Central Ohio industrial market still on a roll

Robin Mitchell

Robin Mitchell

by Dan Rafter

Industrial real estate remains a hot commodity in the Central Ohio region. In its latest industrial report, Cassidy Turley says that the industrial real estate market in the area is still on a record-breaking pace in 2014.

According to Cassidy Turley, the mid-year vacancy rate of industrial real estate in Columbus and Central Ohio stands at a low 7.4 percent. Even more impressive, the market has absorbed nearly 2.5 million square feet of industrial space in the first and second quarters of this year. That resulted in the best absorption rate that Cassidy Turley has ever seen in the region for the first two quarters of any year.

Robin Mitchell, research analyst for Cassidy Turley’s Columbus office, said that the modern bulk industrial market has been especially strong. She said that this sector’s vacancy rate stood at 4 percent during the second quarter of this year. This sector has also absorbed more than 1 million square feet combined in the first and second quarters of 2014.

“Its best performance in four years,” Mitchell said.

During the second quarter, Cassidy Turley reports, the industrial market in the center of Ohio absorbed 383,693 square feet. Growth areas include the region’s Out of County submarket, with 410,251 square feet of absorption, and the Southwest market, with 220,052 square feet.

Cassidy Turley researchers predict that the industrial market’s positive showing will continue throughout the year and into 2015, with vacancy rates continuing to fall and absorption numbers continuing to rise.

Cassidy Turley also predicted that new construction should increase through late 2016. Almost 3.5 million square feet of new industrial construction is already underway in the Central Ohio region.

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The power of local: Sometimes national names aren’t the best choice for commercial financing

handshakeGuest column by Michael Poe
President, Inland Commercial Mortgage Group

As the economic recovery marches on, many small commercial real estate owners in the Chicago market are beginning to see a light at the end of the tunnel. National, regional and local tenants are increasingly filling vacancies in retail centers, office buildings and industrial parks that suffered during the Great Recession. Many municipalities are now eager to partner with local owners, recognizing the untapped potential in these developments to cater to area demands, create jobs and generate revenue.

Yet these property owners, who play an essential role in bringing jobs and economic activity to the communities in which they are located, often still find it a challenge to locate competitive financing to improve or redevelop their properties. Working with national lenders, they are faced with high closing costs, excessive legal fees and a lagging response time, and even then, they are often only able to obtain loans with recourse.

While access to non- recourse small commercial lending for locally owned projects is improving, it remains difficult for these types of owners to obtain financing terms on par with those offered to competing institutional-quality investors. Enter a new player into the financing market: alternative lenders who combine innovative lending strategies, local expertise and a greater appetite for risk to fill this void for small commercial borrowers, particularly in the $500,000 to $7 million range, a niche many larger borrowers overlook. These lenders are meeting a market demand for small-balance, non-recourse lending programs offering commercial debt consistent with the advantages of national commercial lending platforms, while streamlining the closing process and minimizing fees.

These types of alternative lending programs trade a national focus for local expertise. For example, Inland Commercial Mortgage concentrates its Midwest-based small-balance, non-recourse lending on stabilized projects within a few hundred miles of the Chicago area.

Local lenders play a key role in any area’s economic vitality, as they understand the dynamics and importance of commercial real estate driven by a “boots on the ground” perspective. Their extensive industry expertise allows them to obtain the best financing options. This tightened focus also grants them the capability to streamline the lending process, provide more timely responses to inquiries, speed along the due diligence process and allow borrowers to close under tight deadlines.

While these advantages are traditionally the hallmark of working with a local lender, it is only recently that creative lenders have been able combine this local expertise with many of the characteristics of national lending programs that generally target larger borrowers.

Inland Commercial Mortgage Group is based in Oak Brook, Ill.

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GE investment makes Lafayette a major player in the aviation industry

ge aviation

by Dan Rafter

Thanks to a $100 million investment by GE Aviation, Lafayette, Ind., has just become a bigger player in the aviation industry.

GE Aviation, which manufactures jet engines and aircraft systems, is building a 225,000-square-foot, $100 million jet engine assembly facility in LaFayette. Workers at the facility will build the new LEAP engine of CFM International, a 50/50 joint company of GE and Snecma in France.

