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Midwest Market Reports

KansasMarket ReportsMidwestMidwest Market ReportsOffice

Office Sharing Is on the Rise in Overland Park, Kansas

by Kristin Harlow

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 …

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IndustrialMarket ReportsMichiganMidwestMidwest Market Reports

Strong Manufacturing Industry Boosts Grand Rapids Industrial Market

by Kristin Harlow

Last month I attended the NAI Global convention in Austin, Texas, and had the opportunity to talk with industrial real estate brokers from around the country. One thing was clear: there are many markets across the country that are facing the same dilemma as we are in West Michigan. The supply of vacant industrial buildings is at an all-time low, and construction costs are rising rapidly.    Booming economy The manufacturing industry is extremely strong in West Michigan. Historically known for the automotive and furniture sectors, West Michigan has developed a strong presence in the medical device manufacturing, food processing and aerospace sectors. This diversity is a good indicator of stability for the West Michigan manufacturing sector for the foreseeable future. The strength of the economy has encouraged many companies to expand operations and has attracted numerous out-of-market companies to West Michigan. Low inventory The industrial vacancy rate in the greater Grand Rapids market is currently 1.6 percent, which is historically low. In order to provide some context, in 2012 the vacancy rate was 7.2 percent. Typically, when the vacancy rate is this low, it is a clear indicator that inventory is too low, and the construction of new buildings …

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Market ReportsMichiganMidwestMidwest Market ReportsRetail

Detroit’s Emerging Neighborhoods Create Retail Opportunities

by Kristin Harlow

Today, Detroit looks starkly different than a decade ago. The city was hit hard by the Great Recession, but shortly thereafter, businesses started moving their operations into the downtown corridor. Businessman Dan Gilbert moved Quicken Loans into its downtown headquarters in August 2010, bringing approximately 1,700 employees with him. Today, Quicken’s footprint has expanded to 17,000 employees working downtown. Other companies followed, such as when we moved our headquarters downtown in 2012.  As the city has regained its footing, retail has helped bring people into the downtown corridor, both from around the city and from out of the suburbs. To date, Woodward Avenue and Capitol Park have been the two main hubs of retail activity in downtown Detroit, with once-vacant buildings housing national brands and unique entrepreneurs. As these two neighborhoods become more populated, retailers are starting to look for other neighborhoods in Detroit with potential to be redeveloped into standout retail options.  This begs the question: can other neighborhoods in Detroit flourish and support retail, beyond the central business district? As Detroit’s renaissance expands to other neighborhoods throughout the city, we expect there to be more opportunities ahead. Any incoming retailers and developers should consider what categories may be …

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HealthcareMarket ReportsMidwestMidwest Market ReportsWisconsin

How Healthcare Adds Value to Mixed-Use Developments in Milwaukee and Beyond

by Kristin Harlow

When it comes to location identification for development, you have to think creatively. In a highly competitive market like Milwaukee, mixed-use projects offer a great opportunity to showcase creativity, take advantage of complementary uses and drive tremendous value for clients and investors. The success of a mixed-use project lies in location. A high-profile location will help attract businesses, which then helps build traffic. Ideally, you want to think outside the box to generate repeat visits with businesses that will help sustain that traffic. An innovative mix of retail, restaurant, hospitality, office and even healthcare can greatly enhance a development. Mixed-use retail developments create new opportunities for healthcare projects. Health systems and physician practices are choosing to prioritize locations they may not have previously considered. There’s been a significant expansion of and increased focus on the outpatient ambulatory environment. The trend of developing specialty outpatient facilities, ambulatory surgery centers and micro-hospitals continues to gain momentum and allows for expansion to remain competitive while maintaining efficiency. An outpatient facility brings traffic. Finding a high-visibility location where customers are already engaging increases the convenience factor. Built-in traffic drivers like restaurants and retail help with trip assurance. For example, after wrapping up a clinic …

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IndianaMarket ReportsMidwestMidwest Market ReportsOffice

Don’t Nap on Naptown: Indianapolis Office Market Is Actively Transforming

by Kristin Harlow

You would be hard pressed to find another city more excited about transformation than Indianapolis right now. Previously known as “Naptown” by outsiders due to the sleepy feel the city exuded, those days are long gone. Indy has experienced incredible transformative activity in the past decade, and that extends to the commercial real estate office sector.  For the 18th consecutive quarter, this sector has experienced positive net occupancy gains, and 14 of those quarters have fallen below the 10-year average vacancy rate of 18 percent. Average asking rental rates have experienced healthy growth, with five-year rental rate growth at nearly 14.3 percent. Changing ownership  According to colleague Bennett Williams, director, the office landscape is really about change right now. “Long-term Indianapolis owners, such as Duke Realty, historically have developed and held their assets, but now that they are selling off their product, national and international firms are entering the market,” he says. “These new firms have been pushing all facets of the deal to maximize the return for their investors.”  Within the past five years, Indy has experienced many ownership changes of large office assets both in the suburban markets and the central business district (CBD). Cushman and Wakefield research …

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IllinoisMarket ReportsMidwestMidwest Market ReportsMultifamily

