Tuesday, March 11, 2025
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Midwest Market Reports

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Back to Business? Detroit Office Market Shows Signs of a Burgeoning Recovery

by Kristin Harlow

By Andy Gutman, Farbman Group Until recently, the post-pandemic headlines and trend lines have been clear: the office market is struggling. Lower volumes and businesses closely evaluating their operational models and space needs in the wake of a COVID-altered world have prompted concerned conversations about what’s next for an evolving office sector.  Here’s the good news, however: the Detroit office landscape reflects a changing narrative around not only the commercial climate, but the entire city of Detroit.  To be clear, the office resurgence in Detroit has been modest, and is clearly still in its early stages. Whether you are entering a recession or starting a recovery, there is always a transitional period where sector activity is starting to change before the shift becomes impossible to deny.  Motown momentum While the understandable indecision and uncertainty of the last few years has led to some stagnation in the office space, many of the COVID-era lease expirations seem to have resolved and activity has been gradually, but steadily, picking up in the last six to 12 months. Decisions are being made and lease volume is trending up — but deals and leases are moving slower, are taking longer to get done and we …

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IndustrialMarket ReportsMidwestMidwest Market ReportsOhio

Examine the Cincinnati Industrial Market with Perspective, Patience in Mind

by Kristin Harlow

By Jeff Bender, Thomas McCormick and Seattle Stein, Cushman & Wakefield We’ve been doing this for a while. Every cycle with gang-busters demand and absorption comes to an end, as does every downturn. So, with the Cincinnati industrial market, we find ourselves in the doldrums since mid-2023, and we may not fully turn the corner until next year.  Perspective and context matter, though. We’re coming off record absorption and demand at the end of 2020 and through 2022, when we also closed the year with an unsustainable 1.7 percent vacancy rate. Before the entire world paused for COVID in early and mid-2020, we had a record year in 2019 as well.  While vacancy hovers around 6 percent at mid-year, that is basically the Cincinnati industrial market’s historical average. Four consecutive quarters of negative net absorption certainly defines “doldrums,” but that must be weighed against the previous 48 consecutive quarters of positive net absorption through mid-2023. We’ve also seen a slight increase in asking rental rates, up to $6.25 per square foot, despite negative absorption. So, despite a lackluster past 12 months, we have positive momentum, and that’s bolstered by many of the factors that have always made Cincinnati one of …

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Market ReportsMidwestMidwest Market ReportsOfficeOhio

Cincinnati Office Amenities: Then Versus Now

by Kristin Harlow

By Todd Pease, Michelle Klingenberg and Britney Aviles, JLL Since the Cincinnati office landscape upended during the pandemic, area businesses, building owners and broader leaders sought opportunities to help entice employees to return to the office, reclaim the area’s vibrancy and spur economic growth. These stakeholders realized that to entice employees back into the office, they would need to make it worth the commute.  Throughout this evolution, one thing continues to drive tenants into office buildings: high-quality amenities. Amenity demands have changed over the last few years and there are new ways for building owners to create spaces that engage employees. Amenities of the past Up until 2020, the standard “five days in the office” model meant that office buildings strived to accommodate as many professionals as possible while maintaining efficiency. The space planner was the lead consultant on planning offices, and they would work with tenants to design spaces in a way that most efficiently accounted for their company headcount.  Regarding office amenities, tenants most valued high parking ratios, conference facilities, gyms and locker rooms, and onsite food options. It was all about productivity and it didn’t matter if productivity took place in a gray cubical under florescent lighting.  …

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Market ReportsMichiganMidwestMidwest Market ReportsRetail

