Midwest Market Reports

Kansas City Demand Generators Beckon Multifamily Capital

by Kristin Harlow January 18, 2024

By Max Helgeson, CBRE As the national real estate landscape undergoes transformative shifts, Kansas City has emerged as one of the region’s most attractive multifamily markets. There are a myriad of attributes making Kansas City an unrivaled destination to deploy capital in the heart of the Midwest. Here are six key areas that propel the market to the forefront of real estate investors’ considerations. Economic anchors, diversification Kansas City has one of the nation’s most diverse economies with no sector comprising more than 15 percent of overall employment. A national leader of several durable industries provides unmatched economic stability and significant risk mitigation for investors. Moreover, the metro’s strategic location in the heart of the U.S. and strong transportation infrastructure make it a favored logistical hub for corporations across the world. Finally, the market is a base for startups and entrepreneurs drawn to the area’s abundant talent pool and competitive office space rates. Strategic infrastructure, connectivity Infrastructure is a cornerstone of Kansas City’s rise to prominence. The city’s strategic network of highways, interstates, railways, fiber networks and a major airport not only facilitates connectivity but positions it as a hub for commerce. This strategic infrastructure acts as a magnet, pulling …

January 18, 2024

Industrial Kansas Market Reports Midwest Midwest Market Reports Missouri

Kansas City’s Industrial Market Is Positioned for Continued Growth

by Kristin Harlow January 11, 2024

By John Faur, Newmark Zimmer The Kansas City industrial real estate market has been on a historical run since 2020 with over 40 million square feet of inventory added in that time frame. This run of new construction has catapulted Kansas City to the 15th largest industrial market in the country by square footage, despite only being the 31st largest MSA by population. During most of this period, the strong market dynamics which exist in Kansas City, such as strategic highway infrastructure, a centralized location, four Class-1 railroads, availability of bulk land sites and an active development community, were further amplified by the low-interest rate climate and record levels of tenant activity. The continued high pace of speculative industrial construction starts in 2022 positioned 2023 to experience a healthy amount of new deliveries, with almost 8 million square feet of speculative industrial space delivering to the market. While the financial markets presented opportunity during this run of growth, continuous rate hikes in 2023 created challenges that resulted in a significant decrease in year-over-year speculative construction starts (3.5 million square feet of speculative construction has occurred year to date in 2023 as compared with more than 13 million square feet in …

January 11, 2024

Market Reports Midwest Market Reports Multifamily

If You Build It: How to Maximize Multifamily Returns in 2024

by Kristin Harlow December 20, 2023

By John Bogdasarian, Promanas At a time when the multifamily marketplace is experiencing some turbulence after an extended period of strong growth, some developers, owners and investors are rethinking, repositioning and reworking their approach to a commercial real estate sector that has historically been one of the most reliable investments and dependable asset classes. Current market conditions, however, are not as favorable. A report by The Motley Fool this summer highlighted a 21 percent decline in apartment value. Overbuilding has saturated some markets, contributing to an increase in vacancy rates to around 7 percent and helping push rent growth down to 0.8 percent. In conjunction with persistently high interest rates and increasing delinquency issues with renters, the result is that building a traditional apartment product is a very tricky proposition. Even though the apartment market is somewhat dysfunctional at the moment, there are still plenty of opportunities in multifamily. For thought leaders and forward-thinking commercial real estate investors and professionals, the key is to understand the market, be flexible in your development and investment strategies, and be able to execute an approach that does work in the current marketplace. For those looking to maximize multifamily returns in 2024, there are …