Legal Considerations for Condominium Deconversions in Chicago

by Kristin Harlow

With the demand for apartments in Chicago rising, many real estate developers have discovered a previously untapped supply of potential acquisition targets — residential condominium buildings. This includes older condominium properties plagued by large deferred maintenance obligations and stagnating or declining unit sales prices.  While the process for converting condominium buildings into rental properties can be more time consuming and labor-intensive than acquiring an existing apartment building, patient investors often see hidden value opportunities. They are able to capitalize on the spread between a building’s higher value as a rental property versus its lower value as an owner-occupied condominium building.  Purchasing all of the condominium units in an existing building is not your typical real estate purchase. Because of the unique issues involved and the potential voluminous amount of documents involved, both the condominium association (the Association) and the buyer should be represented by experienced counsel with the bandwidth to handle the simultaneous closing of potentially hundreds of units. The counsel should also have a deep familiarity with condominium law, and in particular, Section 15 of the Illinois Condominium Property Act (the Act). Statutory overview  Deconversion is the term that has become widely used in the real estate industry to …

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Market ReportsMidwestMidwest Market ReportsOhioRetail

Columbus Retail Development Keeps Pace With Rising Population

by Kristin Harlow

Columbus is a city on the rise. While that’s not exactly a new development, the fact that the arc of commercial development continues to bend up in Ohio’s capital city is noteworthy — and the pace of growth is impressive, to say the least. Columbus is the gateway market for the state of Ohio, with an impressive civic and economic resume. The counties making up the greater Columbus region have not only added approximately 160,000 jobs since 2010, they have brought in more than $8 billion in capital investments during that time. Columbus is home to The Ohio State University (OSU), one of the largest and most influential public universities in the nation; a long and expanding list of headquarters of national brands and businesses; and Columbus boasts a combination of arts, culture and commercial creativity that has led some to refer to it as the “Austin of the Midwest.” Downtown’s Arena District, home to the city’s professional hockey team the Columbus Blue Jackets, is the standard bearer for large-scale urban infill projects. The new Grandview Yard development brought additional mixed-use horsepower to the city. Retail expansions Easton Town Center is the major retail destination in Columbus, located in the …

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Market ReportsMidwestMidwest Market ReportsOfficeOhio

Startups, Millennials Drive Strong Fundamentals for Columbus Office Market

by Kristin Harlow

The Columbus office market continues to be diverse and thriving as the city becomes an economic hub in the Midwest. With a population that has grown to over 2.1 million people, and the eighth largest millennial population, Columbus has developed varied markets including concentrations in automotive, data centers, fashion/apparel, finance/insurance, food, healthcare, logistics, manufacturing, R&D, beauty, retail/e-commerce and technology. Columbus boasts 14 Fortune 1000 headquarters and five Fortune 500 companies, including Cardinal Health, Nationwide Insurance, American Electric Power, L Brands and Big Lots.  Columbus also hosts a multitude of other large businesses, which are drivers in the market, such as The Ohio State University, JPMorgan Chase and Huntington Bancshares. Having such large employers in the central Ohio region has helped draw other small businesses and given rise to a thriving start-up community, which is supported by Rev1 Ventures (a technology incubator), several community supported incubators and venture capital. A successful Columbus start-up, Cover My Meds, recently sold for $1.3 billion, and the city of Columbus hopes that this is the first of many similar success stories. With its recent sale, Cover My Meds is now planning a new 400,000-square-foot corporate headquarters in Columbus. Another notable project in Columbus is Facebook’s …

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IllinoisMarket ReportsMidwestMidwest Market ReportsOffice

Chicago’s Office Market: the Dichotomy Between Large and Small Law Firms

by Kristin Harlow

Over the past four years, Chicago’s legal sector has accounted for almost 750,000 square feet of negative net absorption despite a robust economy keeping demand for legal services of all types strong. While much has been written about large law firms shedding space as they reconfigure their offices with open floor plans that appeal to millennial and Generation Z talent, not all are following the same course of action. Finding the right size At one end of the spectrum, many large law firms are electing to relocate to ultra-efficient trophy towers, justifying the exorbitant construction costs and rent increases associated with building out new space in Class A+ towers  by shedding enormous amounts of space from their footprints. Of the four firms larger than 100,000 square feet that have elected to reduce their space when relocating to newly constructed towers since 2015, all have been able to shed roughly 35.5 percent of their prior footprints on average, with some firms achieving even greater reductions. For example, Holland & Knight attained a 45 percent space reduction in its recently announced move from 105,000 square feet at Citadel Center to 57,000 square feet at 150 North Riverside. There are also many large …

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IllinoisIndustrialMarket ReportsMidwestMidwest Market Reports

Infrastructure Investments Spur Industrial Development in Chicago Market

by Kristin Harlow

There is no question that all signs are pointing in the right direction for the nation’s second-largest industrial market. Midway through the year, the vacancy rate has stabilized below 7 percent for the first time in over a decade. On top of that, quarterly deliveries totaled 4.5 million square feet, of which 3.9 million square feet was speculative. In the second quarter, 7.9 million square feet was absorbed. So what’s next for Chicago’s industrial occupiers? Luckily there are two seasons in Chicago, winter and construction. With that, state and federal agencies are collaborating on massive transportation infrastructure improvements, and funds continue to flow to improve and expand our region’s road and rail infrastructure. In addition, the Illinois Tollway has been proactively deploying capital for projects. As a result, industrial occupiers are benefitting from an enhanced flow of goods and more efficient distribution, while the industrial development community has responded with new speculative and build-to-suit projects in key areas to take advantage of these transportation improvements. I-57 Corridor Before 2014, there wasn’t a full four-way interchange at I-57 and I-294, which represented one of the few rare nodes in the nation where two interstates crossed paths but did not allow a …

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