Midwest Market Reports

If You Build It, Will They Come? Indy Industrial Tenants Demand Smaller Spaces

by Kristin Harlow March 14, 2019

Recently, my national research colleagues released “The Top 10 Commercial Real Estate Trends for 2019,” a piece featuring predictions on subjects such as trade tensions, labor shortages and the evolution of “co-everything.” Of all the predictions, one stood out as being especially relevant for the Indianapolis industrial market as we inch further into 2019. Indianapolis has lacked industrial space for occupiers seeking to grow, particularly in smaller segments. The great news is that the market is well on its way to remedying this ailment. Demand causing shortage As we all know, the industrial sector is undergoing an e-commerce revolution. This has created a rush of demand by retailers and third-party logistics (3PL) providers for distribution and warehouse space, especially in cities like Indianapolis, which historically has been recognized for logistics strength. As a result, industrial market fundamentals have generally tightened across much of the United States. In the fourth quarter of 2018, the U.S. industrial vacancy rate fell to 4.8 percent, the lowest rate on record. Similarly, Midwestern markets currently sitting at 4.8 percent vacancy have experienced a 50-basis point decline in vacancy since the fourth quarter of 2017. Pair that with north of 111.5 million square feet of …

March 14, 2019

Indiana Market Reports Midwest Midwest Market Reports Retail

The Resilience and Importance of Retail in Indianapolis

by Kristin Harlow March 7, 2019

While Indiana is well known for the Indianapolis 500, the state’s economy is firing on all cylinders and experiencing noteworthy job growth. Indiana’s marketing campaign, “A State That Works,” has been successful in attracting investment to the state by touting its highly ranked business climate, competitive cost of doing business, pro-business tax climate, low cost of living, extensive logistical infrastructure and access to strong educational systems. In June 2018, Bloomberg ranked the Indiana cities of Elkhart (No. 1), Kokomo (No. 3) and Columbus (No. 13) for having the largest employment gains in the country since the recession. The Indianapolis metro area has created one of the nation’s top burgeoning tech scenes with a 68.1 percent increase in tech job growth from 2006 to 2016, landing No. 5 on Forbes’ list of “Cities Creating the Most Technology Jobs.” The state’s stable economy and encouraging unemployment rate have provided strength to the rapidly evolving retail industry. While national news is filled with retail bankruptcies and store closures, there has been tremendous retail activity backfilling vacancies and spurring new development from the following retail sectors: grocery, home living, health and wellness, beauty, fitness, off-price/discount, and dining and entertainment. Backfilling bankruptcies Following the bankruptcy …

March 7, 2019

Illinois Market Reports Midwest Midwest Market Reports Office

Chicago Office: Fulton Market Isn’t in the West Loop

by Kristin Harlow February 28, 2019

Long before the emergence of Fulton Market, local real estate professionals referred to the West Loop as the office submarket between Wells Street and immediately west of the Chicago River. But today some also refer to the Fulton Market area, an area one mile west and across a natural boundary of the Kennedy Expressway, as the West Loop. So which is it? The West Loop is the leading — and by far the largest — office submarket in Chicago with over 50 million square feet of office space inventory. Its proximity to public transportation and wide setbacks along Wacker Drive and the Chicago River offer better view corridors and more access to natural light — key competitive advantages in an area that permits more buildable density than the periphery of the central business district (CBD). On the other hand, Fulton Market has its own distinct “edgy” identity that some area office tenants consider the antithesis of the Loop (recall that the original reference to the Loop meant the area surrounded by the Elevated CTA tracks, the “El,” that loops around the CBD). The West Loop proper has witnessed significant change in the last 10 to 15 years. The …

