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Midwest Market Reports

HospitalityMarket ReportsMichiganMidwestMidwest Market Reports

I-94 Corridor From Detroit to Ann Arbor Piques Hotel Investors’ Interest

by Christina Cannon

Even as hotel operators continue to report steady gains in revenue per available room (RevPAR) nationally, Wall Street execs have begun to downgrade the lodging outlook, painting an entirely different picture. This disconnect is rooted in fears that the year-over-year growth in RevPAR is not sustainable in the current climate and that a spate of high-profile mergers and acquisitions among national operators must dictate a lower assessment of the industry. In spite of these concerns, demand continues to outpace new supply, both of which are occurring at a strong clip. Though industry observers may point to tepid occupancy as a concern, robust increases in average daily rates are leading to continued growth in RevPAR nationwide. How does Detroit stack up?  Similar to the national hotel industry, Detroit is registering these same trends. On one hand, the market has recorded an increase in supply and a decrease in occupancy. On the other hand, average daily rates are steadily rising and RevPAR is growing overall, a sign of a strong hotel market. STR’s April 2016 report on the U.S. hotel pipeline indicated 1,046 rooms under construction in metro Detroit, or approximately 2 percent of the existing supply. This supply increase is at …

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IndianaMarket ReportsMidwestMidwest Market ReportsMultifamilyUncategorized

College Students, Tech Jobs Are Drivers of Niche Apartment Construction

by Christina Cannon

Growth in the Indianapolis downtown multifamily market is as dynamic as the city itself. Since 2013, 3,000 units have been delivered and leased up rapidly. The vacancy rate registers 4.5 percent in a submarket that historically has seen vacancy rates of around 8 percent. Demand is healthy and growth continues, with another 283 units scheduled for delivery by the end of this year. A unique contributor to this multifamily construction boom is the downtown campus of Indiana University-Purdue University Indianapolis (IUPUI), the IU Law School and the IU Medical School. A sudden building spree of more than $100 million of student-focused projects is occurring downtown near IUPUI. With more than 1,000 units currently under construction or in the works, these new deliveries signal a real change for IUPUI from a commuter orientation to that of a residential campus. These off-campus locations will likely appeal to young professionals as well, and savvy developers are making certain to provide conventional units as part of their mix. The largest such development currently under construction is Trinitas Ventures’ 193-unit, 669-bed project at the northeast corner of Michigan Street and Capitol Avenue. Known as Lux On Capitol, the student housing development is due to open …

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Market ReportsMichiganMidwestMidwest Market ReportsRetail

Creativity is Driving Force Behind Keeping Metro Detroit Retail Market Fresh

by Christina Cannon

To get a sense of what is happening in Southeast Michigan retail these days, the place to start looking is the past. It’s interesting and important to recognize that the seeds of many of the retail trends manifesting themselves today were planted years ago. Fortunately, the overall retail marketplace in Southeast Michigan remains generally strong. The marketplace may change over time, but one constant that remains unaltered is that quality rises to the top. Thoughtfully designed and developed retail projects in favorable locations have always done well — and that has remained the case through recessionary ups and downs and the whims of a consumer base that can be quick to change. Rethinking e-commerce  Today, one of the most discussed topics of conversation for any retailer is the competitive pressure of the online and mobile marketplace. The convenience of virtual transactions, the rise of Internet powers like Amazon, and an increasingly tech-savvy population of shoppers who are comfortable and confident shopping online for a wider variety of goods and services has prompted the vast majority of brick-and-mortar retailers to work hard to carve out their own space in the digital marketplace. Online and mobile growth has had less of a …

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IndustrialKansasMarket ReportsMidwestMidwest Market ReportsMissouriUncategorized

