Midwest Market Reports

Downtown Columbus Office Market Devises Solutions to Parking Shortage

by Kristin Harlow October 19, 2017

In today’s world, nearly every company is a technology company. That trend is changing the way we do business and interact with one another. Ted Anglyn, president of the Parking Property Advisors, summarizes how these changes are impacting space utilization, which in turn affects parking needs: The space per square foot per employee in newly leased office space decreased from a range of 300 to 350 square feet per person in 2005 to 150 to 200 square feet in 2010. Some of this space reduction is linked to the recession, but much of it is because of open office design and the predominance of electronic storage, which reduces the need for physical file storage. This change has the potential to increase the typical office parking ratios that range from three to four spaces per 1,000 square feet to five to six spaces per 1,000 square feet. This begs the question of how we, as commercial real estate experts, address this gap. Parking, access and location are not new issues, but they are still major factors in today’s real estate environment. Landlords and economic development directors are all striving to address the needs of business today while also looking to future …

October 19, 2017

Market Reports Midwest Midwest Market Reports Minnesota Retail

Minneapolis Market Ready to Embrace Shifting Retail Trends

by Kristin Harlow October 12, 2017

The Minneapolis retail market ended the second quarter with a vacancy rate of 3.1 percent. The freestanding retail segment (buildings not contained within a shopping center) posted a vacancy rate of 1.8 percent. Over the past year, there has been a pattern of positive absorption in the market. The average quoted asking retail rental rate at the end of the second quarter was $13.94 per square foot. Comparably, a year ago this rate was $13.29 per square foot. Meanwhile, construction of retail properties has been on an upward climb. Within the past four quarters, 1.2 million square feet of retail space has been built, and there is an additional 892,910 square feet in progress, according to CoStar Group. Net absorption continues Retail net absorption was moderate in Minneapolis in the second quarter of 2017, totaling 484,120 square feet. That’s up from 135,536 square feet of positive absorption in the first quarter and 366,652 square feet in the fourth quarter of 2016. However, these figures are all down from the third quarter of 2016, when 638,183 square feet were positively absorbed in the market. Several tenants have moved out of large blocks of space in 2017. For example, Sears vacated 125,209 …

October 12, 2017

Indiana Market Reports Midwest Midwest Market Reports Retail

Northern Suburbs of Indianapolis See Vast Growth in Urban Core Development

by Kristin Harlow October 5, 2017

The northern suburbs of Indianapolis aren’t just following the latest trend of developing dense urban cores within suburban markets — they’re on the leading edge. In particular, Fishers and Carmel boast flourishing downtown environments that are walkable and bike-friendly. The idea is to develop a core urban area amid the suburban sprawl by creating activities and concepts that serve various community needs such as cool restaurants, shops, office and living space, evening events for adults, family activities and music and arts entertainment. It’s a lifestyle choice that more and more people prefer. While retail is struggling to regain balance in traditional environments, these mixed-use developments are resonating with their communities. Consumers are looking for experiential opportunities with multiple touch points, such as living, shopping, fitness, dining and entertainment options that integrate open green space. The suburbs of Indianapolis are responding to this trend. Grocery stores and medical facilities also are key to these types of developments, as residents desire the convenience of making one stop. Fishers blazes its own trail Fishers, located just northeast of Indianapolis in Hamilton County, officially became a city in 2015. The community elected a mayor with a strong vision. That vision included the urban core …