The engine is already in demand. CFM has logged orders and commitments for more than 7,500 of the LEAP engines, even though the engine won’t enter into service until 2016. The engine will power new Airbus, A320neo, Boeing 737 MAX and COMAC C919 aircraft for airlines around the world.

The facility itself will have a positive impact on the Lafayette area.

“The Lafayette plant will contribute greatly to Indiana’s economy through high-paying jobs and new opportunities for our workforce,” said Indiana Sen. Dan Coats. “I am thrilled that GE Aviation has put its faith in Indiana.”

GE could begin hiring employees at the GE plant as early as 2015. Within five years, the workforce at the plant is expected to exceed 200.

These will be skilled jobs. The Lafayette facility will include an advanced assembly line that incorporates several new technologies, including automated-vision inspection systems and radio-frequency parts management to allow workers to easily find parts on the shop floor.

GE worked closely with the state of Indiana to select the Lafayette location. The state of Indiana, the Indiana Economic Development Corporation, the city of Lafayette and Tippecanoe County have all provided technical support and incentives to bring GE to the area. GE officials will work with Ivy Tech at Lafayette and Purdue University to help train the plant’s new employees. The company recently celebrated a ceremonial ground-breaking at the site of the plant.

Indiana Gov. Mike Pence says that it’s little surprise that GE chose Lafayette for its new plant. Indiana residents, after all, have a long history of taking on complicated manufacturing work, the governor said.

“Hoosiers have developed and built some of the world’s most advanced manufacturing technologies,” Pence said. “I know that Hoosiers have the skills needed to make these jet engines soar.”

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Dayton ready for its first Costco Wholesale store

Village Rendering

by Dan Rafter

The Dayton market will soon get its first Costco Wholesale store thanks in part to Oberer Companies.

The new store, which will include 148,000 square feet and a gas station, is scheduled to open in November of 2014 at the Cornerstone of Centerville retail development in Centerville, Ohio, a suburb of Dayton.

The Costco will anchor the first phase of the Centerville development. The store will also provide an employment boost in the region, providing jobs for about 200 people.

Chris Conley, president of Oberer Realty Services, brokered the deal to bring the new store to the area. Conley says that the new Costco will attract a crowd as soon as it opens its doors.

“Costco customers will come from 30-plus miles to visit this location,” Conley said.

Oberer is also working with two additional large-format retailers, in addition to a variety of national and regional restaurants and retailers, to fill the Cornerstone of Centerville. When complete, the first phase of this development will add more than 460,000 square feet of retail and restaurant space to the market. The development should also create about 1,200 permanent jobs.

Cornerstone of Centerville will also offer a 15-acre office park, 15 acres for single-family townhomes and about 300 multi-family units.

Oberer Realty Services is no stranger to this type of development. The company has developed nine Kroger-anchored retail centers and have leased and sold millions of square feet of retail and office space in the Dayton and Cincinnati markets.

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The trend continues: CBRE Group acquires Chicago’s U.S. Equities

Chris Connelly

Chris Connelly

Robert Wislow

Robert Wislow

by Dan Rafter

Last week, Midwest Real Estate News met with Jeffrey Rinkov, chief executive officer of Lee & Associates. During this meeting, Rinkov said that mergers and consolidations remain a hot trend in the commercial real estate world.

As if on cue, CBRE Group earlier this week announced that it had acquired U.S. Equities Realty, LLC, one of the most-active real estate firms in Chicago.

“Consolidations continue to generate major news in our industry,” Rinkov told Midwest Real Estate News last week. “And I don’t see that trend ending any time soon. That’s the nature right now of our business.”

In the CBRE/U.S. Equities move, both companies will now combine their Chicago-area operations. This is a significant acquisition on CBRE’s part: U.S. Equities leases and manages about 17 million square feet of properties in Chicago, including some of the city’s iconic buildings. This includes the Willis Tower — better known still to Chicagoans as the Sears Tower, the John Hancock Center, Harold Washington Library and Millennium Park. The company’s U.S. portfolio includes more than 500 properties across the office, retail, institutional, dormitory and residential sectors.