Industrial Developers Shift into High Gear in Metro Kansas City

by Christina Cannon

Kansas City’s industrial market is experiencing an incredible construction boom that is both market-driven and not limited to just one area or particular deal. In the past two years, multiple, diverse industries and tenant categories have shown interest in a variety of options around the area. The buildings going up and the tenants filling them cannot be pigeonholed into any single, narrow category. It’s encouraging that the entire market is doing well, not just one particular segment or submarket. The success of the market is widespread across the region. New buildings have gone up in Johnson County, Jackson County and Wyandotte County in the past few years. Projects also are moving forward in Platte County, up by Kansas City International Airport, and also in Executive and Northland Park. Additionally, Kansas City is providing options to companies of all sizes, from giant, bulk users to smaller users seeking the features associated with new development. New buildings such as Westlink Industrial Park in Johnson County and Kaw Point in Wyandotte County have offered tenants looking for 50,000 to 100,000 square feet the opportunity to access the amenities and features of modern construction that are associated with new bulk development. Both of those …

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Market ReportsMidwestMidwest Market ReportsMissouriOfficeUncategorized

New Headquarters Construction Drives Office Growth Along Highway 40

by Christina Cannon

The office market in Chesterfield, a suburb of St. Louis, has undergone tremendous growth in the past two years. In particular, the I-64/Highway 40 corridor within the West St. Louis County submarket has experienced a flurry of activity highlighted by the construction of several corporate headquarters as well as expansions. The corridor, which stretches from Clayton to Chesterfield, boasts a highly visible central location, proximity to high-end housing that appeals to corporate executives, newer buildings that bode well for future resale or leasing, and convenient interstate access. With a Class A vacancy rate of only 7.6 percent, the West St. Louis County submarket is experiencing a shortage of available blocks of office space of 50,000 square feet or more. Corporations desiring to locate along the prestigious corridor are relocating from older Class B space to existing or build-to-suit Class A properties. In fact, new construction during the last two years added 774,000 square feet of office space to this submarket, of which all but 50,000 square feet was already committed upon delivery. Less than 50,000 square feet was considered speculative. Magnet for headquarters  RaboAgrifinance will relocate its corporate headquarters from Creve Coeur Pointe to the new Delmar Gardens III at …

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IllinoisMarket ReportsMidwestMidwest Market ReportsRetailUncategorized

Why Specialty Fitness Centers Are Enjoying a Healthy Run in Chicago

by Christina Cannon

Today we have a choice in virtually every retail segment, and choosing a place for your favorite workout is no different. Specialty health clubs are a growing trend in Chicago, ranging from cycling at Flywheel or SoulCycle to high-impact cardio and weights at Shred415, Orange Theory or Barry’s Boot Camp. You can take ballet-inspired classes at Pure Barre, The Bar Method, Daily Method or The Barre Code, or yoga at Core Power Yoga, Yoga Six or Yoga By Degrees. You can even take rowing classes at GO Row or practice wake boarding with ChicagoSUP. But classes are not cheap, ranging from $20 to $30 per visit to unlimited yearlong memberships for $1,900. Despite the high price tag, these types of workouts are increasingly popular. While a full-service health club offers much more than just one type of workout, specialty fitness does just that — it specializes. Unique features  These fitness classes focus on just one exercise, making the classes more challenging and better with teachers who are experts. They also provide different levels of classes compared with a gym, which may only offer one yoga, weight or spin class. Specialty fitness spaces are smaller than a full-service health club, but …

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IllinoisMarket ReportsMidwestMidwest Market ReportsOfficeUncategorized

Market Conditions Ripe for Office Acquisitions by Single-Tenant Users

by Christina Cannon

Across the country, and specifically in the Chicago corridor that leads to the northwestern suburbs, a wide range of businesses are debunking the commonly held notion that urban migration is diminishing the suburban marketplace. The evidence is indisputable. While Fortune 500 firms are leasing hundreds of thousands of square feet in Chicago’s suburbs, small to midsize firms are facilitating the expansion of their businesses by acquiring single-tenant facilities in the burbs as well. Since 2014, 20 businesses in Chicago’s northwest suburbs have acquired buildings totaling more than 1.3 million square feet of space, according to Colliers International. The cumulative purchase price of these assets exceeds $97.1 million. This level of activity compares favorably to statistics for the entire suburban marketplace that show 63 buildings totaling approximately 4.7 million square feet and valued in excess of $307.7 million were sold during that time (see table). Four driving factors  This healthy level of activity can be attributed to a variety of factors, four of which we highlight in this piece. • Access to capital — Banks are lending again and exhibiting greater levels of caution after years of retreating to the sidelines. Additionally, the cost of capital is very reasonable, in spite …