February 28, 2019

Illinois Industrial Market Reports Midwest Midwest Market Reports

Chicago Industrial Predictions: Absorption May Slow in Second Half of 2019

by Kristin Harlow February 21, 2019

As we begin 2019, there are several opposing market forces at work that are sure to influence each of us, and our respective firms and clients. These market dynamics will ultimately dictate who has a great year and why — or why not. This year, it seems the signals are more mixed than in the past several years, so making predictions about the local industrial real estate market is somewhat daunting. Nonetheless, here is what to look for in 2019. A tale of two halves Listen carefully: skip vacations, stay in town, hunker down and make as many deals as you can in 2019. Based on current supply and demand dynamics with several significant users already in play (build-to-suits, new leases, renewals, etc.), plus a recent wave of speculative deliveries, look for the first and second quarters to be fairly robust in terms of gross absorption. This should extend the growing record of 35 straight quarters of positive net absorption, dating back to the second quarter of 2009, with at least two to three more such quarters. But, like in sports, what happens in the first half can be overshadowed by a shift in momentum or other significant change in …

February 21, 2019

Market Reports Michigan Midwest Midwest Market Reports Office

For Detroit’s Office Market, Motown Is Growth Town

by Kristin Harlow February 14, 2019

With 2018 in the rearview mirror, it’s clear that the Detroit commercial office space market looks dramatically different today than it did just a few years ago. By far the biggest story is the continuing (and perhaps even accelerating) level of leasing activity across the metro area. In the context of Detroit’s ongoing civic renaissance and sustained level of economic growth both regionally and nationally, the strength of the office market isn’t necessarily a shock, but it’s still fascinating to watch things unfold. Downtown expansion With both demand and rental rates on the rise, and a central business district (CBD) that is close to full capacity (currently there is less than 5 percent vacancy in Detroit’s CBD), we are starting to see office tenants moving up into Midtown, New Center and other neighborhoods. The growth in these areas has been not just noteworthy, but significant, with buildings like New Center One on West Grand Boulevard in excess of 90 percent occupancy. The Fisher Building in New Center boasts more than 100,000 square feet of new leasing activity in the last year. Suburban momentum More than a few office tenants now find themselves priced out of the CBD, a situation that …

February 14, 2019

Market Reports Michigan Midwest Midwest Market Reports Multifamily

National Investors Begin to Take Interest in Detroit Market

by Kristin Harlow February 7, 2019

In 2018, the Detroit real estate market had a banner year for transactions, new developments and big headlines. Chief among these was Ford Motor Co.’s acquisition of the vacant Michigan Central Station, a major media event that attracted attention from all over the world. Other notable news stories predominantly revolved around Quicken Loans founder Dan Gilbert and his Bedrock Real Estate Services. In 2018 alone, Bedrock delivered the 129-key Shinola Hotel, began construction on the 847,000-square-foot Monroe Blocks and laid the foundation for the 912-foot tall Hudson’s tower. The combined costs of these projects exceed $2 billion. From a brokerage standpoint, it also was a successful year. Q10|Lutz Financial Services, a Birmingham-based commercial mortgage banking firm, had its best year on record. Similarly, Farmington Hills-based Friedman Real Estate’s investment sales division had transaction volume of a half-billion dollars, according to the firm’s manager of opportunities, Jared Friedman. Some highlights and market insights into the Great Lakes State’s commercial real estate market are below. Multifamily redevelopment Downtown Detroit has received most of the notable press this cycle, in particular for the flock of millennials and young professionals who up-ended trends and brought their skinny jeans and electric scooter habits to …

February 7, 2019

Industrial Market Reports Midwest Midwest Market Reports Missouri

Will a Tight Labor Market Limit St. Louis Industrial Growth?

by Kristin Harlow January 31, 2019

The St. Louis industrial market is in the middle of a significant construction boom. Total square footage under construction is at a record-high 6.3 million square feet, with 2.8 million square feet of activity completed in 2018. The last two years have experienced historically high levels of overall net absorption with 4 million square feet in 2017 and 5.6 million square feet in 2016. These absorption levels are significantly higher than pre-recession market numbers. The expected 3 million square feet of positive absorption in 2018 is 1 million square feet higher than what had ever been recorded prior to 2014. A significant portion of this absorption is due to several large transactions in newly constructed, and often tax-abated, parks. Whether or not this level of construction and sizable deals is sustainable remains to be determined, but many trends within the economy indicate that this can continue. The vacancy rate for the St. Louis industrial market dropped to 6.21 percent in the third quarter of 2018, the lowest rate since 2006. This drop in available space bumped average direct asking rates up to $4.58 per square foot, the highest level since before the recession. Earth City and North …

