Midwest Market Reports

Opportunity in the Midwest: Why Indiana Is Gaining Favor with Investors

by Kristin Harlow September 3, 2020

By Chris Bruzas, Berkadia While the COVID-19 pandemic has had a dramatic impact on the commercial real estate industry, bright spots have emerged across the multifamily landscape. Nationally, secondary and tertiary markets demonstrate resilience and strong performance, despite challenging circumstances. One of these bright spots is Indiana. Since the start of the year, Berkadia’s investment sales and mortgage banking teams have closed more than $498 million in combined sales and financing across the state. While Indiana has long been a solid market in the Midwest, in recent years it has emerged as particularly attractive to investors for a few key reasons. Available scale The ability to acquire scale is increasingly important to investors looking to break into new markets and MSAs. Immediate scale is attractive for several reasons. For investors, acquisition at scale enhances geographic and unit diversification at the outset. It also allows investors, specifically those new to the region, to maximize business efficiencies on expenses. If a new buyer can acquire 1,000 units in proximity, they can reduce the burden of staff, construction costs and travel costs, to name a few. Additionally, it helps with leasing. If a prospective tenant tours a property that doesn’t have floor plans …

September 3, 2020

Industrial Market Reports Midwest Midwest Market Reports Ohio

Three Reasons Cincinnati Is Industrial Hot Spot of America

by Kristin Harlow August 20, 2020

By Brian Leonard and Mark Volkman Tides are changing throughout the U.S. as companies work to confront COVID-19 and its implications on the national supply chain. Changing consumer preferences are forcing businesses to reevaluate their current supply chain and diversify their sources of supply. Since COVID-19, retailers across the country have experienced a 54 percent increase in online sales. This shows the value shoppers place on convenience and accessibility — the only missing factor from online shopping is the immediacy of a physical store. As a result, 51 percent of global retailers now offer same-day shipping to available areas, and 65 percent plan to offer same-day delivery services within a year. These factors, combined with the expectations of a “next normal,” will require fulfillment centers to be positioned close to customers to ensure timely deliveries. And finding a well-equipped, centrally located space can be a challenge. Luckily for investors, the Cincinnati market is emerging as a destination for warehouse and fulfillment centers. Cincinnati is nationally recognized for its accessibility to major markets, talented workforce and plentiful intermodal properties. Because of these reasons, major retailers like Wayfair and Hayneedle are dominating the market, making larger footprints harder to come by. Here …

August 20, 2020

Market Reports Michigan Midwest Midwest Market Reports Office

Can America’s Comeback City Get off the Mat Again? Yes — But Uncertainty Reigns

by Kristin Harlow August 13, 2020

By Garrett Keais In my 25 years in commercial real estate, I’ve never seen the economy — and our industry — come to a standstill the way it did this spring after the coronavirus hit. With so much uncertainty in the market, Detroit’s office sales and leasing activity slowed considerably. But as the last decade has shown us, if ever there was a city that could take a punch and get back up swinging, it’s Detroit. Comeback before the virus Fueled by a strong economy and low unemployment, America’s “Comeback City” was posting first-quarter 2020 office vacancy rates as low as 7 percent in one central submarket, according to Cushman & Wakefield research, and seeing rising property values and rents before the coronavirus hit. It was a striking change from a decade earlier, when the Detroit area was struggling after the Great Recession. Unemployment was 3.7 percent in February 2020, compared with 17.2 percent in June 2010, according to the U.S. Bureau of Labor Statistics. The city’s GDP had climbed steadily over those years. Tech giants like Quicken, Google, Twitter, Microsoft and Amazon moved to the city’s central business district, boosting downtown office occupancy and helping to diversify the local …