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IllinoisIndustrialMarket ReportsMidwestMidwest Market ReportsUncategorized

Don’t Expect Metro Chicago’s Industrial Boom to Tail Off Anytime Soon

by Christina Cannon

The Chicago industrial market continues its charge full steam ahead in 2016, driven by strong fundamentals, our diverse economy, intense investor demand and constrained development. After a strong first quarter, the second quarter seems to be keeping pace. Demand remains high and continues to outpace new construction. We will also see more new projects announced as developers see continued success with existing projects. At the end of the first quarter, the overall vacancy rate in metro Chicago was slightly over 7 percent, down 10 basis points from the end of 2015, according to CoStar Group. All of the major submarkets posted vacancy rates of 10.1 percent or lower. Robust leasing activity Positive absorption in the first quarter was approximately 3.4 million square feet. Chicago has seen positive absorption every year since 2011, and this year looks to be headed in the same direction. The most active submarkets of O’Hare, I-55 and I-80 recorded vacancy rates of approximately 4.8 percent, 7.4 percent and 8.9 percent, respectively. Vacancy rates in those submarkets will continue to improve as speculative development is gobbled up as quickly as it is built, and existing product continues to get leased up. The I-80 and I-55 submarkets alone …

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Market ReportsMidwestMidwest Market ReportsRetailWisconsin

From Brews to J. Crew: Retailers Tap Revamped Milwaukee-Area Warehouses

by Christina Cannon

In real estate, where some see an eyesore, others can sometimes find opportunity. Such was the case with The Mayfair Collection, a new regional shopping center in Wauwatosa, Wis., located approximately 10 miles west of downtown Milwaukee. Just a few years ago, the 69-acre site was filled with old, obsolete industrial buildings that were mostly unoccupied, but the City of Wauwatosa and our firm, Chicago-based HSA Commercial, shared the vision of transforming the vacant industrial park into a vibrant mixed-use community. The project initially involved adaptively repurposing 1 million square feet of warehouse space into a contemporary retail destination that has brought national retailers like Nordstrom Rack and Saks Fifth Avenue OFF 5TH to Wisconsin. The development also has helped launch new national brands such as J. Crew Mercantile and Off/Aisle by Kohl’s. The once-empty industrial structures are now completely transformed into lively shops and restaurants that are drawing customers from all over southeast Wisconsin. Phase I: Find the right mix What historically made the site attractive for industrial use — its highly accessible location, at the interchange with U.S. Highway 45 and Burleigh Street, less than five miles north of Interstate 94 — also made it ideal for retail, …

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Market ReportsMichiganMidwestMidwest Market ReportsOffice

Detroit’s Downtown Revival, Led By Dan Gilbert, Gains Momentum

by Christina Cannon

Detroit has become a five-sport town: The Pistons, Red Wings, Lions and Tigers have been joined by Dan Gilbert’s Bedrock Real Estate Services LLC, the entity that has made a sport out of assembling a downtown Detroit portfolio of commercial buildings. In the process, Gilbert is becoming the city’s biggest advocate. Talking about Detroit’s office market without including Gilbert’s latest investment is akin to discussing Detroit’s economy and excluding the automotive industry. The Quicken Loans founder and principal shareholder of the Cleveland Cavaliers put himself on the region’s real estate game board when the recession ended and he started buying up properties. To date, Gilbert and his team have amassed a portfolio of more than 85 properties in and around the downtown comprised of more than 13 million square feet and valued in excess of $2.2 billion. The March 2015 acquisition of the 43-story One Detroit Center at 500 Woodward Ave. — which has since been renamed Ally Detroit Center — and attached 2,070-space parking deck for well over $100 million was his biggest deal during the acquisition spree. Ally Financial is completing its relocation to the building this spring from the nearby Renaissance Center, as well as bringing employees …

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