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Heartland Feature Archive

FeaturesHeartland Feature ArchiveRetail

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

by Kristin Harlow

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: …

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FeaturesHeartland Feature ArchiveOffice

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

by Kristin Harlow

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 …

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FeaturesHeartland Feature ArchiveMichiganMidwestMixed-Use

When Done Right, New Stadium Development Can Transform Neighborhoods

by Kristin Harlow

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 …

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FeaturesHeartland Feature ArchiveIndustrialMidwest

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

by Kristin Harlow

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 …

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FeaturesHeartland Feature ArchiveIllinoisMidwestRetail

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

by Kristin Harlow

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 …

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Kingston Square Affordable Housing, Kokomo, Indiana
FeaturesHeartland Feature ArchiveMultifamilyStudent Housing

Student Housing Pushes Out Affordable Living in College Towns

by Jeff Shaw

For Kyle Bach, CEO of The Annex Group LLC, there’s an affordable housing crisis taking place in large university towns. After extensive research in Bloomington, Indiana, and other similar towns, Bach found that over the past decade or so virtually all new multifamily product added to the market has been either student or luxury housing. This has priced out the workforce or affordable housing residents in those communities, he says. About a year-and-a-half ago, Bach’s Indianapolis-based firm reconfigured its development focus in effort to fill this need by providing affordable housing for the university workforce or married students. In Bloomington, The Annex Group is in the midst of securing final approvals for Union at Crescent, a 146-unit affordable housing development about two miles from Indiana University. The $18 million project has received tax credits from the Indiana Housing Community Development Authority. The project will also be financed with Section 42 of the low-income housing tax credits program (LIHTC). With this type of financing, law regulates that full-time students are not allowed to live in the development unless they are married and their spouse’s income qualifies. The Annex Group hopes to break ground in the fourth quarter of this year with …

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FeaturesHeartland Feature ArchiveMidwestMultifamily

Midwest Apartment Demand Isn’t Dropping Anytime Soon, Says JVM Realty CEO

by Kristin Harlow

Apartment rents in Detroit are now the fastest rising in the United States among the nation’s largest cities, growing at an annual rate of 5.3 percent as of May 2018, according to Yardi Matrix and RENTCafé. Across the Midwest, the apartment market remains very strong with high demand and therefore increasing rents. Jay Madary, president and CEO of Oak Brook, Ill.-based JVM Realty, spoke with REBusinessOnline to discuss the state of the market, including the pace of investment sales. JVM owns and operates Class A and B apartment communities in Midwest markets such as Cleveland, Indianapolis, Kansas City and suburban Chicago. REBusinessOnline: How would you assess the overall state of the apartment market in the Midwest? Jay Madary: I think it’s really strong. In general, supply and demand remain balanced. We’ve certainly seen a surge of new construction in most Midwestern markets, and those new units coming online have cooled rent growth a bit. Whereas we were seeing growth of 5 to 6 percent a couple of years ago, now 2 to 4 percent is more typical. But the robust job growth in the region and the historically low unemployment rates have kept demand high, and those new units are largely being …

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FeaturesHeartland Feature ArchiveLee & AssociatesRetail

Retail Conversation Is All About ‘Rightsizing,’ Says Lee & Associates Principal

by Jeff Shaw

LAS VEGAS — At RECon, the world’s largest retail real estate trade show held last week in Las Vegas, REBusinessOnline sat down with veteran Chicago broker Rick Scardino of Lee & Associates. A principal with the Chicago office, Scardino spearheads the retail division at Lee & Associates of Illinois. Discussion topics ranged from backfilling vacant space to local, independent grocers and the movement of online retailers embracing brick-and-mortar locations. What follows is an edited version of that conversation. REBO: According to Mid-America Real Estate Corp.’s Shopping Center Report, development has tailed off about 5 percent year over year. Is that a surprise or not? Scardino: This has been going on for a few years. It’s well known that the United States is the most over-developed retail country in the world by far. It’s all about rightsizing, simple supply and demand. I don’t see it as a bad thing. Certainly existing landlords who aren’t developing are thrilled to see less new competition coming online. There really hasn’t been a need for it. Mellody Farm in Vernon Hills, Illinois, is one of the few new projects with Whole Foods Market, REI and Nordstrom Rack as anchor tenants. Regency Centers Corp. is the …

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FeaturesHeartland Feature ArchiveMichiganMidwest

It’s Not Too Late to Invest in Detroit, Say Entrepreneurs Dan Gilbert, Chris Ilitch

by Kristin Harlow

DETROIT — At the conclusion of his speech at the Urban Land Institute (ULI) Spring Meeting in Detroit, billionaire businessman Dan Gilbert gave conference goers one piece of advice. “Get in on some of these investments in Detroit,” he said. “It’s not too late.” The event, held May 1-3 at the Cobo Center, drew 4,200 attendees from the real estate industry. It was the first ULI event in Detroit in 40 years. Gilbert, founder and chairman of Quicken Loans Inc., spoke at the opening panel along with Christopher Ilitch, president and CEO of Ilitch Holdings Inc. Robert Taubman, president and CEO of Taubman Centers Inc., moderated the session, entitled “Detroit’s Renaissance.” Subject matter ranged from Detroit’s past to present, including development highlights and the resilient DNA of its citizens. Gilbert’s real estate company, Bedrock, has acquired and developed more than 100 commercial properties totaling over 16 million square feet in the city’s urban core. The Ilitch family, made famous by Little Caesars Pizza, owns both the Detroit Red Wings and the Detroit Tigers and is responsible for a 50-block mixed-use project under development known as The District Detroit. For decades, the Motor City was a well-publicized story of economic decline …

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FeaturesHeartland Feature ArchiveNortheast Feature ArchiveSoutheast Feature ArchiveTexas & Oklahoma Feature Archive

CBRE: U.S. Apartment Sector Gets Boost from Comprehensive Tax Reform

by David Cohen

LOS ANGELES — The sweeping tax reform bill signed into law in late 2017 by President Donald Trump is expected to benefit the U.S. multifamily investment market, according to a new report from CBRE. The report states that under the Tax Cuts and Jobs Act, the tax benefits of renting over buying a home will increase in 29 of the 35 largest U.S. markets. That number is up from 15 markets before the tax reform. The new tax law increases the standard deduction from $12,700 to $24,000 for a married couple. This means more people will take the standard deduction rather than itemize items such as mortgage interest, which CBRE said will significantly benefit renters in most of the country’s largest markets and encourage renting over homeownership. Additionally, limitations on state and local tax deductions, as well as the loss of the mortgage interest deduction on home purchases of $750,000 or more, will marginally impact the cost of housing in high-cost markets. “The new tax policy’s raising of the standard deduction, combined with limitations on mortgage interest and state and local tax deductions, will significantly increase the attraction of renting versus buying housing,” said Spencer Levy, CBRE’s senior economic advisor and …

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