Midwest Market Reports

Kansas City Multifamily Market Poised for More Growth in 2021

by Kristin Harlow February 18, 2021

By Gabe Tovar, John Duvall and Kyle Tucker of NorthMarq The Kansas City multifamily market has proved it is more than resilient in the face of adversity. Throughout 2020, the market ranked consistently in the top 10 of 30 markets tracked by Yardi. It logged higher occupancies and rent growth, all while welcoming a record level of new supply. That stellar performance is likely to attract even more capital to the market in 2021. The story dominating the Kansas City market in recent years has been its booming development pipeline. Despite shutdowns and delays caused by the pandemic, developers delivered nearly 5,900 new units in 2020. That volume represents a record-high growth rate of 4.1 percent added to Kansas City’s market-rate inventory, compared with an annual average rate of 2 to 3 percent throughout the past decade. Looking ahead, that supply wave has crested, and the pipeline is shifting to the suburbs. NorthMarq forecasts completions over the next two years to average closer to 4,000 units with 70 to 75 percent of those opening across the suburban submarkets. In recent years, between 40 and 50 percent of total deliveries were concentrated in the urban core, so while this data supports …

February 18, 2021

Kansas Market Reports Midwest Midwest Market Reports Missouri

Kansas City Industrial Market Slated to Continue Positive Momentum in 2021

by Kristin Harlow February 11, 2021

By David Zimmer, SIOR, Newmark Zimmer The industrial real estate market in the metropolitan Kansas City area ended 2020 on a high note. 2021 will pick up right where 2020 ended, with no outward or visible signs of a slowdown. New industrial construction is visible in every geographic sector of the metro area, with upwards of 2.5 million square feet of buildings under construction. Without exception, all these are high cube, modern distribution-type facilities intended to capture the ever-growing e-commerce, logistics and food and beverage sectors of the economy. With the one possible exception being the 880,000-square-foot office and distribution building for Urban Outfitters in Wyandotte County, all industrial construction underway is on a speculative basis with lease-up taking place before the buildings are placed into service. Development activity is being sponsored by both local development entities and regional and national developers who state that Kansas City’s geographical central location, coupled with a skilled workforce and extensive transportation infrastructure, are the primary reasons why Kansas City has attracted numerous companies to establish major distribution operations over the past decade. Investor appetite In addition to new development activities, the investor market for industrial properties has also reached record levels. In one …

February 11, 2021

Iowa Market Reports Midwest Midwest Market Reports Retail

Investors Shift Focus from Higher Returns to Stability, Proven Cash Flow

by Kristin Harlow February 4, 2021

By Tyler Dingel and Blake Bogenrief, CBRE | Hubbell Commercial COVID-19, and the immediate uncertainty that came with it, slowed investment activity in nearly all markets. The transactions that have closed since March, and those that will follow in the coming months, are changing. Investors and lenders alike are more thorough in upfront analysis, more selective in tenants, and overall, trending more conservative. The vision is now long-term oriented, and the spotlight is shining brightly on essential goods and services as well as investments with proven track records. Slow and steady is winning the race. Investor concerns Over the last 12 months, a common concern for real estate investors has been what the future holds for capital gains taxes. Many sellers are contemplating and opting to “take the hit” now as opposed to down the road when capital gains tax could be replaced by the ordinary income tax rate. In addition, the Biden Administration seeks to increase individual tax rates while the U.S. continues to deliver financial aid to the masses. Nearly nine months following the CARES Act, Congress agreed on a second, $908 billion stimulus package. Many expect that taxes will do one of two things in the future …

