Heartland Feature Archive

Mall Owners Scramble to Redevelop Properties in Face of Department Store Closures

by Alex Tostado October 31, 2019

The number of retail store closures nationwide in the first half of 2019 surpassed 7,000 and is on pace to reach a record 12,000 by year’s end, according to Cushman & Wakefield. Major retail bankruptcies over the last year have caused the power and regional shopping center sector to experience continued store closures and negative absorption of 2 million square feet in the first half of 2019. That said, discount retailers, entertainment and fitness concepts are still in expansion mode and help backfill vacant space. Mall and shopping center owners are scrambling to redevelop properties and incorporate a variety of uses. For example, this month CBL Properties will wrap up completion of a Sears redevelopment at Brookfield Square in Milwaukee. The project includes new-to-market entertainment operator WhirlyBall as well as a Movie Tavern by Marcus Theatres. Additionally, there are several new dining options and an Orangetheory Fitness location. “Our strategy is to transform our properties from traditional, enclosed malls to suburban town centers that offer a variety of uses, including entertainment, dining, fitness and in some cases office, hotel or multifamily,” says Stacey Keating, public relations and corporate communications director for Chattanooga, Tennessee-based CBL, which owns 108 properties totaling 68.2 …

October 31, 2019

Features Heartland Feature Archive Retail

F&B Dominates Discussion at ICSC’s Chicago Deal Making

by Kristin Harlow October 24, 2019

CHICAGO — The food and beverage industry dominated much of the programming and sessions at this year’s Chicago Deal Making, hosted by the International Council of Shopping Centers (ICSC). In fact, the keynote speaker was Fabio Viviani, a celebrity chef and hospitality developer. Examples of other food-oriented workshops and panels included “How to Craft Restaurant Deals,” “From Automation to Ghost Kitchens, Understanding the Trends Reshaping F&B” and “Small Bites: New Restaurant Concepts.” The two-day ICSC event took place at Navy Pier on Wednesday and Thursday, Oct. 16-17. The show kicked off with an hour-long session in which retailers pitched their expansion plans in the Midwest. An overwhelming number of participants were restaurants. “Chicago is recognized for being a gastronomical center, not one or two really good chefs and restaurant tours but many,” said Steven Weinstock, first vice president and regional manager of Marcus & Millichap’s Chicago Oak Brook office. “We win as residents of Chicago because they keep trying new concepts.” Weinstock cited the influx of residents in Chicago’s River North, Streeterville and West Loop neighborhoods for helping grow the food industry within the city. This younger, affluent crowd views restaurants as a source of enjoyment and entertainment, he argued. …

October 24, 2019

Features Heartland Feature Archive

Subcontractors Grow More Selective as Labor Market Continues to Tighten

by Kristin Harlow August 13, 2019

Rising materials costs and the shortage of skilled workers continue to pose a challenge for general contractors. In turn, these conditions have enabled subcontractors to be highly selective about the projects they are willing to accept. “For the first time in many years, we have found ourselves encountering subcontractors who have passed up on project opportunities because the reality is that resources within qualified subcontracting firmsare finite as well,” says Anthony Johnson, executive vice president and industrial business unit leader with Chicago-based Clayco. Given this reality, contractors are relying on existing relationships with subcontractors and spending more time on pre-construction phases with developers in order to manage costs. “The most important thing we can do in this landscape is communicate with clients and manage expectations,” says Chuck Taylor, director of operations with Lemont, Illinois-based Englewood Construction. “For example, we make it clear how important timing is and that pricing could change from what we originally estimate if there’s a significant delay in a project due to design revisions or financing.” Englewood specializes in the construction of retail and restaurant properties. Most subcontractors that the firm works with are currently charging what Taylor describes as high rates and are operating at …

August 13, 2019

Features Heartland Feature Archive Multifamily Northeast Feature Archive Southeast Feature Archive Student Housing Texas & Oklahoma Feature Archive Western Feature Archive