Detroit Retail Market: What’s Old Is New as Users Backfill Spaces

by Kristin Harlow

Metro Detroit’s retail market is characterized by strong tenant demand and investors’ eagerness to acquire and backfill vacant properties. In the downtown area, the revitalization efforts and adaptive reuse developments that started well before the pandemic continue. In fact, this year marked Detroit’s 100th commercial demolition, accelerated by $95 million in American Rescue Plan Act funding. Over the past five years, the City of Detroit has invested $1 billion in preserving or developing more than 4,600 affordable housing units. The hard work is paying off. Between July 2022 and July 2023, Detroit experienced population growth for the first time since 1957, according to the U.S. Census Bureau.  A major highlight this year was the reopening of the long-abandoned train station, Michigan Central Station. Ford Motor Co. redeveloped the property in the city’s Corktown neighborhood into a 30-acre technology and cultural hub. Until Aug. 31, the first floor will be open for “Summer at The Station,” where visitors can take self-guided tours and enjoy food and beverages outside. This fall, the first commercial spaces will begin opening to the public.  Meanwhile, developer Bedrock topped off construction of its Hudson’s project, the redevelopment of the former J.L. Hudson’s department store site. General …

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IllinoisIndustrialMarket ReportsMidwestMidwest Market Reports

Windy City’s Industrial Sector May Face Market Headwinds in 2024

by Kristin Harlow

By Chris Mergenthaler, DarwinPW Realty/CORFAC International The Windy City, as Chicago is often dubbed, has long been a vital hub of commerce and industry. Boasting 19 intermodal facilities operated by six Class I railroads, a top 15 worldwide cargo airport, and sitting at the confluence of seven interstate highways that allow goods to reach 25 to 30 percent of the U.S. population within one day’s drive, Chicago’s central location makes it a key logistics and transportation hub.  The robust labor force of over 4.7 million nonfarm employees, according to a first-quarter 2024 U.S. Bureau of Labor Statistics report, coupled with Chicago’s location and infrastructure, lay the foundation for a fundamentally strong industrial market.  While the long-term outlook of the Chicago industrial market remains positive, the Windy City is facing some headwinds as the market progresses through 2024. Uncertainty, whether positive or negative, has been a common theme of the Chicago industrial market since early 2023  as the market reacts to changing macroeconomic and geopolitical factors.  Uncertainty in the global supply chain, trade relations with other countries, as well as one of the longest freight market recessions in recent history, have led to an increase in direct and sublet space on …

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IllinoisMarket ReportsMidwestMidwest Market ReportsOffice

The Good News for Chicago’s Office Market

by Kristin Harlow

By Dougal Jeppe, Colliers Over the past few years, we have been inundated with less than positive industry news. While it’s true we are at a historic moment in commercial real estate, and users are facing complex, never-before-seen questions about how to use their space, there remain many positives as we head toward the second half of 2024. So, let’s take a look at the good news from the Chicago office market. For now, downtown Chicago remains a tenant’s market, a trend expected to persist throughout 2024. With over 47.2 million square feet of office space available, tenants have a plethora of high-quality options to choose from, making it an opportune time for businesses seeking favorable lease terms to secure space.  And companies are doing just that. There has been a recent uptick in large space renewals by long-term office tenants including some consolidations reflecting the commitments many Fortune 500 companies, such as Mesirow and PNC Bank, have made to the City of Chicago.  Notably, JPMorgan Chase announced plans to reinvest in Chicago by renovating its namesake tower and keeping its 7,200 employees in the city. Similarly, Google has committed to the Central Loop, and plans to move about 1,000 …

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KansasMarket ReportsMidwestMidwest Market Reports

Wichita Market Continues to Show Signs of Substantial Growth

by Kristin Harlow

By Bob Ale-Ebrahim, Occidental Management Wichita has seen significant growth in the commercial real estate market for two years in a row. There have been sizable investments in downtown, new industrial campuses, medical offices and higher education institutions. These projects are spurring strong momentum in downtown Wichita.  Wichita is a thriving hub of social, professional and cultural experiences with 350 new residential units under development with over 120 unique retailers and 4.1 million square feet of occupied office space. Add in the solid job growth, and Wichita continues to show significant signs of a solid and expanding economy.  Projects recently completed include the WSU Tech National Institute for Culinary & Hospitality Education (NICHE), The Hudson St. Francis (event space), The Arcade and the Chester I. Lewis Reflection Square Park. Projects under construction include Hi-Tone Lofts, Sutton Place student housing and the Broadway Plaza AC Marriott Hotel.  Projects in the planning stage are street improvements at Commerce and St. Francis streets, the Wichita Biomedical Campus, Wichita Transit multimodal facility, ballpark/riverfront stadium development, Exploration Place amphitheater and destination playscape, Delano Riverfront Stadium project and the Kingdom Building.  Wichita’s economic development generated more than $418 million in capital investment in 2023 alone. Remarks …