January 31, 2019

Kansas Market Reports Midwest Midwest Market Reports Mixed-Use

Mixed-Use Makes its Mark on Kansas City Neighborhoods

by Kristin Harlow January 24, 2019

Many of us remember a time when a great new job was measured primarily by the paycheck and the size of the office. How times have changed. And nothing illustrates that better than the favor of mixed-use developments. As the workforce demographic has evolved, so have the amenities that attract top talent. Smart companies know that creating an appealing environment for the best candidates means access to food options, walking distance to shopping and retail choices, and close proximity to housing. Millennials are a big part (but not the only part) of this changing trend, especially as older millennials assume decision-making roles. But employers in general are learning that it makes sense to cater to their workforce by creating a more attractive work environment. From malls to millennials The landscape of American living and working has transformed over the decades. Up until the mid-20th century, mixed-use was everywhere, as many shop owners and employees lived in homes behind their businesses or apartments above their shops. With the rapid growth of the federal interstate system and growing popularity of single-use zoning regulations, however, commercial and residential spaces were largely separated. Not surprisingly, this combination gave rise to the golden age of …

January 24, 2019

Industrial Kansas Market Reports Midwest Midwest Market Reports

Johnson County, Kansas: A Midwest Hub for Industry and Innovation

by Kristin Harlow January 17, 2019

Once referred to by developers as a “well-kept secret,” the Kansas City metro area is quickly developing a global reputation for skilled workforce, strong infrastructure, affordable housing and competitive overhead costs like transportation and utilities. “Kansas City is a region rising. We are dispelling the notion that Kansas City is a well-kept secret,” says Tim Cowden, president and CEO of Kansas City Area Development Council. “There is growing recognition among site locators and corporate executives that the Kansas City region is an excellent option for any number of business types, including financial services, technology centers, animal health, e-commerce or industrial.” I-35 corridor As one of the most populous counties in the metro area, Johnson County, Kansas, appeals particularly to business and industry seeking to locate outside the downtown Kansas City core. The county has added an average of 6,500 residents each year for the past decade, and private development is keeping pace. Residential and retail projects dot the I-35 corridor northeast of Olathe, Kansas, the Johnson County seat. Southwest Johnson County, meanwhile, has become an industrial heavyweight with two parks located just off the interstate. “Johnson County has a formula for success with the quality of the workforce, infrastructure that’s …

January 17, 2019

Kansas Market Reports Midwest Midwest Market Reports Office

Office Sharing Is on the Rise in Overland Park, Kansas

by Kristin Harlow January 10, 2019

For those of you not familiar with Overland Park, Kansas, and its progressive office market, below are a few key points to help illustrate the relative size and economic strength of one of Kansas City’s most dynamic suburbs. • Incorporated in 1960, Overland Park is the second-most populous city in Kansas. • As of 2017, the unemployment rate was 3.1 percent. • It contains 17 percent +/- of metro Kansas City’s total office inventory. • $69,888 per capita income in 2017 • AAA bond rating status from the nation’s top three bond rating agencies, received by only a small handful of municipalities The Overland Park office market has led the metro in new office deliveries, occupancy and rent growth for much of the past two decades. It is the headquarters location of choice for a host of large corporations, such as Sprint, AMC Theaters, Black and Veatch, Waddell & Reed and YRC, to name a few. Access to a highly educated workforce, affordable housing, top-rated public schools and healthcare is a sampling of the reasons companies are attracted to the area. However, large corporations are not the only companies interested in locating here. Overland Park has a deep and …

January 10, 2019

Newer Posts

Older Posts