It was a little less than two decades ago that local business leaders could see what was unfolding in West Michigan. The industrial sector was steadily declining, and companies were either going out of business or moving away. It was evident that something had to be done. That’s when two hometown heroes, Amway founders Richard DeVos and Jay Van Andel, proposed their vision to turn Grand Rapids into one of the top medical services cities in the world. Their leadership and philanthropic efforts spurred a series of events, forever changing the landscape, mentality and image of Grand Rapids. One of the city’s first streets, Michigan Street, running parallel to I-196, was the initial site of their vision. In 1996, Jay and Betty Van Andel founded the Van Andel Institute. They broke ground in 1998, and the Van Andel Institute opened its doors in 2000. The institute is now home to scientific research that is focused primarily on cancer and Parkinson’s disease and has received more than $1 billion in research funding. The original development was a $60 million facility. In 2010, the institute opened a second phase with an additional 242,000 square feet at a cost of $175 million. Butterworth …
Midwest Market Reports
The Minneapolis-Saint Paul MSA was on the road to recovery long before many others. And while that might come as a surprise to outsiders, this market actually packs quite a punch. With more than a dozen Fortune 500 employers — including Target, Wells Fargo, U.S. Bank, Ecolab and 3M, to name a few—the MSA’s 5.1 percent unemployment rate is a full three points lower than the national average and is consistently ranked as one of the friendliest job markets in the country. Little wonder national retailers have been so keen on taking space in prime Twin Cities markets such as Roseville, Edina (Southdale) and Minnetonka (Ridgedale). Whole Foods, for instance, opened a Minnetonka store in a former Circuit City box late last year and also razed a vacant Storables to make way for a Southdale store. More recently, the Texas-based chain announced plans to open a downtown Minneapolis store on the site of a former Jaguar dealership. Slowly but surely, remaining Ultimate Electronics, Circuit City and Linens ’n Things boxes are being refilled by expanding chains. Some are leasing vacant boxes in their entirety; others are taking portions of subdivided boxes. Case in point: Last year T-Mobile, Godfather’s Pizza and …
The office segment of Omaha’s commercial real estate market is currently in a transitional phase. Companies that have been in the market for office space during the past two to three years have realized that discounted rent and/or the ability to relocate into higher-quality properties are feasible options. In order to retain and attract tenants, landlords are now required to lower rents and renovate properties to the extent they can. This pressure on property owners has been the leading force behind this current state of transition, and the ripple effects are felt through all classes of buildings. Tenants in Class C properties are now able to climb the property ladder and obtain favorable lease rates in a Class B property. Owners of Class C properties are forced to renovate, or redevelop, to avoid obsolescence. The Lund Co. refers to this evolution as “Real Estate Darwinism.” FACELIFT PAYS OFF A perfect example of the evolution of a property is the 450 Regency building. Originally constructed as a single-tenant, build-to-suit for IBM in 1983, the property became stale and was a non-factor in the overall office inventory in Omaha. The building sat vacant for many years after its second tenant, Commercial Federal/Bank …
Like a baby boomer adapting to the new realities of social media and the digital age, the St. Louis industrial market has had to learn to reinvent itself during the down market we entered in 2008. Legacy industries that employed generations of St. Louisans and drove significant demand for space from suppliers and vendors have exited the market, leaving challenges and opportunities throughout the industrial real estate landscape here. Prior to the downturn, St. Louis enjoyed the presence of automotive plants for all of the “Big Three,” with Chrysler, Ford and General Motors all producing vehicles here. Chrysler, in fact, had committed to invest more than $1 billion in its plants in the Fenton submarket until the global economic crisis sent the company into forced bankruptcy. After acquiring locally based McDonnell Douglas in 1997, Boeing continued to be a major production force here. Several smaller companies across the business spectrum operated manufacturing and production facilities in St. Louis, providing opportunities for a highly skilled workforce. The plot twist that followed isn’t unique to St. Louis, the Midwest or the United States, as so many are acutely aware. The closure of the Chrysler plants in Fenton (in favor of Canadian and …
Redevelopment initiatives in Cleveland’s urban core will attract rental households to the area, while healthy job growth and a lackluster single-family housing market will uphold modest demand in the suburbs. Among ongoing projects in the urban core, the $2 billion redevelopment of University Circle, which includes the expansion of the VA Medical Center, Cleveland Clinic and University Hospitals, has created more than 4,000 jobs since construction started in 2005. The renovations are expected to be complete by 2015 and will support over 36,000 jobs in the area. Surrounding neighborhoods such as Beachwood, Shaker Heights and Cleveland Heights will benefit most as roughly 30 percent of the employees live in these areas. Many of these young professionals occupy apartments and will delay purchasing single-family homes, a trend that will sustain demand throughout the metro area. As a result, most submarkets will post vacancy decreases this year, providing many owners with enough leverage to ease concessions and lift rents. Construction pipeline Development slowed significantly during the last year, as only one apartment complex came on line. The 38-unit University Lofts was delivered in the Cleveland Heights/Shaker Heights area in the first half of 2011. The first phase of the Uptown project will …
