Lately, it has been quite challenging to pick up a newspaper, watch television or even view an online news source and not be inundated by sour economic events occurring throughout the world, as well as in the Greater Cleveland area. As we navigate our way through these uncertain times in the economy, and more specifically in the commercial real estate industry, owners and users of real estate will be faced with challenges as well as opportunities. The Cleveland industrial real estate market, which ranks as the ninth largest industrial market in the United States, remains healthy largely due to its conservative growth during the last decade. The Cleveland economy is comprised of a diverse range of businesses from many different sectors, making it less prone to volatile cycles common in other industrial-based regions. Our local industrial market, which consists of numerous submarkets, had a vacancy rate ranging from 8 to 10 percent throughout 2009. The average lease rate for industrial space was approximately $3.90 per square foot. Both of these indicators compare favorably to the U.S. average, which has slightly higher vacancy and lease rates. A major obstacle weighing on today’s real estate consumer in the Cleveland area is the …
Midwest Market Reports
Although retail developments and construction cooled during 2009, the Omaha retail sector is now experiencing an influx of completed projects, with most planned projects being set on the back burner. Retail projects in the final phases of construction include the 600,000-square-foot L Street Marketplace, located at the corner of 120th and L streets in Omaha; Midtown Crossing, a mixed-use project offering 200,000 square feet of retail space at 33rd and Dodge streets; and the forthcoming retail and entertainment component of Aksarben Village, which is located at 72nd and Center streets. The new projects are bringing Target, Best Buy, Sports Authority, Prairie Life Fitness Center, Marcus Theaters and Wohlner’s Grocery to the market. Neighboring retail developments in Council Bluffs, Iowa, include the JC Penney- and Shopko-anchored 24th Street Marketplace and Target-, Hobby Lobby- and Kohl’s-anchored Metro Crossing. A handful of new retailers and restaurants have entered the Omaha market, including Garden Ridge, Books A Million, Jump & Shout Play Center, Brix, Five Guys and Smashburger. Active developers include Cormac Company, Seldin Company, Noddle Company, Lerner Company and Magnum. Many developers are looking to infill sites for untapped development opportunities. Both the Midtown Crossing and Aksarben Village projects are helping to revitalize …
The old adage that every cloud has a silver lining holds true for the St. Louis industrial market. After posting positive absorption during every quarter of the current recession, the industrial market got cloudier when Chrysler shuttered its St. Louis plants during the early part of the third quarter. That placed more than 5.1 million square feet of space on the market and boosted the vacancy rate a couple points. The auto industry’s woes trickled down to a number of Chrysler’s suppliers as well. Another 2.1 million square feet of auto supplier buildings also became available. So where’s the silver lining? Actually, there are several. For starters, Chrysler’s plants and its suppliers are primarily located in the South County submarket. Historically, South County has been one of the area’s strongholds for industrial, with a vacancy rate of only 4.2 percent at the end of the second quarter. The availability of space now opens up opportunities for large and small users. A number of companies have already taken advantage of these opportunities. Colt Industries, the area’s distributor for Corian countertops, purchased a nearly 100,000-square-foot building formerly occupied by Dakkota Integrated Systems, which supplied vehicle interiors. An aerosol can supplier has signed …
In comparison to many other U.S. markets, the Indianapolis bulk warehouse sector has weathered the financial crisis and the downturn fairly well, but in no way is the city immune to the recession. The market’s vacancy rate has crept up from 13.25 percent at the beginning of 2009 to 15.20 percent at the end of the third quarter. Some of this increase in the vacancy rate can be contributed to two new projects coming online — Browning Development’s Axcess70 Buildings 1 and 2, totaling 673,000 square feet, and Browning/Duke Realty’s 533,520-square-foot Allpoints Midwest. In 2008, the modern bulk warehouse market experienced more than 5 million square feet of positive absorption while managing reasonable growth of 3.35 million square feet. The net result was a 7.5 percent increase to the entire Indianapolis modern bulk market. Through the close of third quarter 2009, the market has remained mostly idle, while only recording two new transactions — AEL Span 144,075-square-foot deal and Niagara Water’s 226,900-square-foot deal — and only growing the overall market inventory by 2.5 percent. Only a couple of new projects have come online, but these projects were financed and under way prior to the financial crisis really hitting in the …
Several factors have contributed to the softness in the St. Louis apartment market and are expected to continue to present operational challenges in the near term. A spike in construction has been met with the weak demand caused by the slumping labor market. In fact, demand for rental housing contracted 2.2 percent year-over-year in the third quarter — the largest decline in more than 20 years — and will likely fall until payrolls begin to expand. Owners have increased concessions to roughly 26 days of free rent. With vacancy on track to rise further this year, concessions will remain elevated, particularly in the Maryland Heights/Northwest County submarket. Area operators are currently offering renters nearly 40 days of free rent, the most of any submarket in the metro area. Nonetheless, many residents are opting to relocate out of the area and into St. Charles to capture lower rents or into Clayton to be near the metro’s healthiest employment corridors. As such, owners in the Clayton/Mid-County submarket have kept concessions relatively flat during the past 12 months. Turning to investment sales, transaction velocity has slowed in the St. Louis market due primarily to reduced pricing and increased buyer caution regarding weakened fundamentals. …
