Midwest Market Reports

Columbus Industrial Market Is Going Strong for Eighth Straight Quarter

by Kristin Harlow November 11, 2021

Columbus has been the shining star of the industrial real estate market over the last five years, and for the eighth straight quarter, it has more than 5 million square feet under construction. This year is on track for more than 10 million square feet, with half of that already absorbed in the first part of the year. A question I always get is, “Why Columbus?” The answer (and the sell) is quite simple — location and population. Columbus is a 10-hour drive within 46 percent of the country’s population and manufacturing base. Incentives play a large role in the process as well, which enables developers to be competitive and drives tenants to the markets. Labor is always a factor in site selection, but now more than ever it tops the list as one of the most vital components of the decision-making process of choosing a site. With the Columbus region ranking No. 1 in the Midwest for population, jobs and GDP growth, it’s natural for developers to be highly attracted to the area. Columbus has three major industrial submarkets: West Jefferson, Rickenbacker and Etna Township. The West Jefferson submarket is home to Amazon, Target, Restoration Hardware and JoAnn Fabric. …

November 11, 2021

Illinois Market Reports Midwest Midwest Market Reports Office

Chicago Office Market: Should I Stay or Should I Go?

by Kristin Harlow November 4, 2021

A common question Chicago office brokers are hearing from clients these days is, “When is the best time to start negotiating with my landlord?” In fact, it is also a question brokers are asking themselves, contemplating when they should advise their clients to get into the market. The truth is: 1) it’s very hard to say, and 2) it depends on the situation. Let’s explore what we do know. This is a historically tenant-favorable office market. Vacancy rates have increased from 13.8 percent to start 2021 up to 17.7 percent currently. Concessions are far over-weighted with construction allowances and free rent packages 20 to 30 percent higher than they were pre-pandemic, and landlords are being more flexible on term lengths allowing tenants three- or five-year leases despite offering full buildouts. On the other side of the coin, gross rental rates (base rent plus real estate taxes and building operating expenses) have not declined. In fact, in the last quarter they increased from $42.34 to $42.57 per square foot. The trends and market conditions surrounding concession packages and rental rates haven’t really changed in the last 12 months or so. The above touches on what the market is doing, but what …

November 4, 2021

Illinois Market Reports Midwest Midwest Market Reports Multifamily

Condo Deconversions Will Continue in Chicagoland Area

by Kristin Harlow October 28, 2021

If we consider that 2017 was the year that deconversion sales in Chicago began in earnest, we are now four years into the cycle. I’m frequently asked my opinion of how much longer this cycle will last, and what it will look like going forward. To me, that comes down mainly to supply and demand, with an eye on change in the relevant state and city statutes governing these sales. The supply of condominiums in Chicago is still plentiful, especially condominiums that were converted from apartment buildings. While there was a bit of a condo-buying frenzy in the early part of 2021 as the world opened back up, that frenzy has dissipated. Condominiums that would typically take a couple of months to sell sold in days, and often at asking price. With that said, there was little meaningful price appreciation. The factors that hinder appreciation of these condominiums did not change: high amounts of rental units in the association; lack of amenities; and aging buildings that are either behind on maintenance or expensive to keep up. Those factors are unlikely to ever change. The current demand for multifamily properties is quite strong. Most investors sat on the sidelines in 2020, …

October 28, 2021

Market Reports Midwest Midwest Market Reports Multifamily

How to Woo New Tenants and Keep Them Amid Booming Multifamily Market

by Kristin Harlow October 21, 2021

By Ryan Kirby, Village Green In the understatement of all understatements, the COVID-19 pandemic has changed a few things in the housing market. Supply chain disruptions, labor shortages and the astronomical rise in the price of lumber have all exacerbated the steady decline in new home construction. For more than a year, home prices have been on the rise, making purchasing a home a challenge — or even an impossibility — for many. As a result, the rental market is booming, but that’s not entirely due to COVID. In fact, the rise in rentals began taking shape long before COVID made its impact on the world. Then, new challenges and norms created by the pandemic accelerated these existing trends. Ultimately, more Americans are choosing to rent due to generational, financial and practical factors, not just situational factors related to COVID. That said, the pandemic has fundamentally changed what renters are looking for in a rental unit, and these preferences are likely to continue long after the coronavirus is a distant memory. For property managers, this means playing into the trends of what today’s renters are looking for. Keeping these renter preferences in mind won’t just make your properties more attractive …