February 4, 2021

Industrial Market Reports Midwest Midwest Market Reports Missouri

St. Louis Market Poised to Capitalize on Industrial Demand

by Kristin Harlow January 28, 2021

By Jake Corrigan, Sansone Group As we reflect on the tumultuous year of 2020 and the COVID-19 restrictions that decimated the retail real estate sector, those of us on the industrial side of the equation are breathing a sigh of relief. While there have been small pockets of industrial users and owners that have been adversely affected, the industrial market has remained strong as a sector. We anticipate this trend to continue. Statistics continue to show the conversion of the brick-and-mortar shopper to online is on the fast track. In the last 10 years, the meteoric shift to online shopping has increased from 7 percent in 2010 to just under 25 percent at the end of 2020, according to the U.S. Census Bureau. COVID-19 has forced the otherwise reluctant online shopper to shop for goods they had never thought to have delivered to their door. As a result, online retailers have dramatically improved web-based interfacing and ease of shopping. Active development These realities have supply chain experts, third-party logistics (3PL) companies, owner/users, and of course, mega online retailers clamoring for blocks of vacant space to house their inventories. Developers active in the St. Louis metropolitan statistical area (MSA) …

January 28, 2021

Market Reports Midwest Market Reports Mixed-Use

Pandemic, Shifts in Consumer Behavior Trigger Fundamental Changes in Design of Public Spaces

by Kristin Harlow December 24, 2020

By Bob Kraemer, Kraemer Design Group The way that we work, eat, shop, gather and interact in community spaces will never look the same. While we may someday return to dine-in experiences and large-scale events, it’s clear the novel coronavirus has prompted profound and pervasive societal changes that are here to stay. It should come as no surprise to anyone who understands the deep connection between designed spaces and the people who occupy them that public spaces will need to evolve. We have already seen an evolution of spaces in order to stay relevant, stay profitable and in some cases, stay open. What does all of this mean for design and development? To understand what the brick-and-mortar landscape of tomorrow might look like, we have to think differently about the design of public spaces and the evolving priorities and practices of consumers, diners and office users. The waiting game Thinking differently about the design and functionality of public spaces means ensuring spaces formerly seen as functional or utilitarian are updated to address health and safety concerns and are no longer viewed and designed as an afterthought — but as strategically designed spaces. For example, diners waiting to be seated or …

December 24, 2020

Market Reports Midwest Market Reports Office

Office Space After Coronavirus: the New Norm with Remote Workers

by Kristin Harlow December 17, 2020

By Steve Kimball, emersion Design The impact of COVID-19 on workplaces will continue long after the virus has subsided. A majority of large corporations have embraced remote working, with many in the technology space such as Google, Twitter and Microsoft announcing they’ll keep a majority of employees permanently working from home. But it’s not just big technology companies that are taking this approach. New research from Harvard Business School cites at least 16 percent of the U.S. workforce will be remote moving forward. Additionally, a study by 451 Research shows that number could go as high as 67 percent being remote. Jobs in technology, healthcare, customer service, education, accounting and sales are considered the most likely to shift permanently to remote work. What does that mean for traditional office space? There will still be robust office environments, although changes are coming. These vary from what is in the office to where it will now be located. Downsize, upgrade Cost savings achieved by less square footage needs will enable companies to relocate to a more desirable location, offer additional amenities onsite and upgrade the office environment. While less space is required, companies can use the savings to upgrade the office with …

December 17, 2020

Market Reports Midwest Market Reports Multifamily Student Housing

How COVID-19 Will Alter the Evolution of Student Housing

by Kristin Harlow December 10, 2020

By Justin Wybenga, GMH Capital Partners The economic impact of the COVID-19 pandemic continues to unfold globally, shifting the way we conduct business and go about our day-to-day lives. Across all sectors of commercial real estate, we’ve seen a lot of change, from sanitation measures to limited in-person interactions and occupancy. The most important lesson from 2020 is the need to be resilient and adapt as the landscape evolves. That’s exactly what we’re seeing in student housing, especially in the Midwest, as owners prepare for next year. Here are four trends we can expect to see in the Midwest student housing sector in 2021 as a result of COVID-19. Sanitation, touch-free COVID-19 has introduced a whole new set of cleaning best practices, and moving forward, residents expect enhanced methods in their communities. To satisfy the new sanitation expectations, we’ve seen owners implement a variety of initiatives, such as installing upgraded air filtration systems and using hospital-grade electrostatic sprayers to sanitize commonly touched surfaces, disinfecting all amenity and common areas on a regular basis, and requiring all staff members to use personal protective equipment (PPE). Many residents are also looking for convenient contactless or concierge-focused amenities, such as package and food …