December 20, 2023

Illinois Market Reports Midwest Midwest Market Reports Multifamily

Building Sustainable Communities: Three Models for Equitable Development

by Kristin Harlow December 14, 2023

By J. Byron Brazier Equitable development is a knotty concept. In theory, development equity sounds easy and essential. In practice, it’s not clearly defined and not easily sustainable — economically, socially or politically. Equitable development is generally seen as an approach that revitalizes and empowers disinvested communities by meeting residents’ wants and needs, diminishing disparities and spurring economic growth, ensuring residents benefit from such growth and creating conditions for people to live healthy and happy lives. That definition is accurate but incomplete. Equitable development has multiple meanings, some less intuitive than others. Chicago lawyer Danielle Meltzer Cassel says there are three ways to define development equity. The first is the one above, which is the direct model of equitable development. This model rectifies inequality through what development directly produces, such as affordable housing in areas where there’s little or no such housing, good jobs for people who are unemployed or underemployed, greater access to quality healthcare and education, and other resources that allow communities to thrive. There are two other definitions, the indirect model and what Cassel calls the procedural model of equitable development. The indirect model involves real estate developments that do not directly benefit disinvested communities, such as …

December 14, 2023

Market Reports Midwest Market Reports

Consider Constitutionality in Property Taxation

by Kristin Harlow December 6, 2023

By Cecilia Hyun, Esq. Taxpayers usually appeal property tax assessments by proving a market value different from the assessor’s finding, but they should not overlook constitutional guarantees of uniform and equal taxation. As an ad valorem tax, real property taxes are charged on the value of the underlying real estate, usually measured as fair market value. In many states, taxpayers can demonstrate their property’s market value with a recent, arm’s-length sale price or by independent appraisal evidence. Two potential concerns emerge for taxpayers in an assessment appeal centered on market value: the declining reliability of data in volatile and rapidly changing markets, and the trailing nature of market data used by assessors. Those data issues can skew the mass appraisal techniques tax assessors often use, including comparisons to sales of similar properties, when assessing real property. Volatility, rapid change Commercial property data can lose relevancy with surprising speed in a volatile market. For example, office properties continue to bear the consequences of increased remote work and occupants’ shrinking footprints since the pandemic. Many office properties with mortgages maturing in 2023 have lost half or more of their previously underwritten asset values. Badge swipes tracked by Kastle Systems show an average …

December 6, 2023

Market Reports Midwest Midwest Market Reports Office Wisconsin

How Milwaukee’s Hottest Downtown Buildings Continue to Drive Leasing Activity

by Kristin Harlow November 16, 2023

By David Pudlosky and Patrick Savoie, JLL Milwaukee remains a strong office market with leasing activity showing no sign of slowing. Post-pandemic, companies took a fresh look at their workplace strategies to adjust to hybrid working environments, and many rightsized their overall square footage while adding significant amenities and attractions that provide a rewarding office experience for returning workers. Despite a smaller footprint, tenants are seeking updated, highly amenitized spaces in Class A buildings. While amenities have always been a focus for landlords, the buildings that stand out today are the ones that focus on quality amenities over quantity. For example, today’s tenant will likely not be as interested in a building lounge unless it has comfortable seating, a café, strong Wi-Fi and more. To be relevant to tenants, amenities must be high end and culture focused. We’ve seen companies like Milwaukee Tool, Fiserv, Komatsu Mining Corp. and Northwestern Mutual invest in their downtown office spaces and make commitments to bring more employees downtown, and we expect this trend to continue. Building owners can learn from what Class A building landlords are doing to drive leasing activity, and learn how investing in quality, amenity-driven spaces will likely bring in new …

November 16, 2023

Industrial Market Reports Michigan Midwest Midwest Market Reports

Grand Rapids Industrial Market Fundamentals Remain Strong

by Kristin Harlow November 9, 2023

By Drew Miller, CBRE Despite some level of macroeconomic uncertainty, the fundamentals of the industrial real estate market in West Michigan remain solid. While the overall number of tenants in the market has recently declined slightly, the demand for space from local companies and tenants new to the market is still outpacing supply. Nationally, the overall industrial vacancy rate finished the second quarter of 2023 at 3.7 percent, 30 basis points higher than the previous quarter but 100 basis points lower than the 10-year average. Comparatively, the West Michigan industrial market, of approximately 170 million square feet, ended the second quarter with an availability rate of less than 3 percent. The combination of a diverse economy, robust infrastructure and a conservative approach to development all factor into the continued strength of the region. Grand Rapids, the second-largest city in Michigan, and West Michigan at large are blessed with a well-balanced and diverse economy led by office furniture, automotive suppliers, aerospace, food processing, e-commerce and advanced manufacturing companies. The area is home to many of the leading office furniture and related design companies, including MillerKnoll, Haworth and Steelcase, all headquartered in West Michigan, with many of their manufacturing and suppliers …