August 13, 2020

Illinois Industrial Market Reports Midwest Midwest Market Reports

Pandemic Shines Light on Lack of Cold Storage Space

by Kristin Harlow August 6, 2020

By Brian Niven As we begin to reopen most parts of our society following the COVID-19 pandemic that devastated our country and economy earlier this year, many in the commercial real estate industry are beginning to take stock of the massive shifts it may have put into motion. While the pandemic has decimated many sectors — shuttering retail shops, leaving offices empty and setting off an exodus of urban apartment dwellers — prospects for industrial properties have remained strong. Demand for warehouses of all kinds has been soaring in recent years, largely on the back of the growing e-commerce industry, and the sidelining of brick-and-mortar stores has only strengthened those tailwinds. However, that does not mean that the sector will not face challenges in the years to come. While most of the country’s core markets have a healthy pipeline of dry warehouse development that will help meet demand from users, the same cannot be said for an increasingly essential part of our supply chain — cold storage facilities. Vacancy for cold storage was already at or near zero across the country, but the pandemic has set off a chain of events that is likely to place significant stress on our …

August 6, 2020

Market Reports Michigan Midwest Midwest Market Reports

Despite Costs, Developers Pursue Rehab Opportunities for Detroit’s Historic Buildings

by Kristin Harlow July 30, 2020

By Steven Phillip Siegel Mies van der Rohe. Yamasaki. Kamper. Kahn. Portman. Gyllis. Some of the biggest architects in the world have a presence in Detroit. Motown’s exceptional confluence of architects and designers earned the city a UNESCO City of Design designation, the only city in the United States to receive the UN’s award for design excellence. However, beginning in the early 1970s, many of the city’s finest architectural works slowly sank under a weakening market amid tenant (and residential) flight to the suburbs. In the aftermath of the Great Recession, developers, led by Dan Gilbert’s Bedrock, began slowly redeveloping Detroit’s architectural gems. Historic properties like downtown’s David Stott Building or New Center’s Fisher Building saw massive capital investments in recent years. Yet, many city residents and tenants find it hard to comprehend why rents on these new projects are so much higher than the rest of the market. The narrative of Detroit’s architectural gems — and the financial Jenga it takes to make them succeed — tells the story of the city’s modern-day renaissance. “To us, it’s a passion project,” says Brett Yuhsaz, Bedrock’s director of construction, who has worked on some of the city’s most notable historic rehabs, …

July 30, 2020

Healthcare Market Reports Midwest Midwest Market Reports

COVID-19 Interruptions Are Largely Short Term for Medical Office Sales

by Kristin Harlow July 9, 2020

By Mike Wilson, Principal, Avison Young As the commercial real estate industry shifts toward a new normal, there are several changes occurring in the medical office sector. This asset class has long been considered a safe haven, even in recessionary times, given its ties to the healthcare system and overall population growth. The onset of COVID-19 and the subsequent stay-at-home orders in many states have created challenges that also touch the medical office sector, although not nearly as deeply as other asset classes. One shift occurring is a varying level of activity among medical office tenants, depending upon whether their services are deemed essential or nonessential. Tenants in essential buildings, particularly those tied to large healthcare systems, are still seeing patient throughput activity as healthcare needs remain. Some elective surgery centers and outpatient testing facilities, however, have seen a temporary pause as medical professionals retrenched due to the state closures. Landlords in turn have had to manage rent relief requests from tenants. These changes are considered short-term and are not expected to have long-term effects on tenant activity or property investment levels. The medical office sector continues to draw the attention of a wide range of investors, due to its …

July 9, 2020

Market Reports Midwest Midwest Market Reports

Post-Pandemic Lease Provisions: They’re Changing, But Will They Work?

by Kristin Harlow July 2, 2020

By Tim McCaffrey, Counsel, Eversheds Sutherland (US) The coronavirus pandemic has impacted individual and corporate behavior on a global scale. Businesses across every sector are attempting to mitigate the economic impact of this crisis. Previously standard leasing terms are changing, both in light of the current environment and in anticipation of a second wave of infection. But even as parties negotiate carefully drafted provisions and carve-outs, it remains unclear when courts will be available to interpret these changes and how they will ultimately respond. The most commonly discussed change to standard contract terms is the force majeure provision, which typically allows one or both parties to delay or excuse performance of contractual obligations when prevented by unforeseeable circumstances. Where pandemic-specific language is not already part of a force majeure clause, many parties are seeking to add it to the contract. In typical leases, this defense to performance is only available to landlords for obligations such as the timely delivery of the property or completion of certain landlord work. And in those instances where it does apply to benefit tenants, it typically expressly excludes payment obligations. But in today’s climate, tenants have begun requesting the ability to invoke a force majeure …

