Midwest Market Reports

Developers Flock to Columbus Industrial Market

by Kristin Harlow April 9, 2020

Columbus continues to be a powerhouse in the industrial market of the Midwest. Fueling this growth are its strategic logistics location as well as being the Ohio state capital and home to eight colleges and universities in central Ohio. Job creation in Columbus remains ahead of Ohio with employment expanding nearly 22 percent since 2010, twice the state’s rate of expansion. The region’s largest employers include The Ohio State University, OhioHealth, JP Morgan Chase and Nationwide Mutual Services. These companies employ nearly 100,000 in central Ohio. Columbus is also one of the hottest housing markets in the nation, with overall median sales prices increasing 7.6 percent over 2018 and sellers receiving, on average, 98.7 percent of the last list price at sale. Columbus has a greater access to the U.S. market within a 10-hour drive than any other major metropolitan area in the country. The area has access to 46 percent of the U.S. population within a 10-hour truck drive. This proximity continues to attract large corporations to the area, including Amazon, Facebook, Google and Walmart, who are all occupying new distribution and data centers in the region. The market’s industrial vacancy rate of 5 percent at the end of …

April 9, 2020

Market Reports Midwest Midwest Market Reports Minnesota Multifamily

How Can Minnesota Apartment Developers Access Capital While Minimizing Risk? Structured Finance

by Kristin Harlow March 26, 2020

The Twin Cities of Minneapolis and St. Paul continue to be a very attractive marketplace for multifamily investing due to an average vacancy across the metro of 3.1 percent, as well as average 2019 rent growth of 5.8 percent, according to a recent report issued by Marquette Advisors. The Twin Cities currently has nearly 30,000 multifamily units in the development pipeline that are expected to be delivered between 2020 and 2022. With all of this development activity and an abundance of local and regional banks in the area, the Twin Cities continues to be a very well-banked market, particularly with regard to apartment construction. Local and regional banks are all very active. In addition, national banks are eager to invest in the healthy, consistent Twin Cities multifamily market. But despite capital being relatively plentiful and accessible, local, regional and national developers are exploring more efficient ways to capitalize on the abundance of development activity. They also pursue ways to stretch their own equity through a variety of financing alternatives. Developers may be tapped out with their current banking relationships, or as projects get larger and more expensive, desired loan sizes may drift higher than their banks’ lending limits. Lenders and …

March 26, 2020

Market Reports Midwest Midwest Market Reports Minnesota Retail

Influx of Out-of-State Capital Creates Cap Rate Compression in Twin Cities Market

by Kristin Harlow March 19, 2020

In 2019, the Twin Cities net lease retail market experienced a historic year, benefitting significantly from aggressive western U.S. capital. The Twin Cities saw an unprecedented number of buyers from the western United States who were willing to pay a premium above local buyers for quality net leased real estate. There were 95 net lease transactions in the Twin Cities in 2019 that sold below a 7.5 percent cap rate, according to CoStar Group. Of those transactions, 33 percent were sold to buyers based in the West Coast. What’s more, of the net lease properties that sold below a 6.25 percent cap rate, nearly 50 percent were sold to buyers based in the western U.S. In comparison, in 2018, only 25 percent of the net leased properties below a 6.25 percent cap rate in the Twin Cities sold to buyers based in the western U.S. This trend helped average cap rates compress for both net lease multi-tenant pad/strip centers as well as single-tenant cap rates between 2018 and 2019. The average multi-tenant net lease cap rate in 2018 was 7.25 percent versus 7.1 percent in 2019. The average single-tenant cap rate in 2018 was 6.7 percent versus 6.6 percent in …

