Midwest Market Reports

Industrial Developers Shift into High Gear in Metro Kansas City

by Christina Cannon July 6, 2016

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 …

July 6, 2016

Market Reports Midwest Midwest Market Reports Missouri Office Uncategorized

New Headquarters Construction Drives Office Growth Along Highway 40

by Christina Cannon June 30, 2016

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 …

June 30, 2016

Illinois Market Reports Midwest Midwest Market Reports Retail Uncategorized

Why Specialty Fitness Centers Are Enjoying a Healthy Run in Chicago

by Christina Cannon June 23, 2016

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 …

June 23, 2016

Illinois Market Reports Midwest Midwest Market Reports Office Uncategorized

Market Conditions Ripe for Office Acquisitions by Single-Tenant Users

by Christina Cannon June 16, 2016

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 …

June 16, 2016

Illinois Industrial Market Reports Midwest Midwest Market Reports Uncategorized

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

by Christina Cannon June 9, 2016

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 …

June 9, 2016

Market Reports Midwest Midwest Market Reports Retail Wisconsin

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

by Christina Cannon May 26, 2016

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, …

May 26, 2016

Market Reports Michigan Midwest Midwest Market Reports Office

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

by Christina Cannon May 19, 2016

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 …

May 19, 2016

Market Reports Midwest Midwest Market Reports Multifamily Ohio Uncategorized

Why Cleveland’s Thriving Downtown Apartment Market is on Solid Footing

by Christina Cannon May 12, 2016

It’s no longer a secret. Residential housing is one of the biggest stories to hit Cleveland’s central business district in over a quarter century. The only thing more impressive than the long list of residential projects that have been completed over the last five years is an even longer list of residential projects that are either planned or under construction. Despite this prolonged surge in activity, several questions remain, with most centered around the viability and sustainability of this sector. But before we take a look forward, let’s first take a look back. Downtown Cleveland has added approximately 1,700 new rental units over the past five years, with the total residential rental inventory standing at nearly 5,900 units. Last year alone saw 573 new units come on line as the direct result of converting nearly 500,000 square feet of former commercial and office space to residential. But despite this additional inventory, the occupancy rate has increased nearly 2 percent over the last five years, ending 2015 at 97.5 percent. Population surge in CBD The downtown area contains approximately 14,000 residents, a 79 percent increase since 2000, according to a newly released report from the Downtown Cleveland Alliance. The average rent …

May 12, 2016

Market Reports Midwest Midwest Market Reports Office Ohio

Dayton Office Market Continues Steady Recovery Amid Urban Renaissance

by Christina Cannon April 28, 2016

For the Dayton office market, it’s all about timing. In one of Miami Valley’s largest office leases in recent memory, CareSource early this year signed a five-year lease to occupy 50,000 square feet on two floors at the 486,000-square-foot Kettering Tower downtown. The nonprofit managed healthcare plan is the largest Medicaid plan in Ohio and the second largest in the United States. CareSource said it will assess current and future business needs and redistribute business units from corporate headquarters and offices at 40 W. Second St. to Kettering Tower. In addition, some staff hired during the first quarter of this year also will be placed at the new location. The CareSource location at Kettering Tower increases the company’s footprint to nearly 600,000 square feet in downtown Dayton. The four downtown Dayton locations — including CareSource’s corporate headquarters at 230 N. Main St., Ballpark Village at 220 E. Monument Ave., offices at 40 W. Second St. and Kettering Tower will support 2,200 staff. The $6 million build-out of the multi-tenant Kettering Tower is specifically designed to accommodate CareSource. Tower Partners LLC, an entity whose investors include New York businessman Albert Macanian, owns the building. But the deal bringing 300 new jobs …

April 28, 2016

Market Reports Midwest Midwest Market Reports Multifamily Nebraska

Why Omaha Apartment Owners Should Expect Another Banner Year

by Christina Cannon April 21, 2016

With a three-year average occupancy of 96 percent, Omaha’s apartment market has displayed strong fundamentals that we expect to continue this year and beyond. Given the strong tailwinds created by Omaha’s healthy economy — the local unemployment rate stood at 3.6 percent in January compared with 4.9 percent nationally — it is not surprising that occupancy is high, rents and revenues are rising and new developments continue. According to the recently released IREM fall 2015 Omaha Metropolitan Area Apartment Survey, the year-end market occupancy rate was a strong 96 percent, with the lowest submarket at 94 percent and the highest at an outstanding 98 percent. On a 10-year historical basis, the Omaha market’s occupancy rate has ranged from a low of 92 percent in 2008 to a high of 96 percent in both 2013 and 2015. Any owner will tell you a solid two percent gain in occupancy over a multi-year period has a significant impact on net operating income. Both rents and revenues continue to grow within the Omaha market. Most owners have been raising rents between 2 and 4 percent a year, and in some cases 5 percent. The general expectation is that rents and revenues will both …

April 21, 2016

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