Generation Z Renters Reshaping Student Housing Market

by Katie Sloan August 8, 2019

With some of the oldest members of Generation Z coming onto the rental scene seeking out their first college and post-college apartments, developers and property owners must start paying closer attention to this new audience. While Gen Z and millennials have quite a bit in common, they also differ in some fundamental aspects and demand different standards of living in residential spaces. Just when owners and property managers are finding their footing with millennials, Gen Z will reshape the rules. Who is Gen Z? Gen Z is the population born in and after 1995. With the oldest members having just graduated college in the last few years, this is the beginning of their descent on the rental market. Since they came of age during the Great Recession and watched their parents struggle to make ends meet, Gen Z has a more conservative approach to spending compared to millennials. They are also less likely to uproot and relocate for a new job, as telecommuting and the freelance career path allows them to create their dream job right where they are. Gen Z is a generation that has grown up with standard two-day delivery, on-demand TV shows, movies downloaded within a minute …

August 8, 2019

Features Heartland Feature Archive Multifamily Northeast Feature Archive Southeast Feature Archive Student Housing Texas & Oklahoma Feature Archive Western Feature Archive

Priced Out: Adding Affordable Units to Student Housing

by Katie Sloan August 6, 2019

Student loan figures indicate a growing affordability problem in higher education. The Federal Reserve reports that student loan debt in the United States is almost $1.6 trillion today, with 42 percent of people who attended college — which represents 30 percent of all adults — incurring at least some debt from their education. With a focus on technology-based degree programs, the cost to attend college is rising. But it’s not just tuition that’s going up. According to College Board, the cost of housing exceeds the cost of tuition at four-year, public universities. For the 2017-2018 academic year, students paid an average of $9,970 for in-state tuition while room and board ran $10,800. “There’s a real need to get to the middle of the market and to build quality housing that students can afford,” says Joe Coyle, president of Michaels Student Living. Michaels Student Living is a specialized area of expertise within The Michaels Organization, a leading affordable housing developer in the United States. “Housing is a big part of what contributes to the high cost of attending college. We have to work together to find ways to mitigate this. It’s going to become more and more important.” While the student …

August 6, 2019

Features Heartland Feature Archive Retail

Two New Tri-Land Investment Funds Hungry to Acquire Grocery-Anchored Retail Assets in Midwest, Southeast

by Kristin Harlow June 11, 2019

In today’s volatile retail real estate climate, there is ample need for redevelopment or value-add acquisitions. Tri-Land, a Chicago-based owner and operator, is one such company known for repositioning underperforming retail centers. Established in 1978, the company is launching two new investment funds beginning in July. The two funds — which combined total $30 million — seek to purchase between four and eight properties over a 30-month period. The strategy of the investment funds will be to acquire properties located in Midwest and Southeast markets, including Chicago, Milwaukee, Minneapolis, Kansas City and Atlanta. More specifically, the funds will target grocery-anchored retail centers where the supermarket requires an on-site expansion, repositioning or relocation. During the past five years, Tri-Land has focused on the redevelopment of 10 legacy assets in Minneapolis, Kansas City, Indianapolis and Chicago. The company has sold each project upon completion of the redevelopment. This year, redevelopment of the 10 assets will be complete. This will enable Tri-Land to concentrate on new redevelopment opportunities. Against that backdrop, REBusinessOnline spoke with Richard Dube, the company’s president, at the ICSC RECon show in Las Vegas, which attracted more than 30,000 attendees. What follows is an edited transcript of the conversation. REBusinessOnline: …

June 11, 2019

Features Heartland Feature Archive Office

How Office Owners Can Help Lower Sky-High Property Tax Assessments

by Kristin Harlow April 16, 2019

Managing fixed expenses is the best way to ensure the long-term profitability of investment properties, especially in a flat market. The largest continuing expense for most commercial properties is the property tax bill, and in a market with skyline-defining properties and headline-grabbing sales prices, tax assessors have multi-tenant office properties in the crosshairs. Any reduction in tax burden can drastically improve an investment’s profitability, competitiveness and tenant retention. As another assessment season begins across the Midwest, understanding tax assessors’ common errors can equip property managers and owners with the tools necessary to review the accuracy and reasonableness of the assessments on their office properties and, when appropriate, challenge those assessments. Know the relevant market To an outsider, the office market can appear monolithic. To such people, rent, occupancy and other income characteristics of office properties are consistent throughout the market. But pulling data from the wrong market can lead assessors to an incorrect result. For example, assessors may assume that Class A downtown office towers are the best-performing assets in the market, and value them accordingly. Contrary to this perception, though, Class A properties may not outperform all Class B or Class C properties, and downtown may not be the …

