oriented businesses that want to locate near big-box retailers.
“From what I’ve heard from other planning commission members and real estate developers, there’s a lot more interest in the outlots that have been sitting there for years,” said Waugh, who has noticed the trend both in her professional capacity and as a planning commissioner in Algoma Township.
If anything, local general contractors, subcontractors and construction management companies are worried about finding qualified help -- not interest rates.
“The big problem is finding capable contractors and suppliers right now,” said Todd Oosting, executive vice president and partner at CD Barnes Construction in Grand Rapids. “For instance, we have projects that we are doing in multi-family, and we are having a hard time even getting the subs to respond to us because they are so busy. Roofers, framers, masons, plumbers — you name the trade — are hard to find.”