Mark Sanchez: This is data that came to us here last week from folks at Lakeshore Advantage. That's the economic development organization for Allegan and Ottawa counties. Bottom line, things are looking awfully well over there along the Lakeshore for the economic performance. Economic development groups regularly are visiting companies in their market, the executives. How's business going? What's your plans? Are you growing? Are you investing? Are you hiring? Things like that. And based on all those visits in the last several months, there were about 140 executives at corporations and employers in Ottawa and Allegan counties. And basically, they're planning more expansions than last year. They're planning more expansions within the next few years. You know, workforce, housing, infrastructure are issues and could be limiting their growth.
And this is called the business insights report from Lakeshore Advantage. Basically, the executives they spoke to, 56.8% said their sales are up this year. That's a good increase from 48.5% last year. And another 37% say their sales are stable. You know, that's amid what we hear so much in the last several months about uncertainty in the economy and where we're going, the effects of tariffs, the effect of interest rates, the effect of geopolitical uncertainty, the elections obviously coming up next week. So, businesses are growing their sales. That's, that's a good sign that consumers are feeling somewhat okay and they're still spending. They're about 35.5%, they're planning expansions within the next few years. That's up about three percentage points from last year, although still a little lower than 2024 and 2023. Although it's certainly better than going in the other direction.
Nearly one in five companies said they're spending 6% or more of their sales revenue on research and development. And that's double the rate from 2025. So bottom line, I'm looking at the Lakeshore economy, the data's saying everything's going in the right direction and looking a little better than it did a year ago, based on the responses of corporate executives there.
Patrick Center: The report also identifies some of the challenges that these companies are facing.
Mark Sanchez: Yeah, you know, obviously inflation, cost of commodities, but really what we hear so much is still workforce is an issue, attracting the talented workforce and keeping folks on the payroll. Housing availability, housing's expensive. In Ottawa County, you've got an issue with the groundwater there. So, there's some limits to housing development. And then of course, there's a need for more industrial sites and capacity. As I said, they also found some concerns about reliability of water and energy infrastructure.
Patrick Center: This report also identifies some of the up-and-coming sectors in the region.
Mark Sanchez: Yeah, you know, the lakeshore has been dominated for a long time for generations with some pretty iconic corporations. We're talking Gentex, MillerKnoll, Perrigo, Hayworth, Shape. Those are the largest employers on the lakeshore.
But it also cites smart manufacturing and food processing and energy storage as emerging and growing sectors. Just to give you an example, smart manufacturing, the high-tech manufacturing sector, 27,000 jobs in Allegan and Ottawa counties and a gross regional product of $4.4 billion. Food processing is a pretty good size industry over there as well, employees about 4,500 people. And it's a $1 billion gross regional product. So those are two sectors that Lake Shore Advantage has identified as growing sectors and certainly a couple to keep an eye on.
Patrick Center: Another industry that has been doing well seems to be growing year over year and that is the cruise ship industry on the Great Lakes.
Mark Sanchez: Yeah, well this is a report that came to us last week by Rachel Watson, my coworker here at Crain’s, Grand Rapids Business. And this is something that goes back several years. I remember writing about this back in the late nineties and another job that folks were trying to get the cruise ships back to the Great Lakes. The European cruise companies were making smaller vessels that fit down the St. Lawrence Seaway and through the locks and through the canals to get into the Great Lakes.
And here we are now in 2026. As of last year, the cruise ships generated $10 million more than expected in economic spinoff. In the ports around the Great Lakes, they carried 2,000 more passengers and 80 more visits than what was projected. Bottom line, the Great Lakes cruise ships brought in about $310 million in economic impact for the region and for the destinations.
And that's something the organization called Cruise the Great Lakes that promotes the industry put out last week. And in that the bookings are also climbing, and each year are growing about 15% to 20%. It's part of the tourism industry, which is a big industry in Michigan. For a number of years now, he's been adding to the tourism industry in the state as folks are enjoying taking a cruise along the Great Lakes.
Patrick Center: And just here locally, Holland and Muskegon are two of those ports of call.
Mark Sanchez: Yeah, you know, Holland and Muskegon are two deep water ports. They're commercial ports. They're dredged so they can get in. And we're seeing the ships have also been going to Detroit, Mackinac Island, Houghton, Marquette, Bay City, East Tawas, as well as Cleveland, Chicago, Green Bay and Milwaukee in the other states around the Great Lakes. So, it's, again, its nice industry, a nice niche part of the tourism industry here in Michigan that's seen some nice solid growth rates.
Patrick Center: We're talking with Crain's Grand Rapids Business staff writer, Mark Sanchez. You work in downtown Grand Rapids, and you've been seeing a number of offices being converted.
Mark Sanchez: The downtown real estate market is in a flux. It's changing and we've seen any number of these conversions of office buildings to other uses.
CWD Real Estate converted a majority of the Fifth Third Building on Lyon into 140 apartments this year. CWD is also turning the upper three floors of the Ledyard Building into 36 apartments. That's presently under construction. We've seen Brave Works Inc. partner with CWD and it's converting part of the Trust Building on Pearl Street into a 63-room boutique hotel known as the Vault Hotel. And then Lee Shore Enterprises is turning the top four floors of the Lemon Wheeler Building on Ionia Avenue into apartments. So again, that's what we all lived through six years ago. That's kind of brought about some changes in the real estate market for commercial real estate.
We're also seeing more people coming to Grand Rapids for business trips, for conventions, conferences, leisure travel. So, there's a need for more hotel rooms, especially with the amphitheater that opened this year and is bringing more people to town.
There's also a desire for more people to live in the downtown areas. So that's really driving a lot of this redevelopment of these office spaces. Just adds to the vitality of the business district, more people living here, more people visiting. You'll probably very likely see more of these projects in the future as developers look at these facilities, look at these offices, look at the vacancy rates, look at the projections and what's the better use or the best use of that, of that property. And as you said, we're seeing a lot of these projects going forward to convert these offices into other uses.
We do know for a number of years, small towns and big towns and mid-sized communities, especially among a younger demographic, there's a desire to live back in the urban cores. This is something that's been going on for a number of years. So that's driving redevelopment of spaces in downtown areas, big and small. And that certainly I would suspect is contributing to this trend here in downtown Grand Rapids.
Patrick Center: Will this create more support businesses downtown? Do you see expansion there?
Mark Sanchez: Boy, more people living in a district that's good for the central business district. And that's obviously something that a lot of folks have been wanting to see is more retail in downtown. It's almost like the chicken and egg thing, you know, which do you have first? Does more retail draw more people living there? Do more people living there draw more retail, more of those amenities? All to be seen and it's a trend that again a lot of folks suspect is just going to keep going forward.
Patrick Center: Crain's Grand Rapids Business staff writer, Mark Sanchez. Thank you so much.
Mark Sanchez: Thank you, Patrick.