Midwest Market Reports

Good Times Continue to Roll for Apartment Owners in Metro Cleveland

by Jeff Shaw September 10, 2015

Cleveland will host the Republican National Convention in July 2016. In response, hospitality firms have steadily expanded payrolls with the addition of 9,200 workers, the biggest relative gain among all employment sectors. The overall labor force will expand 1.6 percent this year, or by 16,500 new workers. Thousands of these newly employed workers are seeking rental housing, particularly in the urban core where housing prices are much higher than the metro average. In addition, the urban core’s transformation to a 24-hour city has created its own momentum. Demand Exceeds Supply High net absorption outpaced construction during the past four quarters, putting downward pressure on vacancy. Last year, average vacancy dropped 160 basis points as tenants absorbed more than 3,400 units. In the last 12-month period ending in June, nearly every Cleveland submarket posted a drop in vacancy. Net absorption is expected to end the year more than 40 percent higher, with vacancy projected to slide 50 basis points to 3.4 percent, one of the lowest levels in the country. Builders have responded by expanding the project pipeline. More than 1,700 rental units have already come on line during the past year. However, compared with almost any other major metro in the country, this is just a drop in the bucket. …

September 10, 2015

Industrial Market Reports Midwest Midwest Market Reports Missouri

E-Commerce Drives Demand for Modern Bulk Distribution Centers in Kansas City

by Jeff Shaw September 3, 2015

E-commerce and business-to-consumer companies could overtake the automotive industry when it comes to driving growth in Kansas City’s modern bulk distribution segment of the industrial market. Auto suppliers filled the first wave of new space in the Kansas City industrial market. But now that those needs have primarily been met, new industry sectors are needed to fill the second wave of development. E-commerce and business-to-consumer companies could be the dominant users. These companies are capitalizing on the fact that 85 percent of the U.S. population can be reached from Kansas City in a two-day truck drive, according to KC Smart Port, a nonprofit organization that works to attract freight-based companies to the Kansas City area. Through in-house transportation studies, KC Smart Port is coming to the conclusion that it strategically makes sense for the distribution centers of e-commerce companies to be located in Kansas City. Recommendations from UPS, FedEx and third-party consultants also help e-commerce companies — located on both the East and West coasts — make that decision. Business-to-consumer companies operating a one-, three- or five-building model find that Kansas City works well logistically as it is in the middle of the country. Inherent Advantages Locating in Kansas City allows …

September 3, 2015

Market Reports Midwest Midwest Market Reports Missouri Retail

Hungry to Expand, Fresh-Format Grocers Boldly Enter St. Louis Market

by Jeff Shaw August 27, 2015

Family-owned grocers Schnucks and Dierbergs solidified their position as the primary grocers across the St. Louis metro area when Schnucks acquired 57 stores from National Supermarkets in 1995. But after several years of these two chains dominating the grocery sector, an influx of fresh-format grocery stores is shaking up the market by offering shoppers fresh, local, organic — and in some cases more affordable — whole food choices. These new chains — typically half the size of traditional grocers — appeal to a younger customer, as well as those looking to supplement their grocery shopping or find items for special occasions. Consumers interested in the offerings of fresh-format grocers are willing to drive farther to shop at their stores. New Entrants Abound Fields Foods, a “homegrown” fresh-format grocer, opened its first location in the Lafayette Square neighborhood in January 2014. The newly constructed 37,000-square-foot, stand-alone building is just south of downtown’s central business district. The grocer markets produce provided by farmers within 100 miles of the store, and also features a wine bar and personal shoppers. This unique, full-service grocer is locally owned and was the first fresh-format store to enter the metro area. Fields Foods has plans to expand …