One of the hardest-hit real estate segments, both in Cleveland and across the nation, has been the retail sector. A dramatic reduction in consumer spending over the past four years has caused significantly lower retail sales and resulted in a long list of bankrupt retailers and struggling retail centers. While the pullback by the consumer has ultimately led to numerous instances of shuttered stores and bank-owned retail centers across the region, there have also been some noticeable trends that illustrate the underlying resiliency and strength of this segment. Digging in the dirt Although the pace of retail development has been at a near standstill for the past few years, some projects have begun to take shape. The furthest along is a new 86,000-square-foot Giant Eagle in Broadview Heights, which is under construction with an early 2012 opening planned. The South Euclid/Cleveland Heights area has also emerged as a favored development location with two large-scale projects. The long-planned expansion and renovation to the northern half of Cedar Center began in the spring with the construction of a new GFS Marketplace. When fully completed in late 2012, this project is expected to contain approximately 60,000 square feet of total retail as well …
Southeastern Wisconsin’s industrial market absorbed nearly 1.28 million square feet in the third quarter — the fifth consecutive quarter of positive absorption — and 2.87 million square feet of absorption year-to-date. The vacancy rate registered 7.6 percent in the third quarter, down from 9.2 percent a year ago, according to Xceligent/CARW. Leasing activity in Milwaukee and Waukesha counties has accounted for 80 percent of the 2.87 million square feet absorbed year-to-date. Kenosha and Racine counties both experienced positive absorption of 81,527 square feet and 486,832 square feet in the third quarter, respectively. While impressive, this data is less substantial than previous quarters that we have analyzed. Traditionally, Racine and Kenosha counties compete for tenants crossing over the border from Illinois. These two counties will likely attract the next speculative or build-to-suit developments in Southeastern Wisconsin. With leasing and sales activity continuing to be on the rise late into the third quarter, we expect these positive trends to carry over into the final quarter of 2011. Quality industrial space is being depleted in many of the more popular submarkets south of I-94 and west of I-45. Natural tensions between quality supply and increasing demand are causing a stabilization of lease rates …
As we approach the end of the 2011, there are clear indications of an improving economy. Although the rate of commercial property foreclosure is still high, the rate of absorption of foreclosed properties has risen appreciably. These properties are not sitting on the market like they did the previous 24 months. One may say that this is not only a clear indication that we have turned the corner, but also that the community has genuine faith in the investment in commercial real estate. Although it may be time-consuming for some local businesses to secure financing, it is evident that traditional lending institutions are far more accessible than they were in 2009 and early 2010, albeit some more than others. The Small Business Administration (SBA) programs are propagated frequently, and the qualification process is not as cumbersome as in years past. The types of businesses that have taken advantage of the improved lending environment vary, and include automotive parts suppliers, manufacturing businesses, and distribution companies. Many area businesses are unsure about the near future. Considering what Detroit has endured over the past three years, this is to be expected. Although cautious, these same businesses are moving forward in a confident manner. …
After years of little or no new construction, the Greater Cleveland area is experiencing the construction of a broad range of major new projects representing more than $5 billion of new investment. Some of the largest projects include a new convention center and medical mart, a new Caesars Horseshoe Casino, plus major new medical center facilities developed for the Cleveland Clinic, University Hospitals and the VA Medical Center. There also are four new office developments: a 450,000-square-foot multi-tenant office tower in the Flats East Bank area of the central business district; a 580,000-square-foot world headquarters complex on 53 acres in the eastern suburb of Beachwood for Fortune 500 company Eaton Corp; a 700,000-square-foot corporate headquarters for American Greetings in Westlake, a western suburb; and a 639,000 sq. ft. global headquarters for Goodyear Tire & Rubber Co. in Akron to the south. Not since the 1990s, when we saw the completion of a half dozen CBD office towers and new stadiums for the Browns, Indians, and Cavaliers has Cleveland seen this kind of activity. Build new or renovate? In mature, established cities like Cleveland, the time comes for companies and institutions to decide between building new or renovating existing structures. The …
When people manufacture products in the U.S., they manufacture them in the Rust Belt, and Cleveland is in the heart of the Rust Belt. Our manufacturing sector has experienced increased occupancy and decreased vacancy levels quarter over quarter for the past three quarters. Cleveland historically has been a manufacturing market, and when manufacturing is strong the Northeast Ohio market is strong. In addition to the strength of manufacturing, the development of the Utica and Marcellus Shale is the biggest factor affecting Cleveland right now. The Utica and Marcellus Shales have been big in the Pennsylvania market for the past five years, but development is now moving westward into Ohio. As drilling increases, so too does the need for services for the drillers. The drillers and their service providers need real estate, and there have been dramatic increases in prices over the past four months in rural markets such as Steubenville, Ohio. That growth is beginning to move toward Youngstown, Warren, and up to the Streetsboro area. Employment is expected to grow dramatically over the next five years. While the overall manufacturing market is surging, there are still challenges in old properties that were modern in the 1930s and 40s, which …