It's a record year in western Michigan for out-of-state investment, which likely surpassed $150 million, estimated Colin Kraay, investment adviser at Grubb & Ellis|Paramount Commerce in Grand Rapids.

In the last days of 2007, the firm negotiated the sale of 17 industrial buildings for $35 million to $40 million to California-based Core Realty Holdings - a return buyer in the region. Core in 2005 purchased several industrial buildings in Kent County and the lakeshore.

This purchase, of an undisclosed price, totaled 572,000 square feet and included 90 tenants, Kraay said. Principals of First Cos. Inc. in Grand Rapids, which managed all, built many, and owned some of the properties, organized the sale and will continue to manage the buildings.

"It was a sale we have thought about for quite some time," First Cos. President Jeff Baker said. "It's one of the biggest ones we've done."

"West Michigan doesn't often see a lot of these large portfolio sales," Kraay said, noting that the buyer sought multiple buildings in one transaction. "Core looks for stable properties with solid income potential and income growth. They saw those in these properties."

Kraay, along with brokers Chad Barton, John Kuiper and Duke Suwyn, represented buyer and seller. The firm handled a record $115 million in 2007 out-of-state investment into western Michigan, Kraay said, estimating the entire region brought in about $150 million.

"We'll probably see a little bit of a slowdown" in 2008, he predicted. "One hundred fifteen million dollars is a big number. 2007 was really an enormous year."

Investment broker Patrick Mohney of NAI West Michigan in Grand Rapids expects even larger figures in 2008, however.

"I wouldn't be surprised if in the next year, it wasn't three times that," Mohney said. "Investment's at least half the (real estate) activity going on in the area. Sometimes I'm even getting calls from people with no connection here whatsoever."

Daily calls from investors, most often in San Francisco and Chicago, continue unabated, he said. A continued weak dollar might even prompt foreign investment, he added.

"About 70 percent of our buyers for Michigan real estate come from out of state, lured by the relatively high cap rates and relatively low prices," noted Michael Cagen, associate broker at Marcus & Millichap's Grand Rapids office.
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