August 27, 2015

Market Reports Michigan Midwest Midwest Market Reports Multifamily Retail

Why Today’s Development Wave in Downtown Detroit Has Staying Power

by Jeff Shaw August 20, 2015

Detroit is in a state of transition. It’s a process that has been simmering for some time, but really began in earnest about five years ago. This article discusses some of the property types, developments and neighborhoods that continue to reshape downtown Detroit and offers some insight into what the city might look like in five to 10 years. Fueled by a strengthening economy, there is an air of excitement in the Motor City, and the development climate is increasingly vibrant. The nexus of development and redevelopment activity is occurring in the same places — Downtown, Midtown, New Center — that were at the core of the city’s renaissance a century ago. In some respects, today’s Detroit is reinventing itself in the same way. Residential leads the way The foundation of Detroit’s development resurgence is residential growth. People are continuing to move to Detroit to work and to live — a trend that has accelerated dramatically in the last few years with downtown apartment buildings reporting upwards of 98 percent occupancy. It’s a phenomenon that shows no real sign of slowing down. It’s also an important and natural first phase. With residential comes the corresponding demand for dining, retail and …

August 20, 2015

CSRT’s new 11-story corporate headquarters in downtown Cedar Rapids

Industrial Iowa Market Reports Midwest Midwest Market Reports Multifamily Office Retail

Cedar Rapids Rises to Commercial Real Estate Challenge Following Major Flood

by Jeff Shaw August 13, 2015

In the April 2014 edition of Heartland Real Estate Business, I pointed out that the recovery from the historic 2008 flood was nearing completion in Cedar Rapids, a city of approximately 129,000 residents. The last of the damaged city facilities, a recreation center in the Time Check neighborhood on the city’s northwest side, has been demolished. Taking its place will be a new 17,000-square-foot recreation center currently under construction. In July, the Cedar Rapids City Council approved the $600 million flood protection system alignment on both sides of the Cedar River; all the flood system funding plan is now in place, except for the federal appropriation of $78 million pending approval in Congress. Three sections of flood protection are complete or under construction. The National Civic League recognized this feat in 2014 when it named Cedar Rapids as a recipient of the All-America City Award, which recognizes communities that overcome citywide challenges and achieve uncommon results. (The National Civic League is a nonprofit organization that advocates for transparency, effectiveness, and openness in local government.) The city’s strong recovery following the devastating flood in 2008 is evident by the accolades it has received from a variety of media outlets and interest …

August 13, 2015

Market Reports Midwest Midwest Market Reports Mixed-Use Wisconsin

Proposed New Arena for Milwaukee Bucks Could Lead to Development Run

by Jeff Shaw August 6, 2015

An article highlighting the fortunes of the Milwaukee Bucks that appeared July 6 on CBSSports.com couldn’t be more accurate. “There’s something powerful and sustainable growing in Milwaukee, rising out of the weeds of small-market irrelevance and into a team you’re going to want to watch next season,” wrote Matt Moore who covers the NBA. Since New York hedge fund investors Wes Edens and Marc Lasry purchased the Bucks last year for $550 million, the team has been on the rise. Founded as an expansion team in 1968, the Bucks went from being the worst team in the league during the 2013-14 season to the sixth seed in the 2014-2015 playoffs. The new owners, along with former owner Herb Kohl, have committed $250 million for the construction of a new $500 million arena as a replacement for the team’s current home, BMO Harris Bradley Center, which opened in 1988. But if the new arena is not built by the 2017 season, Milwaukee could be left without an NBA team. Once complete, the entire development, which would sit on approximately 30 acres in the Park East corridor, could include up to 3 million square feet of office, entertainment, retail, residential and hotel …

August 6, 2015

Market Reports Midwest Midwest Market Reports Office Ohio

Cincinnati’s CBD Experiences Flurry of Development in Multiple Sectors

by Jeff Shaw July 16, 2015

Cincinnati’s central business district (CBD) is humming with activity, particularly in the office sector with nearly 13 million square feet of office space spread across 54 buildings. Class A office space has been in high demand in the past year as approximately 245,000 square feet was absorbed by area businesses, according to DTZ. During that time, the vacancy rate declined 380 basis points and now sits at 16.4 percent. The Banks, an 18-acre mixed-use development on the Ohio River between Great American Ball Park and Paul Brown Stadium, is driving much of the recent activity downtown. It links entertainment venues and connects the CBD to the waterfront via a riverfront park. A much-anticipated 340,000-square-foot office building is currently under construction there. The Banks’ office building, developed for General Electric’s new U.S. Global Operations Center, will accommodate up to 2,000 employees. The riverfront development edged out bids from other areas in the region, including Oakley and Mason, to land GE’s new operations center. In June, GE announced that it is leasing 80,000 square feet in the Atrium Two building on a three-year temporary basis, allowing the company time to set up operations during construction. Cincinnati Bell recently leased 220,000 square feet …