July 2, 2020

Market Reports Midwest Midwest Market Reports Office

Office Best Practices: How to Prepare for a Post-COVID-19 Reality

by Kristin Harlow June 25, 2020

By Andy Gutman, President, Farbman Group It’s no hyperbole to acknowledge that we are living in unprecedented times and facing unique and historic challenges. The novel coronavirus pandemic has had a profound impact on the lives and livelihoods of Americans across a wide range of industries, and commercial real estate is no exception. As brands and businesses struggle to adjust to the slowdown, with many shutting their doors and others making significant operational adjustments, owners and operators face their own dilemmas. How can real estate professionals help their tenants while protecting their own interests? What can they do differently today to start preparing for a post-shutdown new normal once the nation and the economy begin reopening in the months ahead? What follows is a review of practical tips and best practices that real estate professionals should be deploying to ensure they are doing everything they can to help themselves and their tenants navigate the unfamiliar terrain of a pandemic-altered landscape. Talk the talk Communication with tenants is always important. In the current circumstances, however, clear and consistent communication is not just a priority, but an urgent necessity. Make sure your team is connecting on COVID-related changes to tenants, sharing updates …

June 25, 2020

Market Reports Midwest Midwest Market Reports Ohio Restaurant Retail

Ohio Delivers High Property Tax Values

by Kristin Harlow June 18, 2020

By Steve Nowak, Siegel Jennings Co. A recent decision from an Ohio appeals court highlights a developing and troubling pattern in the state’s property tax valuation appeals. In a number of cases, an appraiser’s misuse of the highest and best use concept has led to extreme overvaluations. Given its potential to grossly inflate tax liabilities, property owners and well-known tenants need to be aware of this alarming trend and how to best respond. In the recently decided case, a property used as a McDonald’s restaurant in Northeast Ohio received widely varied appraisals. The county assessor, in the ordinary course of setting values, assessed the value at $1.3 million. Then a Member of the Appraisal Institute (MAI) appraiser hired by the property owner calculated a value of $715,000. Another MAI appraiser, this one hired by the county assessor, set the value at $1.9 million. The average of the two MAI appraisals equals $1.3 million, closely mirroring the county’s initial value. Despite the property owner having met its burden of proof at the first hearing level, the county board of revision rejected the property owner’s evidence without analysis or explanation. The owner then appealed to the Ohio Board of Tax Appeals (BTA). …

June 18, 2020

Market Reports Midwest Midwest Market Reports Retail Wisconsin

Reimagined Milwaukee Retail Scene Meets Consumer Lifestyle Needs

by Kristin Harlow June 11, 2020

By Ray Balfanz, Outlook Management Group What does Milwaukee bring to mind? Beer? Cheese? TV’s “Happy Days?” Perhaps the city chosen as the site for the 2020 Democratic National Convention? Yes, that’s us — being recognized and happy about it. But since I began penning this piece in March, we’ve experienced a world of change in the realities of group gatherings: we can hardly have 10 people in a group now, let alone thousands of delegates filling our new Fiserv Forum. It’s anybody’s guess how long the multi-trillion-dollar brick-and-mortar retail industry will be effectively shuttered and how the industry will have changed when it’s over. So without a crystal ball, I’m sharing Milwaukee’s story of how our retail developments have kept relevant for our consumers, while hoping for the best possible outcome once we’re on the other side of this coronavirus pandemic. “A great place on a great lake” our tourism slogan once proclaimed — and indeed it is. Milwaukee is a largely undiscovered gem with excellent quality of life and endless spots at which to spend your hard-earned cash: a prolific culinary scene, first-rate arts offerings and vibrant retail. From the reimagined Drexel Town Square, to redeveloped Bayshore, to …

June 11, 2020

Newer Posts

Older Posts