October 21, 2021

Industrial Market Reports Midwest Midwest Market Reports Minnesota

Institutional Capital Targets Minneapolis Industrial Market

by Kristin Harlow October 14, 2021

By Peter Loehrer, Colliers MSP Minneapolis has secured its position as the darling market of the Midwest industrial investment community. Minneapolis was the quintessential Midwest city: cautious real estate development, durable rents with stately growth and moderate but unwavering absorption growth year to year. This, however, is no longer the case. A combination of repeated institutional capital injections, a highly constrained land market and exponential growth in tenants looking for new space has transformed Minneapolis into an institutional and foreign capital target market. Institutional capital By far the most transformational event in recent history for the Minneapolis industrial market was Link Industrial’s entrance into the market. Beginning in 2018 with the Gramercy acquisition, and continuing in 2019 with the Space Center acquisition — both of which have bits and pieces of the national portfolio located throughout Minneapolis — Link made its first real foray into Minneapolis in May of 2019 with the acquisition of the 2.2 million-square-foot Industrial Equities portfolio. Link quickly followed this up with pieces of the GLP and Colony Capital acquisitions, as well as the largest real estate purchase in Minneapolis history, the 7.2 million-square-foot CSM Corp. industrial portfolio, and most recently the 2.5 million-square-foot Prologis portfolio. …

October 14, 2021

Industrial Market Reports Midwest Midwest Market Reports Missouri

Spec Industrial Activity in St. Louis Region Rivals Pre-Pandemic Levels

by Kristin Harlow October 7, 2021

World and domestic markets are constantly recalibrating as the global supply chain continues to see a disruption from the COVID-19 pandemic. It has never been more clear though just how important freight logistics and a healthy supply chain are to keep the economy moving. Demand for distribution space continues to grow, and the latest data available reveals the bi-state St. Louis market is rebounding well from the uncertainty of 2020 and 2021, and is positioned to assist distributors and developers to meet the growing demand. The St. Louis region has more than 51 million square feet of modern bulk inventory supported by a strong labor force and an exceptional freight network that provides tremendous optionality to move goods into and out of the region via river, rail, truck and runway. Those advantages are contributing to historic lows in vacancy rates, with only 4.5 percent of modern bulk space (more than 250,000 square feet) available at this time. This follows on the heels of the overall vacancy rate for the entire St. Louis industrial market dropping below 6 percent in 2020, the first time it fell so low in more than 15 years. Fortunately, construction in the bi-state region has rebounded …

October 7, 2021

Market Reports Midwest Midwest Market Reports Missouri Retail

E-Commerce Growth, Restaurant Oversaturation Shape St. Louis Retail Market

by Kristin Harlow September 30, 2021

By Tim McFarland, Sansone Group It is hard to describe 2020 as anything other than a lost year. COVID-19 brought us quarantines, social distancing, masks and plenty of uncertainty. The pandemic pushed our healthcare system to the brink, stressed our supply chain and caused a global economic slowdown. The St. Louis commercial real estate market certainly felt the effects of COVID-19, with retail and hospitality being hit the hardest. The retail sector was turned upside down by lockdowns that transformed homes into virtual offices, mandates that forced the closure of non-essential businesses and capacity restrictions that required restaurants to learn how to survive without dine-in business for a large portion of the year. These factors have caused an increase in vacancy to nearly 5 percent, and average asking rates to soften to $13.02 per square foot, off by 15 cents per square foot from this time last year. Perhaps most intriguing was seeing trends in the retail market accelerated by COVID-19. E-commerce For years now there has been a trend toward e-commerce. That is true now more than ever as the pandemic has accelerated the drive to digital. More than five years of e-commerce adoption was compressed into a three-month …

