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Midwest Market Reports

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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IndustrialMarket ReportsMidwestMidwest Market ReportsOhio

Location, Business-Friendly Climate Propel Columbus Industrial Market

by Kristin Harlow

By Dan Wendorf, JLL The industrial landscape in Columbus is not just thriving — it’s breaking records. As highlighted in JLL’s fourth-quarter 2023 Columbus Industrial Insights Report, 2023 marked another milestone year for the market. With over 19 million square feet under construction and surpassing 2022’s nearly 7 million-square-foot total, Columbus has solidified its position as a national industrial hub.  The report also showed total vacancy increased 3.8 percent year over year due to 15.7 million square feet of speculative completions, which finished the year at 30 percent leased. Although a modest uptick, Columbus continues to diversify its industrial scene from exclusively being known as once a “logistics and parcel delivery hub” to now being recognized for its growth in advanced manufacturing and data centers.  As exemplified by investments from Facebook, Google and Meta, the market has evolved into a multifaceted industrial powerhouse. In particular, investments in microchip factories have stimulated the need for additional warehousing from suppliers, and this trend is expected to continue in the coming year. This article explores how Columbus has become a key player in industrial development, factors motivating businesses to move their operations to central Ohio and what’s in the pipeline to keep an …

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Market ReportsMidwestMidwest Market ReportsOhioRetail

National, Regional Retailers Discover Columbus Market Is Thriving

by Kristin Harlow

By Spencer Jordan, Steiner + Associates The retail environment in Columbus, Ohio, is not just among the most unique and diverse in the Midwest, but in the nation. Columbus currently enjoys the fourth highest concentration of retail headquarters of any American city. Familiar names like Bath & Body Works, Victoria’s Secret, Express, Big Lots! and Chipotle all call Columbus home, and brands like Lululemon have significant logistics and distribution infrastructure in the city. But why is Columbus such a popular retail hub? What is the state of Columbus retail today? What sectors and neighborhoods are performing, and what are the trends to monitor when it comes to the future of retail in the Columbus market? Why Columbus? Among the many factors driving Columbus’s sustained retail success, the most important piece of the puzzle is the big picture: the city is thriving — and not just economically. Columbus placed eighth nationally in WalletHub’s recent rankings of all 50 state capitals, coming in ahead of popular high-profile markets like Denver, Nashville and Boston. The rankings are based on affordability, economic well being, quality of health and education, and quality of life. Columbus is one of the strongest Midwest markets in GDP per …

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IllinoisIndustrialMarket ReportsMidwestMidwest Market Reports

Chicagoland Industrial Market Remains Resilient

by Kristin Harlow

By Noel Liston, Core Industrial Realty The 10 major submarkets that comprise the broader Chicagoland industrial market all performed at or above expectations in 2023. While absorption was not as robust as the pandemic boom that saw back-to-back record years, 2023 was a solid year for absorption and a strong year in rental growth throughout the broader market.  Significant deliveries of speculative developments were offset with solid absorption by manufacturing, assembly and food & beverage-related industries that picked up the slack left from a less enthusiastic e-commerce market. Broadly speaking, the greater Chicagoland industrial market started 2024 with a vacancy rate of ±7.3 percent. This vacancy rate is up from the low 5 percent range the market averaged for the second half of 2023.  Assuming equilibrium (a market that favors neither tenant nor landlord) for the market is historically a ±6 percent vacancy rate, the current vacancy rate can be deceiving. This is, in large part, due to the jump in vacancy as a result of the delivery of a significant amount of larger, speculative industrial developments in certain submarkets where land zoned for industrial with relatively good access to a major highway or interstate was still available.   Further, …

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IllinoisMarket ReportsMidwestMidwest Market ReportsRetail

Chicago Retail Market Is Busy as Tenants Reconfigure Store Sizes

by Kristin Harlow

By Brad Belden, Colliers Now that the final numbers are in for 2023, we can undoubtedly say that the worst of COVID is behind us in the world of retail leasing. 2023 saw increased rental rates, longer-term deals and record low vacancy rates across the nation.  It’s great news; retail is not dead and it could even be argued that it’s never been busier. But it’s also… different. On average, leases are shrinking and how space is used is changing. And demand, coupled with customers’ increased desire to visit evolving concepts, is making for another busy year ahead for this segment of the industry.  So far, 2024 is off to a great start and this year’s trends are already taking form. On the consumer side, a significant shift back to bricks-and-mortar retail is already underway as consumers seek to connect with retailers again and make shopping an “experience.”  On the retailer side, two factors are driving change: the emergence of AI, which is allowing many retailers to analyze and customize the customer experience while improving operations behind the scenes to boost sales (regardless of the tenant type, retail tenants in Chicago and across the U.S. have one thing in common: …

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HealthcareMarket ReportsMidwestMidwest Market ReportsMinnesota

Twin Cities Medical Office Landscape Evolves With Conversion Initiatives

by Kristin Harlow

By Louis Suarez, Misty Bowe and Brian Bruggeman, Colliers The Twin Cities medical real estate market has experienced many different phases over the last few years, reflecting the region’s journey toward post-pandemic recovery. Currently, this sector is experiencing a notable shift that is fueled by rising vacancy rates for on-campus hospital properties contrasted with a low vacancy rate of 4.9 percent for off-campus medical buildings.  This shift is significantly influenced by the push to outpatient surgery centers, ongoing financial pressures and consolidation trends. Additionally, experts in this region are predicting a scarcity of new medical building supply in 2024, which is expected to exert ongoing pressure on rental rates for existing medical office space, despite the stabilization of interest rates that is anticipated to come later this year.  As of the fourth quarter of 2023, the current construction pipeline consists of a mere 84,000 square feet, all of which is spoken for with no additional supply projected to come to market in the next year, which is a nearly 80 percent decrease year-over-year. The dramatic increase in interest rates, rising construction costs and capital constraints have pushed asking rents for new proposed projects to well above $30 per square foot …

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