October 5, 2017

Industrial Market Reports Midwest Midwest Market Reports Missouri

St. Louis Industrial Market Is a Force to Be Reckoned With

by Kristin Harlow September 28, 2017

The St. Louis industrial market has enjoyed robust growth in recent years in part because of a growing economy, the rise of e-commerce and 3PL activity, favorable tax incentives and abatement packages and a movement to quality from existing users. With a population of 37.5 million in a 300-mile radius and over 96 million in a 500-mile radius, St. Louis is a distribution force to be reckoned with. Over the past five years, vacancy has dropped from 9 percent to 4.1 percent as of the second quarter of 2017. This number, paired with asking lease rates rising 9 percent during that same time frame, illustrate the health of the market. With more than 2.7 million square feet of space absorbed already this year, the 4.2 million square feet currently under construction will be absorbed quickly. Low vacancies have spurred the need for speculative space, which has increased at a rate not seen before in this market. Recent ongoing or completed projects include a 548,850-square-foot space at Aviator Business Park, 158,000 square feet at Fenton Logistics Park and two 100,000-square-foot buildings at Hazelwood Logistics Center. Having spec product on the market places St. Louis on the radars of users that require …

September 28, 2017

Kansas Market Reports Midwest Midwest Market Reports Missouri Retail

National Retail Tenants Enter, Expand Into Kansas City Market

by Kristin Harlow September 21, 2017

The greater Kansas City area retail market remains solid as a rock, despite CoStar Group’s mid-year report showing a slight decline in the average asking rental rate and a slight increase in vacancy. The retail vacancy rate in the second quarter of 2017 stood at 5.7 percent, up slightly from the previous quarter’s 5.5 percent. The average asking rental rate for retail is $13.05 per square foot, down from $13.07 in the previous quarter. Local, regional and national restaurant chains continue to expand with strong success throughout all areas of the Kansas City market, and “new-to-market” users continue to open their doors. Currently, there is approximately 570,000 square feet of retail space under construction in the Kansas City area and various mixed-use projects under development. Additionally, several new shopping center projects have recently been announced and are quickly gaining traction with restaurant and retail users. One of the major catalysts for the widespread retail and mixed-use boom throughout greater Kansas City is the various incentives that have been made available to developers including tax increment financing, community improvement districts, transportation development districts, tax abatement and other incentives. On both sides of the state line, as sites become more expensive and …

September 21, 2017

Kansas Market Reports Midwest Midwest Market Reports Missouri Office

Myriad Factors Help Explain Why Kansas City Office Market Has Not Reached Full Altitude

by Kristin Harlow September 14, 2017

The Kansas City office market is poised for increasing rental rates and decreasing vacancy rates for the remainder of 2017 and into 2018. Kansas City has realized its 14th consecutive quarter of increased rental rates (through March 2017), while vacancy has decreased in the overall metro area due to lack of new office construction and a steady pace of absorption. Several factors contribute to the complexity of why the market is good but not great, steady but not dynamic, with no one factor driving the steady upward climb. It has been like a plane taking off but never reaching full altitude. A contradiction of sorts is contributing to the rental rate increases and vacancy decline, while there is still a lack of newly constructed space. Bread-and-butter leasing absorption and a lack of new speculative development have been the main ingredients in the overall solid market for office activity. The velocity in the market is doing its job of generating positive absorption each quarter while rates inch up. The lack of large blocks of space has created a few new construction projects, but not as many as experts had predicted and hoped for. Costs on the rise Higher construction costs and …

September 14, 2017

Illinois Market Reports Midwest Midwest Market Reports Multifamily

The Middle Ground: The Next Great Opportunity for Chicago Multifamily

by Kristin Harlow September 7, 2017

Like other metros, Chicago is in the midst of an apartment boom where the hum of multifamily construction has become commonplace. In fact, approximately 8,000 new rental units are slated to deliver by the end of next year, according to Appraisal Research Counselors. Nearly 4,000 units are expected to deliver in 2019. The majority of this multifamily construction is concentrated on Class A rental high-rises. SixForty (640 N. Wells St.) by JDL Development and 8 E. Huron by CA Ventures — both of which The Habitat Co. will be managing — aim to meet the demand of those looking to be closer to the influx of new businesses moving downtown, as well as an urban lifestyle with robust dining and entertainment options. Like its metro counterparts, Chicago has become a city of renters. According to Harvard University’s Joint Center for Housing Studies, the U.S. homeownership rate hovered at just 64 percent at the start of 2017, following 12 years of decline, while the number of renters continued its upswing. In the past five years, an average of 1 million new renter households were formed every year, per the National Multifamily Housing Council. Indeed, these have been good years for those …

