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West Michigan/Grand Rapids Economy


GRDadof3

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9 hours ago, HavingAhoot said:

What does Kellogg produce in GR? I see Morning star/Kellogg building off 28th street. Is that it?

Aren’t pop tarts produced here? And Keebler products. AFAIK, pop tarts were invented in GR. 

Joe

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https://www.woodtv.com/news/grand-rapids/oregon-shoemaker-moving-to-downtown-grand-rapids/amp/

This seems good for DT.  As much as I love DT Grand Rapids... seems strange to relocate from Portland. 

I've loved Portland every time I've visited, but  haven't been since covid so not sure if things have changed. 

 

Per the MIBIZ article, getting venture capital was easier in the midwest.

https://mibiz.com/sections/manufacturing/footwear-manufacturer-holo-relocating-from-west-coast-to-west-michigan

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On 6/22/2022 at 9:04 PM, joeDowntown said:

Aren’t pop tarts produced here? And Keebler products. AFAIK, pop tarts were invented in GR. 

Joe

Yes they are.  Keebler as well.  IIRC one of their granola bars as well.

22 hours ago, egrguy said:

https://www.woodtv.com/news/grand-rapids/oregon-shoemaker-moving-to-downtown-grand-rapids/amp/

This seems good for DT.  As much as I love DT Grand Rapids... seems strange to relocate from Portland. 

I've loved Portland every time I've visited, but  haven't been since covid so not sure if things have changed. 

 

Per the MIBIZ article, getting venture capital was easier in the midwest.

https://mibiz.com/sections/manufacturing/footwear-manufacturer-holo-relocating-from-west-coast-to-west-michigan

I was surprised too.  Sounds like The Right Place had quite a bit to do with convincing them as well.  It wouldn't be bad moving from Portland with a median housing price of $600k to GR at $275k.

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18 hours ago, Floyd_Z said:

Yes they are.  Keebler as well.  IIRC one of their granola bars as well.

I was surprised too.  Sounds like The Right Place had quite a bit to do with convincing them as well.  It wouldn't be bad moving from Portland with a median housing price of $600k to GR at $275k.

And from a recruitment standpoint, they can draw off Wolverine. Of course, out in Portland they had Nike, but still. I need to look at buying a pair to support the "new locals". :)

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  • 3 weeks later...

All the news outlets are crying that when data comes out at the end of July, that it will indeed show that the U.S. is technically in a recession (two consecutive quarters of negative growth in GDP). 

But here locally:

) Rental vacancy rates are again down to 1.5% for 1st quarter 2022. It averaged 3 - 6% last year. There are quite a few apartment projects under construction that are probably not included in these numbers yet. 

) 30 year mortgage rates have come down off their highs in June, causing a resurgence in homebuyer activity (anecdotally)

) Labor force and non-farm employment continue to both grow in Grand Rapids, and unemployment is down to 3.4% (basically pre-covid levels). Anecdotally it still seems like a lot of companies are struggling to find workers.

) Gas prices have dropped by almost 50 cents in the last 30 days

I've traveled around the sun quite a few times, this doesn't feel like "recession" to me. Anyone else? 

 

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I’m hoping it’s what it’s intended to be. A slowdown to tame inflation. Technically a recession (which is fine, they typically happen every 7 years, it’s been 13). Slowing the economy a bit (rabid spending) and giving the supply chain a chance to catch up wouldn’t be such a bad thing. Hopefully it’s shallow, and only lasts 4-6 months. 

Joe

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19 minutes ago, joeDowntown said:

I’m hoping it’s what it’s intended to be. A slowdown to tame inflation. Technically a recession (which is fine, they typically happen every 7 years, it’s been 13). Slowing the economy a bit (rabid spending) and giving the supply chain a chance to catch up wouldn’t be such a bad thing. Hopefully it’s shallow, and only lasts 4-6 months. 

Joe

It's a mid-term election year too. I assume a lot of what is going on (gas prices for sure) is political and will change a lot after November, for the better. 

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43 minutes ago, joeDowntown said:

I’m hoping it’s what it’s intended to be. A slowdown to tame inflation. Technically a recession (which is fine, they typically happen every 7 years, it’s been 13). Slowing the economy a bit (rabid spending) and giving the supply chain a chance to catch up wouldn’t be such a bad thing. Hopefully it’s shallow, and only lasts 4-6 months. 

Joe

I agree with you. But unfortunately, in regards to most commodities, the supply chain issues will take years to get corrected. 

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  • 2 weeks later...
  • 4 weeks later...

Grand Rapids Metro had the 2nd lowest rental vacancy rate in the country last quarter, according to this website (was mentioned in the apartment project article on the river on Ann Street):

https://www.helpadvisor.com/community-health/rental-vacancy-by-city-state-report

I'm not sure if that's a good thing or a bad thing. 

