Michigan & Urban Economic Diffusion

Just a few years ago Michigan made a big hullabaloo about Economic Gardening in Michigan Economic Development Circles; The concept of taking what you have from a business development standpoint and improving upon it. In other words, take a small to mid-sized company and figure out what it needs to grow and fill those needs. Definitely a proven and age-old method of good stewardship.

Now the hot topic is Opportunity Zones, geographical designations throughout the state whereby corporations or individuals can shelter their capital gains tax in an Opportunity Fund to develop something in an Opportunity Zone—similar to a 1031 Exchange. One of the many problems with the OZ concept is that most of the Zones are in Rural Areas in Michigan and Most of the qualified investors are in urban areas. Capital gains liabilities to invest in Opportunity Funds as a viable tool is in excess of $5M—So expensive property has to be sold. Michigan decided to house their OZ program under the Michigan State Housing Development Authority (MSHDA) implying they’d like OZs to be used for housing—which, no-doubt, there is a great need for across the state, urban or rural. You can see the MSHDA maps of OZs Here.

Linking the urban investor or corporate entity with the rural Opportunity Zone property and surrounding assets is a major issue in activating the OZ benefits. Since Michigan Economic Development Corporation (MEDC) is not in the business of matchmaking outside of its Pure Michigan® Business Connect website, what other statewide networks could help facilitate matching Opportunity Fund Investors with Rural Opportunity Zones?

Recently, I had an opportunity to talk CDFI Fund Director Jodie Harris about how the use of Opportunity Zone Funds and New Market Tax Credits could create a powerful capital stack for developing Michigan’s rural areas. These two tools could be used to invest, not only in housing, but Industrial Park developments above “the knuckles” of our Great State. This begs the question, is anyone thinking about Urban Economic Diffusion for their corporate/industrial space? And why not? Mrs. Harris was gracious enough to look into how educating rural area CDFIs in the use and implementation of New Market Tax Credits.

An Article in the Grand Rapids Business Journal entitled: Region’s Real Estate Activity Remains Strong talks about a market report from NAI Wisinski West Michigan (Grand Rapids Area) segmented into the following 2019 Q4 Statistics:


  • Rentable Building Area (RBA) 19,444,058 Sqft
  • Total Net absorption of 99,914 Sqft
  • Average Rent $3.90/sqft.
  • Highest Vacancy Rate of 3.6%


  • Rentable Building Area (RBA) 29,855,132 Sqft
  • Total Net absorption of 79,637 Sqft
  • Average Rent $15.92/sqft.
  • Highest Vacancy Rate of 4.7%


  • Rentable Building Area (RBA) 169,786,800 Sqft.
  • Total Net absorption of 99,914 Sqft.
  • Average Rent $4.18/sqft.
  • Highest Vacancy Rate of 2.6%

With Average office Space in the West Michigan Area being $15+/sqft., one would think Corporate Strategists might want to think about instituting Work from Home (WFH) policies disbursing their work force to more rural areas of the State. Microsoft Japan sited large savings in 4 day work weeks and 6hr days. The urban paychecks would definitely boost the rural economies, save on expense and increase productivity for expanding urban companies.

Perhaps the Michigan Strategic Fund (MSF) should incentivize corporate diffusion to rural Michigan by offering incentives for them to consider placing redundancies, ancillary manufacturing facilities or WFH programs where employees live in rural areas to Michigan’s urban corporations—applying Economic Gardening principles on a macro-state level. If Bissell moved manufacturing from Mexico to Manistee Or Steel Case moved Manufacturing from Thailand to Thompsonville, rural Michigan would grow economically. Climate Change, Terrorism, less expensive land are all incentives for Michigan companies to diversify their holdings from urban to rural areas and when they do, the workforce will follow.

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