March 19, 2020

Illinois Market Reports Midwest Midwest Market Reports Office

Now Is the Time to Invest in Chicago’s Office Market

by Kristin Harlow March 12, 2020

There is a widely held belief that investing in the Chicago office real estate market in 2020 is potentially a bad bet. While some investors are concerned by headlines decrying the fiscal health of Illinois, the supposed overvaluing of Cook County tax assessments and softening of the Chicago market, our experience tells us those fears will create opportunities for contrarian investors willing to dig deeper. Because these misperceptions are scaring away some institutional investors, the time is ripe for continued investment in Chicago office properties to take advantage of opportunities that more cautious investors are passing up. Municipal realities At the state level, much has been written about Illinois’ fiscal health. In a report released in September 2019, government watchdog Truth in Accounting labeled Illinois a “Sinkhole State” and ranked it 49th in the nation for its financial condition. After failing to raise enough revenue by hiking taxes to fund the state’s debt, leaders from Illinois have said that massive pension reform — not tax hikes — is the way out of our current debt crisis. Consequently, office real estate investors should not be overly concerned that the state of Illinois will potentially shift the state’s tax burden onto their …

March 12, 2020

Illinois Industrial Market Reports Midwest Midwest Market Reports

Industrial Landlord Consolidation Means Chicago-Area Tenants Should Be Ready to Negotiate

by Kristin Harlow March 5, 2020

In December 2019, Prologis, the largest industrial landlord in the world, announced its acquisition of Liberty Property Trust, another publicly traded REIT with a large industrial portfolio of its own. This deal, valued at $12.6 billion, seems to have become the norm in recent months. Companies such as Prologis and Blackstone Group, as well as regional ownership groups, have gobbled up industrial investment opportunities whenever they can. Just 10 years ago, the industrial real estate asset class was battling high supply and low rents, due primarily to the Great Recession. But with the growth of e-commerce and omnichannel logistics, this asset class is now considered one of the best investment opportunities available. So how is this consolidation of industrial ownership impacting the Chicago-area industrial market, and what should tenants know so that they can make informed real estate decisions? Local numbers While it seems like there are just a handful of landlords controlling the marketplace, when you look at the numbers, the prognosis isn’t so bad. Nationally, no single owner controls more than 10 percent of the U.S. market. Instead, landlord dominance is more of a local concern, and typical real estate indicators continue to influence lease terms. However, there …

March 5, 2020

Industrial Market Reports Michigan Midwest Midwest Market Reports

Manufacturing, Autonomous Technology Drive Detroit’s Industrial Growth

by Kristin Harlow February 27, 2020

Southeast Michigan has enjoyed a decade of prosperity surrounding the revitalization of downtown Detroit led by billionaire businessman and Quicken Loans Founder Dan Gilbert. Detroit has 580 million square feet of industrial space and is projected to see another 5 million square feet by 2021, much of that distribution-focused. In the past decade, Southeast Michigan has become a hub for driverless car technology. Toyota has announced plans to create an autonomous vehicle research facility in Ann Arbor and Ford Motor Co. has purchased the former Detroit train station to create an autonomous vehicle research center. In addition, the state of Michigan partnered with the University of Michigan to convert an old World War II air base into a 500-acre autonomous vehicle testing ground. The American Center for Mobility at Willow Run located in Ypsilanti Township operates as a global center for testing, research, education and product development, and serves companies such as Microsoft, AT&T, Ford, Toyota and Hyundai. The GM strike has recently been resolved, a relief to smaller automotive suppliers. High costs of construction, due to the international trade war as well as labor shortages, have resulted in limited inventory, therefore increasing the value of existing facilities. Construction, leasing …

February 27, 2020

Market Reports Michigan Midwest Midwest Market Reports Office

Investors Note Steady Supply, High Demand Within Detroit’s Office Market

by Kristin Harlow February 20, 2020

While there are plenty of news stories touting Detroit’s comeback, it’s the actual 2019 year-end numbers backing up the claims with solid momentum in the office and lending sectors. And the numbers are capturing the attention of national investors, not to mention lenders who were on the bench for years and years. Office occupancy Office vacancy across metropolitan Detroit decreased from 24.5 percent in 2013 to 13.8 percent as of the fourth quarter of 2019, according to national leasing firm CBRE. Asking rates have climbed since 2009 and vacancy rates have dropped. These figures even include the 23 percent-vacant Southfield submarket and the 19.5 percent-vacant Auburn Hills submarket, which with their combined total square footage account for 23.4 percent of the total metropolitan Detroit office market, dragging up the total average vacancy rate. Focusing on the central business district (CBD), the post-recession predictions of a city powering through the real estate cycle are holding true. The total direct office vacancy in JLL’s latest Detroit CBD Skyline report is 7.7 percent. That figure includes approximately 500,000 vacant square feet in the GM-owned and largely self-occupied Renaissance Center (RenCen) complex. Remove the RenCen from the equation, and the Detroit CBD skyline (i.e. …