September 30, 2021

Industrial Market Reports Midwest Midwest Market Reports Office Ohio Retail

Commercial Real Estate Fundamentals Stay Steady in Akron, Ohio

by Kristin Harlow September 16, 2021

By Jerry Fiume, SVN Summit Commercial Real Estate Advisors You’ve heard it before. In Akron, everything is earned, and nothing is given. No quote better represents the fabric of the City of Akron, Summit County and Northeast Ohio. Aside from an unstoppable work ethic, the other key characteristic of our marketplace is one of steady consistency. Our pricing is steady, our cap rates are steady and our opportunities are steady. With that said, there is a renaissance underway in our area. Akron is experiencing residential growth driven by a 15-year, 100 percent residential tax abatement program for all new residential and multifamily construction. This also applies to recent rehabilitation work, helping Akron stand out as a competitive and attractive place to invest in real estate. Plus, increased residential investment will continue to attract more commercial investment. Akron has made a significant investment in its downtown neighborhood, spurring significant residential, retail and office growth. The city invested $30 million to facelift Main Street, including several significant mixed-use projects like The Bowery and the 159, creating a better-looking, more walkable downtown that is becoming a premier place to live. Hundreds of new apartments have been constructed in former office buildings, and hundreds …

September 16, 2021

Industrial Iowa Market Reports Midwest Midwest Market Reports Multifamily Single-Family Rental

Resilience, Growth in Cedar Rapids is Unparalleled

by Kristin Harlow September 9, 2021

By Scott Olson, Skogman Commercial On Aug. 10, 2020, eastern Iowa was hit with a derecho. This is the Spanish word for a widespread, long-lived, straight-line windstorm that is associated with a fast-moving group of several thunderstorms. Winds in southwest Cedar Rapids were estimated to be 140 miles per hour with the entire city of 75 square miles sustaining major damage. The statistics are staggering: • Cedar Rapids lost 669,000 mature trees, about 70 percent of its urban canopy. The storm left at least 4.5 million cubic yards of debris. Stacked 35 feet tall and wide, it would extend a whopping 24 miles. • 6,000 homes and properties were damaged. As repairs and reconstruction got underway, the city issued 25,000 building permits in fiscal-year 2021, more than double the number in a typical year. • City government buildings suffered $20 million in damage, while the business community reported losses totaling $170 million. About $70 million of that was the result of derecho-related shutdowns or power outages. • The state cumulatively sustained $11.5 billion in damage, according to the National Oceanic and Atmospheric Administration, which calls the Aug. 10 derecho “the costliest thunderstorm in U.S. history.” However, as evidenced in the …

September 9, 2021

Market Reports Midwest Midwest Market Reports Ohio Retail

Demand Rises for Convenient, Quality and Affordable Retail in Cleveland

by Kristin Harlow September 2, 2021

By Catherine Lueckel and Allison Giomuso, Matthews Real Estate Investment Services In nearly every major metro in the Midwest, the most active retailers expanding, leasing or developing involve grocers, discounters and drive-thru tenants. Most of the activity in the Midwest is reflective of the broader trend in shifting consumer demands, away from wants and more toward needs and services. Discount retailers It’s no surprise that discount retailers rose in popularity among shoppers during economic uncertainty, as they offer products for a fraction of the price. This trend is very apparent in the Midwest, with consumers focusing on value through the wake of the economic recovery. While discount retailers offer the best value in their products, they equally search for the best value in their real estate. Their expansion goals align closely with their financial goals; therefore, they target the Midwest, where deals are not overvalued and produce a higher rate of return. The Midwest boasts cheaper real estate compared with other regions, and more robust growth due to the affordable cost of living and lower costs of doing business. Discount-oriented retailers dominated Ohio’s leasing activity, specifically in Cleveland, where they accounted for the most move-ins and top leases in 2020. …

September 2, 2021

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