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Market ReportsMidwestMidwest Market ReportsOfficeWisconsin

Milwaukee Office Tenants Focus on Quality Spaces, Talent Retention

by Kristin Harlow

By Matt Hock, NAI Greywolf In the active landscape of Milwaukee’s commercial real estate market, several trends are reshaping the way businesses, both tenants and landlords, approach office spaces. From the enduring impact of remote work to the changing preferences of tenants, the market is currently witnessing a focus on quality, adaptability and talent retention. Flight to quality persists While the market continues to see the flight to quality we have experienced for the past few years, the Milwaukee office sector is now also experiencing what has been termed as “competing with the couch.” Companies are battling the challenge of bringing employees back to the office and with that they are looking to solve this issue with providing spaces that offer more than your standard office setup.  Basically, they are looking for amenities and features within the office that entice workers to come back, compared with what remote workers have with their home office setup. So, competing with the comforts of home, or the couch, in these cases. This has catalyzed a “flight to quality,” where businesses are investing in premium office spaces designed to enhance the overall employee experience. In effort to attract and retain top talent, companies are …

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Market ReportsMidwestMidwest Market ReportsNebraskaOffice

Omaha’s Office Market Continues to Buck National Trends

by Kristin Harlow

By Kristi Andersen and Melissa Torrez, CBRE The office market remains one of the most uncertain commercial real estate sectors across the country. Facing declining asset values, rising interest rates and the increase of remote and hybrid work, many of the nation’s office markets are struggling.  Key indicators that typically track the health of the market include net absorption, rental rates and vacancy rates. Not surprisingly, given the recent challenges, net absorption of office space nationwide is currently negative, rents have gone down and vacancy is high. However, Omaha continues to buck those trends. A solid, steady economy The midwestern city boasts a diverse economy with agriculture, food processing, insurance, transportation, healthcare and education all being leading drivers. Warren Buffett calls Omaha home, as do several Fortune 500 corporations such as Berkshire Hathaway, Union Pacific Railroad, Mutual of Omaha and Peter Kiewit Sons’ Inc.  The Omaha economy consistently outperforms other metro areas, particularly during economic downturns. In December, the U.S. Bureau of Economic Analysis released 2022 Gross Domestic Product (GDP) data for counties and metropolitan areas. Douglas County, the most populous county in Nebraska, had the highest annual GDP growth at 9.2 percent for U.S. counties with populations greater than …

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Market ReportsMidwestMidwest Market ReportsNebraskaRetail

Tenant Demand, Construction Slowdown Lower Omaha’s Retail Vacancy Rate

by Kristin Harlow

By Mandi Backhaus, The Lerner Co. As we finish out the first quarter of 2024, we reflect on the Omaha retail real estate market with consideration to the internal and external factors of trends, challenges, opportunities and the state of the economy. It can be said that the Omaha metropolitan area remains steadfast throughout difficult times. With its robust and diverse nature, anchored by industries such as healthcare, technology and finance, Omaha, although sometimes called a “flyover city,” remains a hidden gem for those looking for a steady yet vital lifestyle at an attractive cost.  This favorability trickles down to how real estate is valued and utilized in the area. According to a Merrill Lynch article, approximately $84 trillion in assets is set to change hands over the next 20 years, from baby boomers onto their children and so on. While the various generations may invest differently, one constant remains: real estate.  From a national standpoint, the unstable scenario results from a blend of factors, with inflation, interest rates and the collapse of banks in early 2023 being particularly prominent. This perfect storm had left the industry in a precarious position. The Mortgage Bankers Association revealed a 56 percent drop …

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