February 20, 2020

Indiana Market Reports Midwest Midwest Market Reports Retail

Commercial Real Estate’s Sphere of Influence Grows in the Circle City

by Kristin Harlow February 13, 2020

Indianapolis is a humble midwestern city that often seems to fly under the radar, but for those willing to take a closer look, they will find more than just a famous racetrack and cornfields. Indianapolis is a dynamic city with a thriving commercial real estate market. Sitting as the 14th-largest city in the U.S., Indianapolis is the economic heart of the region and has experienced steady growth over the past decade — and with true Hoosier hospitality. Here’s a look at what’s happening and what’s to come in the Indianapolis market. Downtown Indianapolis has rapidly evolved over the last few years. The “Circle City” gained momentum through the emergence of a thriving technology sector and steady employment gains in an already economically diverse business landscape. Those influences added to the convenience and tourism that make downtown a desirable destination for retailers. Increased interest from brands has spurred new development and better amenities. An additional 1 million square feet of first-floor commercial space has been added in downtown Indianapolis over the last eight years, and an additional 400,000 square feet is expected over the next few years — a firm foundation that tells an incredible story of growth and investment. Mass …

February 13, 2020

Indiana Industrial Market Reports Midwest Midwest Market Reports

Indianapolis Caps Off Record-Setting 2019 in Industrial Market

by Kristin Harlow February 6, 2020

The Indianapolis industrial market somehow heated up even more throughout 2019, setting several all-time records along the way and setting the table for another strong year in 2020. Landlords and tenants showed just how strong the market remained throughout 2019, with absorption across all industrial property types besting its previous record by nearly a third. A total of 11.4 million square feet was absorbed throughout the market in 2019. That blew away what was a record at the time — 8.9 million square feet absorbed in 2018. Tenants were active all throughout the market, with 17.3 million square feet of space leased over the course of the year. That’s up from just under 14 million square feet that had been leased in 2018. While all sectors of the market attracted plenty of attention, the southwest and northwest Indianapolis markets saw the most action, with 5.3 million square feet leased in the southwest, and another 5 million square feet leased in the northwest. The activity applied to both small and large tenants, with new projects all over the metro leasing up quickly. The city’s largest deal was a 933,000-square-foot lease to Energizer at Franklin Tech Park within a year of Sunbeam …

February 6, 2020

Market Reports Midwest Midwest Market Reports Missouri Office

Office Occupiers in Kansas City Face the Short-Term Cost Versus Long-Term Benefit Dilemma

by Kristin Harlow January 30, 2020

With Kansas City unemployment hovering at cyclical lows around 3.5 percent and the war for talent at an all-time high, companies must leverage their real estate to attract and retain top talent. At the height of the corporate office boom in the late 1990s and early 2000s, the average space per employee ranged from approximately 275 to more than 325 square feet. Today, that number has shrunk to 175 square feet per employee and some predictions see that number moving even closer to 100 square feet. These changes are driven by a recognition that companies are adopting better workplace strategies. These newer, more efficient spaces deliver a more engaging experience for employees and provide a stronger return on real estate costs for companies. There is no denying that these new spaces cost more on a per-square-foot basis. Cushman & Wakefield research reported that the weighted average asking rate for Class A space in the Kansas City market was $25.04 per square foot on a full-service basis in the third quarter of 2019. Yet the net asking rates for the buildings with this new class of product range anywhere from the high $20s to the high $30s. Occupancy costs for new …

January 30, 2020

Newer Posts

Older Posts