December 10, 2020

Industrial Market Reports Midwest Midwest Market Reports Nebraska

Omaha Industrial Market Dips Toe into Modern Speculative Development

by Kristin Harlow November 19, 2020

By Kevin Stratman, CCIM, SIOR, Investors Realty Like many metropolitan areas, new construction has been the recent theme in Omaha’s industrial market. Since 2015, the Omaha market has delivered almost 5 million square feet of new flex, industrial and warehouse properties. This is significant, considering the market as a whole is only about 90 million square feet. Equally impressive, the market has kept the vacancy rate below 4 percent despite all this growth. A bulk of this development has taken place in the popular Sarpy West submarket on the southwest side of the metro area along the I-80 corridor. Notwithstanding all of this construction, the market continues to have a lack of opportunities for users of all sizes. At the time of this writing, there are only 10 vacancies in existing properties for lease that are greater than 50,000 square feet. Only one of those vacancies is in a modern warehouse building. Both national and local tenants alike are shocked to find the limited number of spaces available to them. Which begs the question, why is there so little speculative construction in Omaha? Omaha has always been a more conservative economy. The market might not see the high of highs …

November 19, 2020

Market Reports Midwest Midwest Market Reports Multifamily Nebraska

Omaha’s Strong Multifamily Market Fundamentals Drive Investment Sales Activity

by Kristin Harlow November 12, 2020

By Jason Kinnison, NorthMarq The Omaha multifamily market’s occupancy, rents and new construction activity remain stable despite the economic uncertainty surrounding the COVID-19 pandemic. As a solid Midwestern market, Omaha’s apartment sector remains strong due to its healthy market fundamentals, including a strong employment base and a highly educated workforce. Omaha boasts an approximate 94.9 percent occupancy rate and consistently has a steady supply of roughly 1,500 new units delivered annually. New construction activity has historically been at an absorbable pace, however, there has been a slight lag in absorption recently, which has the potential to compress occupancy levels as well as asking rents. Multifamily rent collections remained strong in the second quarter, supported in part by the increased unemployment benefits offered to renters who lost jobs and the government-sponsored stimulus initiatives. Additionally, federal eviction bans were enacted. Omaha’s multifamily real estate property values continue rising and capitalization rates remain low. Over the last five to seven years, Omaha has experienced an increase in multifamily investment sales activity. Historically, the market has been controlled by local investors with a buy-and-hold mentality. However, as valuations have risen and activity has increased in investment sales, there has been a shift to more …

November 12, 2020

Market Reports Midwest Midwest Market Reports Nebraska Office Retail

Key Leasing Considerations for Commercial Landlords in the Age of Coronavirus

by Kristin Harlow November 5, 2020

By Addison Fairchild, Baird Holm At its onset nearly nine months ago, the novel coronavirus forced federal, state and local leaders to consider measures necessary to prevent the virus’s inevitable spread. Those leaders imposed measures they calculated to balance minimizing the spread and harm of coronavirus to the national and local economies. Whether those measures were effective in achieving those goals is a question for another day. However, now that coronavirus is currently a part of daily life, businesses have been considering what measures they must take. Like political leaders, they must also consider balancing the potential liability they may face for the spread of the coronavirus or other illness, the harm to their patrons and clients, and the harm to their bottom lines. Commercial landlords are not exempt from considering the coronavirus or other pandemics in future leasing. It is unlikely a court would find a commercial landlord liable for the spread of a pandemic in their leased properties, except in rare circumstances. However, tenants may require landlords to provide upgrades to properties to ensure the safety of the leased premises. This article considers whether landlords may be liable for the spread of a pandemic in their leased premises. …

November 5, 2020

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