September 7, 2017

Market Reports Midwest Midwest Market Reports Missouri Office

Dramatic Rise in Tech Jobs Propels Growth in St. Louis Office Market

by Kristin Harlow August 24, 2017

Rapid growth in the tech sector is dramatically impacting the St. Louis office market. The city boasted an increase of 6,220 high-tech jobs during the last four years, over 2,000 of which were generated in the past year alone. Given the total number of tech jobs in St. Louis is 57,300, this amounts to a healthy growth rate of 10.9 percent. From well-known companies like Square Inc., Yurbuds and Answers.com to newer ones such as LockerDome, Aisle411 Inc. and MediBeacon Inc., the St. Louis region is a growing hot spot for innovative, new and expanding companies. These companies include leaders in the areas of plant and life sciences as well as financial services, information technology, advanced manufacturing and even rapidly growing pet care industries. Significant healthcare and biotechnology institutions in the region include Pfizer, Donald Danforth Plant Science Center, Solae Co. and Sigma-Aldrich. As capital injections slow in the coastal markets, St. Louis’ startup scene is thriving, attracting talent, new companies and investors from across the globe. According to Forbes, the city was named the fastest-growing metropolis for startups in 2016. Analytical website fivethirtyeight.com reaffirmed St. Louis’ increased appetite for startups, attributing the uptick in part to a combination of …

August 24, 2017

Market Reports Midwest Midwest Market Reports Office Ohio

Cleveland Office Market Sees String of New Projects

by Kristin Harlow August 17, 2017

Cleveland’s central business district (CBD) continues to make headlines as events like the Republican National Convention, the 2016 and 2017 NBA Championships and the 2016 World Series earned national attention. Within the office market, trends such as “flight to quality” and office-to-residential conversions, which are driven by a hot apartment market, have reduced surplus supply and lowered vacancies. This has shaped metrics positively, and has put Cleveland in a position of strength for the upcoming years. The news of the year has been the purchase of Key Tower by Millennia Cos., a local real estate developer known mostly for multifamily. The company moved its headquarters from a property in Valley View to two entire floors spanning approximately 40,000 square feet in Cleveland’s signature office tower. Almost immediately after, Forest City announced its headquarters move from the historic Terminal Tower to the Key Tower, backfilling almost 150,000 square feet of space that KeyCorp gave back in a downsizing strategy. By the first quarter of 2018, Key Tower will benefit from lobby and building amenity upgrades, and should see a vacancy rate of less than 10 percent. Another story on the horizon is the potential move of Medical Mutual of Ohio, now …

August 17, 2017

Iowa Market Reports Midwest Midwest Market Reports

Increased Development Activity in Cedar Rapids Flows Across Property Types

by Kristin Harlow August 10, 2017

These are momentous times for the Cedar Rapids economy. On the jobs front, the unemployment rate for the Cedar Rapids area stood at 3.2 percent in May, even tighter than the national unemployment rate of 4.3 percent for the same period. Meanwhile, the housing market recorded its lowest inventory of housing on the market in two years with 1,482 active listings in June 2017, 540 less than June 2015. On average, the number of days that houses were on the market dropped from 87 to 62 in the last year-and-a-half, while the median house price increased to $166,646. The city has seen dramatic housing, commercial and industrial growth in the last several years. Municipal and business leaders are addressing several issues, including: • affordable housing for entry-level workers and those earning 30 to 50 percent of the area median income; • recruitment of workers to fill an abundance of job openings; • more recreational, retail and cultural opportunities to attract Millennials to the city to fill the job openings; • completion of the flood protection system to reinforce the confidence of developers in creating projects along the Cedar River. What follows is an update on the performance of the major …

August 10, 2017

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