July 16, 2015

Market Reports Midwest Midwest Market Reports Ohio Retail

Cleveland’s Retail Market Experiences Its Share of Hits and Misses

by Jeff Shaw July 9, 2015

The Cleveland retail market has shown a dramatic recovery over the last five years. The overall vacancy rate has fallen from just over 14 percent in 2011 to slightly under 9 percent at the beginning of 2015, and rental rates have noticeably increased. As a result, there have been some landmark sales as part of a brisk investment market and new retail development has started in earnest. However, there are also some high-profile retail centers that continue to be plagued by a variety of issues, in spite of the market’s turnaround. Nearly $400 million of retail properties have changed hands over the last 12 months and this sector is the most active of all the property types. While local investors have certainly played a part, the majority of the buyers have been from outside the region. Among the most active non-local purchasers has been a pair of REITs — Inland Real Estate Corp. (NYSE: IRC) and Devonshire REIT. Recent purchases by Inland include Creekside Commons, a 200,000-square-foot center that sold for $28.3 million and Cedar Center North, a 60,000-square-foot center that sold for $15.4 million. Meanwhile, Devonshire REIT has acquired The Plaza at Chapel Hills, a 450,000-square-foot center that sold …

July 9, 2015

Market Reports Midwest Midwest Market Reports Minnesota Multifamily Office

Office, Multifamily Developers Capitalize on Growth in Twin Cities’ West End

by Haisten Willis June 25, 2015

You can hardly open the local paper lately without reading that “Downtown is hot right now; urban living is great.” Yes, downtown is booming. The suburbs are also riding the wave of new mixed-use development and could see more success. It may surprise some, but office vacancy rates and rental rates along I-394 and I-494 rival, and sometimes trump, downtown Minneapolis. The message is clear: convenience has value. The idea of a mixed-use neighborhood where people are living, working, shopping and having fun in one place is a relatively new concept to the Twin Cities. Minneapolis no longer turns into a ghost town after 6 p.m., but many people don’t want to live downtown. They find it too congested and far from work, with little green space and few parking options. If only there was a way to have the vitality of a mixed-use neighborhood without the drawbacks of the concrete jungle, right? Today that question is answered all around the metro area. West End’s Advantages In particular, the West End region of the Twin Cities shares that same long-term vision. With a strong office market long in place, Duke Realty’s addition in 2009 of The Shops at West End, …

June 25, 2015

Illinois Industrial Market Reports Midwest Midwest Market Reports

Dynamic O’Hare Industrial Submarket Regains Its Beat on Development Front

by Haisten Willis June 18, 2015

Chicago’s 1.2 billion-square-foot industrial market has weathered the Great Recession and is now showing strong growth through expansion of the region’s traditional boundaries and by way of redevelopment in land-locked areas. At the center of this trend is O’Hare International Airport — sixth in the nation and 17th in the world in air cargo tonnage. All totaled, the O’Hare industrial submarket contains 103 million square foot of product. Since the vacancy rate peaked at approximately 13 percent in 2010, the O’Hare industrial submarket has rebounded in a big way. In fact, the submarket has recorded positive absorption every year since 2011. The vacancy rate fell to 7 percent in 2014 due to an improving economy and the aggressive deal making of the larger industrial owners such as Prologis, KTR and Hamilton Partners. Development Ramps Up Shrinking vacancy rates and a lack of available Class A logistics facilities led to the delivery of multiple speculative developments in 2014. These projects were the first built since 2007. Panattoni completed 208,000 square feet at 1925 Busse Road in Elk Grove Village and leased the entire facility to CEVA Logistics. The project was subsequently sold to AEW Capital Management at a record-setting cap rate …

June 18, 2015

Newer Posts

Older Posts