April 16, 2019

Features Heartland Feature Archive Michigan Midwest Mixed-Use

When Done Right, New Stadium Development Can Transform Neighborhoods

by Kristin Harlow November 1, 2018

The practice of building large stadiums and sports arenas in urban areas has long been a hotly debated strategy. Critics cite the civic disruption that comes with unavoidable breakdowns in infrastructure and transportation and the significant parking and logistical requirements. There’s also the difficulty of reconciling the financial bottom line, or the aesthetic and functional disconnect of a grand facility that operates intermittently and towers over its surroundings. Stanford economist Roger Noll, an expert on the economics of sports, has argued persuasively that “NFL stadiums do not generate significant local economic growth, and the incremental tax revenue is not sufficient to cover major financial contributions by the city.” Noll has also suggested in the past that smaller, multi-use facilities, and facilities that are “embedded in larger commercial and residential projects,” make more sense. In recent years, innovators in the world of sports and performance arena design, as well as urban planning and design experts, have embraced such an approach, creating inspired new compact arena concepts that are a better fit for urban environments. They are also figuring out new ways to make smaller, multiuse venues a community asset rather than a liability. As cities like Detroit make difficult decisions …

November 1, 2018

Features Heartland Feature Archive Industrial Midwest

Real Capital Markets, SIOR: ‘Plenty of Runway Left’ for Industrial Sector

by Kristin Harlow October 25, 2018

CARLSBAD, CALIF. — Institutional, private and foreign investors all continue to pour capital into the industrial sector in the Midwest and nationwide, confirming there is still “plenty of runway left,” according to the 2018 Industrial Investor Sentiment Report from Real Capital Markets (RCM) and SIOR. The steady flow of capital and positive momentum within the sector comes despite looming threats from rising interest rates, tariffs and a diminishing supply of quality assets. “The industrial market and those who invest in it have enjoyed an incredible, long run because of its ability to adapt to the needs of specific users and subsectors, and embrace the ongoing evolution of the global economy,” says Tina Lichens, COO of Carlsbad, Calif.-based RCM. “Given this performance and consistency, we have every reason to believe there is plenty of runway left.” RCM and SIOR compiled the study through a survey of RCM principals, SIOR members and subsequent interviews with key industry leaders. Year-over-year comparisons Questions in the survey tracked participants’ perceptions of investment activity, pricing and cap rates. Notably, more than 48 percent of respondents believe that industrial activity will remain at or about the current level. One year ago, that figure was 43 percent. More …

October 25, 2018

Features Heartland Feature Archive Illinois Midwest Retail

Marry Online Efficiency With Brick-and-Mortar Retail, Say Experts at ICSC Chicago Deal Making

by Kristin Harlow October 23, 2018

CHICAGO — How retailers can best integrate online and brick-and-mortar sales as well as utilize new technology to analyze shopper activity were two of the most prominent discussion points at this year’s Chicago Deal Making & VRN Outlet Convention. The event, hosted by the International Council of Shopping Centers (ICSC), took place at Navy Pier on Oct. 17-18 and attracted more than 2,400 registered attendees. In a recently released study from ICSC, a new store opening was shown to boost a brand’s web traffic within that market by an average of 37 percent. There’s a special term for it, known as the “halo effect.” The magic formula for today’s retailers and shopping centers is to marry online efficiency with brick-and-mortar locations, according to Karen Fluharty, partner with Montville, N.J.-based Strategy + Style Marketing Group. Fluharty’s remarks came during the “Future of Outlets” session. Today, an omnichannel presence is increasingly critical to a retailer’s competitiveness. Online retailers with growing sales have started successfully transforming their “clicks” into “bricks.” Warby Parker and Bonobos are two of the most well-known online retailers with a steady expansion of physical stores. What’s beneficial for outlet centers is that nine out of 10 consumers say they …

October 23, 2018

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