“With today’s announcement, we are re-defining excellence in Chicago real estate services,” said Chris Connelly, executive managing director for the Chicago region of CBRE. “We’re bringing together two of Chicago’s most highly regarded and successful firms.”

U.S. Equities was founded in 1978. And its top officials said that they were excited about joining CBRE.

“Throughout our 36-year history, U.S. Equities has aggressively pursued every opportunity to anticipate the changing needs of our clients,” said Bob Wislow, chairman and chief executive officer of U.S. Equities. “CBRE’s global platform along with its extensive service offering and broad expertise will expand and enhance our ability to serve clients.”

U.S. Equities principals Camille Julmy and Nancy Pacher join CBRE Chicago as vice chairmen. U.S. Equities’ Katie Scott and Marty Stern will join CBRE as senior managing directors. Wislow will serve as chairman of CBRE Chicago. In all, U.S. Equities boasts about 400 commercial real estate professionals in Chicago.

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Lee & Associates’ Rinkov: This is a great time to be in commercial real estate

Jeffrey Rinkov

Jeffrey Rinkov

Brian Tader

Brian Tader

by Dan Rafter

The top managers with Lee & Associates gathered earlier this month at the Langham hotel in Chicago’s River North neighborhood to discuss the state of the commercial real estate market and the company’s plans for the future. Jeffrey Rinkov, CEO of Lee & Associates, and Brian Tader, managing director with the company, took the time to speak with Midwest Real Estate News about the strength of the Midwest’s industrial markets, the role technology is playing in commercial real estate and the best-performing markets in the Midwest.

Midwest Real Estate News: How strong is the industrial market across the Midwest today?
Brian Tader: It’s been on fire. From Southeast Wisconsin to Kankakee, the industrial market throughout the Chicago area has been amazing lately. Northwest Indiana has been strong. We are seeing the return of spec building in the Chicago area. That is a good sign, and it doesn’t look like the industrial market is going to slow any time soon.
Jeffrey Rinkov: One of the core strengths of Lee & Associates has always been industrial. That certainly hasn’t changed, and we’ve benefited from the growing strength of the industrial market across the country. We’re committed, though, to all the commercial sectors, not just industrial. And we’re seeing good activity in all the sectors, from office to retail to industrial. It’s just a good time right now in the commercial real estate business.

MREN: You mentioned that Lee & Associates is committed to all the commercial sectors. That being said, what kind of growth do you expect to see in the coming years?
Rinkov: We have definite plans for expansion. We do plan to open our 50th office in the Midwest later this year. There are other Midwest markets that definitely interest us. We’re looking at markets such as Milwaukee and Minneapolis, for example. These are strong markets that we think would be great ones for Lee & Associates. That’s a big part of my plans for the future. I’d like to see Lee & Associates expand from 50 offices to 65 to 70 offices.

MREN: Brian mentioned the return of spec construction in the industrial market. Are you seeing a new push from developers for spec construction in this sector?
Tader: The numbers are starting to make sense for more spec construction. There isn’t a lot of industrial product out there in the Chicago market today. But the demand is high for quality industrial sites. It just makes sense that more spec construction will be coming here.
Rinkov: This is an exciting time in the industrial market. As you move to the next six, 12 or 18 months, I think you’ll see even more activity in industrial. It is going to be a very good time. I’m confident about that. For a while it was hard to be a developer. Now people are ramping up their activity again.

MREN: Jeff, you’ve been in the commercial real estate business for a long time. And you’ve been at Lee & Associates for 17 years. What has kept you at the company for so long?
Rinkov: Being at Lee has truly been a life-changing opportunity for me. Working at Lee has given me the opportunity to be an entrepreneur. At Lee I can attack my market. No one is micromanaging how I do things. At the same time, we have tremendous resources available to us from Lee & Associates. The quality of the professionals that work here is so high. I think that gives us an advantage.