With little demand for new retail space and even less money to fund new development, developers and owners have been focused on improvements at existing properties, tenant retention and strategic redevelopment. Westfield has plans to relocate the food court at Great Northern Mall in North Olmsted, Ohio, to allow for a new anchor and restaurant space with exterior entrances, which continues with the trend of turning malls inside out. In Solon, Giant Eagle has won a rezoning effort to replace its store at Solar Shopping Center with a new 99,000-square-foot store and Getgo fuel station. The remainder of the center is slated to undergo a complete redevelopment as well. Giant Eagle has also replaced its stores at Southland Shopping Center in Middleburgh Heights and the Day Drive location in Parma with new larger prototypes. Coral Company has revised its development agreement with the city of South Euclid to allow for the Cedar Center North redevelopment project to be completed in phases; leasing for the all-retail first phase is currently under way. The largest retail development in the Cleveland market is Visconsi Companies’ Plaza at Southpark in Strongsville, which has just opened with Costco, Bed, Bath & Beyond and Best Buy …
Although much of the country may think Michigan’s economic outlook is bleak, Grand Rapids is still holding on strong through the economic downturn. The city is faring better than Southeast Michigan and currently is looking toward the future. With more than 1 billion square feet in proposed construction, the area is getting a head start on the rebound, especially in the medical office sector. Absorption in the traditional office market is slow, causing there to be less speculative development in the pipeline. That being said, Grand Rapids is experiencing an influx in medical office and healthcare development, especially in the central business district (CBD), where Michigan State is currently developing a new medical school. Even with medical office development proposed and under way, there is a perception that companies need to wait and see what everyone else decides to do before making any decisions for themselves. This pause is fueling a vicious cycle in the market that is making it difficult to get deals across the finish line. Like many markets across the nation, the leasing sector of Grand Rapids is seeing a great deal of concessions and incentives pass from landlords to tenants. Some owners are making bare-bone deals …
The old adage that every cloud has a silver lining holds true for the St. Louis industrial market. After posting positive absorption during every quarter of the current recession, the industrial market got cloudier when Chrysler shuttered its St. Louis plants during the early part of the third quarter. That placed more than 5.1 million square feet of space on the market and boosted the vacancy rate a couple points. The auto industry’s woes trickled down to a number of Chrysler’s suppliers as well. Another 2.1 million square feet of auto supplier buildings also became available. So where’s the silver lining? Actually, there are several. For starters, Chrysler’s plants and its suppliers are primarily located in the South County submarket. Historically, South County has been one of the area’s strongholds for industrial, with a vacancy rate of only 4.2 percent at the end of the second quarter. The availability of space now opens opportunities for large and small users. A number of companies have already taken advantage of these opportunities. Colt Industries, the area’s distributor for Corian countertops, purchased a nearly 100,000-square-foot building formerly occupied by Dakkota Integrated Systems, which supplied vehicle interiors. An aerosol can supplier has signed a …
Several factors have contributed to the softness in the St. Louis apartment market and are expected to continue to present operational challenges in the near term. A spike in construction has been met with the weak demand caused by the slumping labor market. In fact, demand for rental housing contracted 2.2 percent year over year in the third quarter — the largest decline in more than 20 years — and will likely fall until payrolls begin to expand. As a result, owners have increased concessions to roughly 26 days of free rent. With vacancy on track to rise further this year, concessions will remain elevated, particularly in the Maryland Heights/Northwest County submarket. Area operators are currently offering renters nearly 40 days of free rent, the most of any submarket in the metro area. Nonetheless, many residents are opting to relocate out of the area and into St. Charles to capture lower rents or into Clayton to be near the metro’s healthiest employment corridors. As such, owners in the Clayton/Mid-County submarket have kept concessions relatively flat during the past 12 months. Turning to investment sales, transaction velocity has slowed in the St. Louis market due primarily to reduced pricing and increased …
Chicago, the nation’s third-largest metropolitan area, is known as a legendary shopping destination. Occupying a glamorous stretch along Chicago’s Michigan Avenue, the Magnificent Mile is lined with fabulous shops, exciting sightseeing activities, restaurants, luxury hotels and even flagship boutiques for some of the world’s most luxurious brands. But the Windy City, like most of the nation, remains mired in a depressed real estate market and faces the worst slump in retailing growth in at least a decade. Vacancies across the Chicagoland market have increased and are currently hovering between 10 and 12 percent. But because the city is so large, there are varying degrees to which areas are affected. The outlying suburbs, where clusters of homes sprouted from farm fields just as the recession began, seem to be faring worse than the downtown area and the more densely populated suburbs. Retailers are taking advantage of the current conditions and many are leaving the “green,” suburban areas and repositioning within the city or upgrading their locations if they already have an urban presence. In the city proper, a massive new Barneys New York emporium opened its doors earlier this year. The 90,000-square-foot store occupies a new six-story building on the corner …