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  • 2 weeks later...
On 8/18/2022 at 8:14 AM, GRDadof3 said:

Grand Rapids Metro had the 2nd lowest rental vacancy rate in the country last quarter, according to this website (was mentioned in the apartment project article on the river on Ann Street):

https://www.helpadvisor.com/community-health/rental-vacancy-by-city-state-report

I'm not sure if that's a good thing or a bad thing. 

Good for landlords. Bad for renters. Probably explains why my rent jumped by almost a third earlier this year. A lot of the decent rentals have waiting lists now.

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  • 4 weeks later...
On 7/18/2022 at 9:12 AM, GRDadof3 said:

this doesn't feel like "recession" to me.

Nope.  As someone who processes the intake/termination paperwork for a not-tiny company, yeah, the labor market is still wild.  And in an attempt to stop the bleeding a first every multi-% across the board raise for all employees.  Demand in the industrial sector is perking right along.   Also housing prices haven't given an inch.   I've ridden out several recessions . . . this is something different.

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1 hour ago, whitemice said:

Nope.  As someone who processes the intake/termination paperwork for a not-tiny company, yeah, the labor market is still wild.  And in an attempt to stop the bleeding a first every multi-% across the board raise for all employees.  Demand in the industrial sector is perking right along.   Also housing prices haven't given an inch.   I've ridden out several recessions . . . this is something different.

Do you think it is just a correction for artificially low interest rates, or something else? I'm very far from proficient in economics, so I really don't know.

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On 9/24/2022 at 6:44 PM, Pattmost20 said:

Do you think it is just a correction for artificially low interest rates, or something else? I'm very far from proficient in economics, so I really don't know.

Most of the inflation is "supply driven" this time around vs "demand driven." So when the fed ups interest rates to try and temper "demand," they're really going after the wrong solution to the issue. Supply of everything is still anemically low (labor, materials, etc.). 

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43 minutes ago, GRDadof3 said:

Most of the inflation is "supply driven" this time around vs "demand driven." So when the fed ups interest rates to try and temper "demand," they're really going after the wrong solution to the issue. Supply of everything is still anemically low (labor, materials, etc.). 

However, the dollars strength against other currencies helps with cost of imports, which lowers inflation. I always say that macro economics is like playing 5d chess and can’t be boiled down in a single headline (which both sides try to do). I just hope prices stabilize so we can build more stuff. :)

Joe

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On 9/25/2022 at 9:27 PM, joeDowntown said:

However, the dollars strength against other currencies helps with cost of imports, which lowers inflation. I always say that macro economics is like playing 5d chess and can’t be boiled down in a single headline (which both sides try to do). I just hope prices stabilize so we can build more stuff. :)

Joe

I'm wondering when the cost of borrowing becomes an impediment to building more stuff.  Thoughts?

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1 hour ago, cstonesparty said:

I'm wondering when the cost of borrowing becomes an impediment to building more stuff.  Thoughts?

There has been a LOT of free money in the markets for a long time. So it will affect development. But a development with solid numbers should always work. 

I think in the near future you'll see housing ramp up as the city / region tries to meet the need, and I bet they'll start handing out incentives to help meet the goal. Lumber prices are almost back to pre-pandemic levels, hopefully other building costs come down too and developers can make the numbers work.

Joe

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1 hour ago, cstonesparty said:

becomes an impediment to building more stuff.  Thoughts?

Not meaning to be pedantic, but it really depends what you are building.  And what kinds of financing is available.  There are rates, and there are rates; traditional bank type of lenders and investor lenders.  One conversation I had recently - with a serious person - was about "New York" money looking for a greater diversity of markets to invest in.

For small time operators I think it has already gotten harder; which is very sad, a decade of very low rates was really squandered.

Also remember that these are not historically unprecedented rates, in the 4% - 8% range.  These rates are normal.  It was the last ~10 years that was anomalous.  Stuff got built in the 90s and 00s.  I was just some dumb kid with a new job back when I purchased my home at 6.75%.

Screenshot from 2022-09-29 15-11-47.png

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3 hours ago, whitemice said:

 I was just some dumb kid with a new job back when I purchased my home at 6.75%.

See that spike on the chart in 1981.  That's when we bought our first house.  It wasn't that I was dumb, but after years as nomads my wife insisted we buy a house.  In practice, bank mortgages were really about 17% if you could find one.  Because of the mortgage rates, most sales then as I remember were land contracts.  We paid 1% of the original balance per month on a five-year balloon contract.  We paid about a third down and paid a jacked up price for the house in order to make up the difference between the contract rate (about 12% per year) and the going bank rate.  As the rates came down we refinanced to a regular mortgage once and then again a couple of years later when they were even lower, and three or four years after that just paid the whole thing off.

It was pretty scary the first years but our monthly payments were still lower than rent would have been and eventually the house was worth more than we paid for it and it was all ours.  

    

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It's huge. I like that it doesn't look like giant FedEx warehouse. Looks like it has somewhat of an old factory look. Definitely huge for that area. I'm always skeptical that these developments end up as planned/promised. Hoping they follow through!

Joe

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