November 9, 2023

Market Reports Michigan Midwest Midwest Market Reports Multifamily

Robust Multifamily Fundamentals Boost Market Appeal of Grand Rapids

by Kristin Harlow November 8, 2023

By Scott Nurski and Kevin O’Reilly, NAI Wisinski Great Lakes The Grand Rapids multifamily investment sales market has experienced reduced volume year-to-date, but the fundamentals remain strong. West Michigan, especially Grand Rapids, is affordable, with abundant high-paying employment opportunities and a high quality of life. In the words of author Malcolm Gladwell, “I love Grand Rapids. Why doesn’t everyone live in Grand Rapids?” Unlike many major markets, the construction pipeline here is slow and steady, with little risk of oversupply. While multifamily sales volume is down across the board, Grand Rapids remains a desirable location for owners and operators alike. Multifamily fundamentals Annualized rent growth continues to normalize from the wild parabolic rise seen nationwide due to the pandemic and associated market disruptions. It currently stands at 5.1 percent, according to third-quarter data from CoStar for Kent County (30 units and above). This figure is a solid uptick from the second-quarter 2023 figure of 3.2 percent. The market generally is returning to the 3 to 5 percent range typically seen during pre-pandemic norms. Occupancy improved slightly from 95.2 percent in the second quarter of 2023 to 95.4 percent in the third quarter of 2023. However, it has been gradually declining …

November 8, 2023

Indiana Market Reports Midwest Midwest Market Reports Mixed-Use

Greater Lafayette, Indiana Is No Longer in the Shadows

by Kristin Harlow October 26, 2023

By Jim Pitoukkas, Coldwell Banker Commercial Shook Outside of recognition related to Purdue University, the Greater Lafayette region (consisting of West Lafayette, Lafayette and surrounding towns in Tippecanoe County), has been in the shadows of the Indianapolis MSA to the south and Chicago MSA to the north. This is changing, though. Growth over the last decade has pushed Greater Lafayette into the national spotlight as an emerging hub for innovation in advanced manufacturing in industries including medical, aerospace and defense, agriculture and nanotechnology, and a burgeoning housing market. For three quarters straight, The Wall Street Journal and Realtor.com have ranked Greater Lafayette the No. 1 Emerging Housing Market in America based on comparatively affordable housing, a skilled technology-based workforce, and a strong growing local economy. Additionally, current and to-be residents benefit from consistent public investments in quality-of-life infrastructure that continue to attract new residents across a range of ages and backgrounds. Quality of life Greater Lafayette has invested in excess of $889 million in public investment since 2015. These investments have ranged from new utility infrastructure, a new minor league ball field, parks, county-wide trails, public facilities like the West Lafayette Wellness Center and the Lafayette Public Safety Center, and …

October 26, 2023

Market Reports Midwest Midwest Market Reports Nebraska Office

Surge in Sublease Space Puts Pressure on Omaha Office Market

by Kristin Harlow October 19, 2023

By Mike Rensch, Investors Realty The Omaha office market is facing an increasing amount of sublease space, which is having a significant impact on what spaces tenants prefer to lease right now. This is directly affecting all aspects of the overall office market as well. As the second quarter came to a close, the direct vacancy rate was 7.4 percent, compared with 7.6 percent in the second quarter of 2022. With that said, those numbers do not paint the whole picture because they do not account for the amount of sublease space on the market. The availability rate (which includes direct space and sublease space available) was at 9.8 percent compared with 8.4 percent in the second quarter of 2022. We see this trend continuing for the time being as companies grapple with whether or not to bring their employees back to the office. At the end of the second quarter, there was 841,000 square feet of sublease space available in Omaha, up from 723,000 square feet at the end of the second quarter of 2022. This represents a 14 percent increase in sublease space over the past year. It reached its peak of 919,000 square feet of available …

October 19, 2023

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