MREN: I know that technology is an important part of your vision for the future of Lee & Associates. How important do you think tech is for the agents working at Lee?
Rinkov: The agents who are in their late 20s or early 30s think this technology fell from the sky. They think it’s always been there. They think anyone who isn’t a smartphone is hopelessly behind the times. So we don’t have to sell them. But the senior agents might be a little more resistant to new technology. Our goal, though, is to use technology to better serve our clients. We don’t want to use it just because it’s cool or interesting. It has to have a real impact on the way we work with our clients. The good news is that our senior agents are more than willing to embrace technology when they see that it has a positive impact on the their efficiency.

MREN: What is it about the industrial market that you both like so much?
Tader: I like the entrepreneurial nature of it. I like the fact that you are in charge of your own career and your own success. The agents who succeed are the ones who work the hardest. In that respect, it’s a business that rewards hard work and dedication.
Rinkov: In a previous career, I worked for a textile manufacturer. It was a family business. I think that’s helped me to better understand the industrial side of the business, having sat in that seat. I’ve always felt comfortable in the industrial market.

MREN: Lee & Associates’ Chicago market now offers property-management services. How important has that part of the business been to the company?
Tader: A few years ago we introduced property management to better service our clients. If a client had a need for property management, we were then able to offer it. We have a good group in this market offering that service. We’d like to grow that part of our office. At the end of the day, it’s about serving our clients. If we are not willing to branch out and add something like property management, there is always someone else who will.

MREN: One final question: Jeff you are a visitor to Chicago this week. What do you plan on doing while in the city, anything unusual?
Rinkov: I can’t yet say if I’m going to enjoy it because I’ve never done it before, but my wife and I are going to take a Segway tour of Chicago. I’ll have to report back on whether it was a good experience or not. My wife and I are also foodies, and Chicago is a great town for that. So we do plan on eating some good food while we’re done here. I’m a runner, too, so I’m looking forward to taking some runs through downtown Chicago. And being here at this networking event, of course, is a great chance for me to network and socialize with 40 or 50 of the members of the leadership at Lee & Associates.

Posted in Chicago Commercial Real Estate, Illinois, Illinois real estate, industrial real estate, Milwaukee commercial real estate, Minneapolis commercial real estate, Minnesota real estate, Wisconsin commercial real estate | Tagged , , , , , , , , | Leave a comment

Nationwide Realty: Making a big investment in Grandview Yard

GVY Nationwide Campus 2by Dan Rafter

Nationwide Realty Investors is ready to make a big commitment to the Grandview Yard mixed-use development in Grandview Heights, Ohio.

Nationwide plans to build a 500,000-square-foot campus for its employees, a 135-room hotel and 13,000-square-foot conference center at the site.

Nationwide officials unveiled their plans earlier this month to the members of the Grandview Heights City Council. Anthony Panzera, president of the city council, said that he and the other members of the body are looking forward to working with Nationwide to make the new plans a reality.

“This proposal represents a great win for our entire community,” Panzera said. “We are thrilled that Nationwide is willing to make this commitment.”

Plans call for the new Nationwide campus to include three four-story interconnected office buildings with three adjacent four-level parking structures. The first building would include 320,000 square feet of space and open in 2016.

The 160,000-square-foot second building would open in 2017, with the third building opening its doors in 2019. The new campus, once it is completed, will be able to accommodate more than 3,000 Nationwide associates.

The hotel and conference center are scheduled to open in 2016. NRI would own the hotel, which would be operated by Columbus Hospitality.

Plans also call for 2.5-acre public park that, Nationwide officials say, would serve as a gathering place for the neighborhood.

Grandview Heights’ officials said that the Grandview Yard development, and the new additions proposed by Nationwide, will be a positive for the community.

“It is an important day in the history of Grandview Heigths,” said Ray DeGraw, mayor of Grandview Heights, in a press release. “Nationwide’s new campus fulfills our city’s community planning vision that called for a vibrant mixed-use district offering professional jobs, an enticing residential lifestyle, vital businesses and an expanded tax base.”

The Grandview Yard mixed-use project sits on the former Big Bear warehouse site at the intersection of State Road 315 and Interstate 670 in Grandview Heights. It is also just minutes from downtown Columbus and The Ohio State University.

Grandview Yard covers more than 100 acres. When complete, it will include offices, restaurants, grocers, retail and hospitality uses.

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