How did the U.S. become a nation of renters?

by Dan Rafter

Why is multi-family so hot? Partly it’s because so many consumers today want to live in the hearts of urban areas. And they don’t want to live only in major cities such as Chicago, New York City or Los Angeles.

So-called second-tier cities across the Midwest — places like Milwaukee, Indianapolis, Cleveland, Kansas City and St. Louis — are attracting plenty of renters to their downtown hubs, too. These renters want to walk to public transportation, shops, restaurants, bars, libraries and other amenities.

But this only tells part of the story of how the multi-family boom across the Midwest and United States.

PM Guardian, an online company that provides application and tenant screen for property managers, recently put together its own history of what it calls “The Great Rental society.” You can check out PM Guardian’s rental timeline below. It’s well worth reading if you work in the property management or multi-family sector.

And if PM Guardian’s research is correct? We can expect the multi-family boom to last for a long time.

pm guardian

Posted in Chicago Commercial Real Estate, Cleveland commercial real estate, Milwaukee commercial real estate, Missouri commercial real estate, multi-family | Tagged , , , , , , , , , , , , | Leave a comment

Expect a good year for Minneapolis’ signature office tower

ids center newby Dan Rafter

Jon Dahl doesn’t hesitate when asked what makes the IDS Center officer tower in downtown Minneapolis so special: “It’s the most iconic centerpiece of downtown,” he said. “It’s always been the skyline-defining building of Minneapolis.”

That’s why Dahl, senior vice president of JLL Minneapolis, so enjoys his work leasing office space in this key building.

“The IDS center is the center of the universe,” Dahl said. “Everything starts at the IDS Center and goes out from there.”

The IDS Center is busy today, too. Accesso Partners, LLC of Hallandale Beach, Fla., purchased the building in April of 2013. Since that time, JLL has worked steadily to fill the 57-story, 1.4-million-square-foot building’s office space.

These efforts have been successful. Since Accesso’s acquisition, 55 tenants have leased more than 424,000 square feet. In the fourth quarter of 2014 alone, tenants renewed leases covering 76,800 square feet.

Newcomers to the office portion of the building include Lazard Middle Market, which moved its headquarters into 23,300 square feet, a move that fills the entire 27th floor of the tower. Also last year, USB signed a 30,000-square-foot lease and moved more than 100 employees from Minneapolis’ Bancorp Center to the 29th and 30th floors of the IDS Center.

The Crystal Court

Dahl says that the building’s location is a big draw, as is its recognizable name.

The IDS Center's Crystal Court

The IDS Center’s Crystal Court

Then there’s the Crystal Court, the retail component of the tower. Dahl says that the retail center is almost like a public park for downtown Minneapolis, albeit an interior one.

“It’s a congregating point for businesses and people,” Dahl said. “It’s also a must-see destination when you come to Minneapolis.”

In fact, Dahl says that there really are no unusual challenges involved in leasing space at the IDS Center, expect for the large volume of tenants that do business from the building. Dahl says that the IDS Center holds 130 office tenants. This means that there are always spaces rolling.

“It’s management’s job to keep all the new and existing tenants happy,” Dahl said.

Dahl also had plenty of praise for Accesso Partners, saying that the company has pumped a significant amount of money into the building since purchasing it in 2013. Much of the money has gone to improvements that the public doesn’t see – new rooftop HVAC units, new roofs, improved windows.

But Accesso has spent on two highly visible projects at the building: The IDS Center will debut a new fitness center and conference center this month.

Dahl said that the conference center will be an especially important space for smaller tenants who don’t necessarily want to build out a larger meeting space on their own. Maybe these tenants need a conference room once or twice a month. With the IDS Center’s new conference room, they can reserve that space for these rarer meetings.

The fitness center will be a draw, too. Tenants will be able to offer the fitness room to their employees. This makes the IDS Center more appealing to office users, as it provides companies with one more amenity.

Posted in Minneapolis commercial real estate, Minnesota real estate, office, retail | Tagged , , , , , , | Leave a comment

It’s back! The cubicle is making a big comeback

by Dan Rafter

Workplace introverts, it’s time to celebrate: The cubicle is back.

Plenty of companies still embrace the open-workspace concept, creating entire floors with not a single cubicle wall to be found. But many others are finding that their workers want more privacy than open-air floor plans provide. Because of this, many companies are moving back to the traditional cubicle formula.

Mason Awtry knows this. And he should; He’s president of Chicago’s Rightsize Facility Performance, a national office interiors and facility services firm that provides furniture to clients moving to new offices.

This means that he stays on top of new trends in office layouts. And during the last three to four months, he’s seen a steady stream of companies moving back to individualized workspaces. As he sums it up, the cubicle is “back in fashion.”

This means that many companies are moving away from what Awtry calls the open-air system of office layout. In this layout, most cubicle walls are removed, and employees work in open areas, in full view of everyone else.

This layout is supposed to inspire creativity and collaboration. It works for many companies and employees. But it’s not the right layout for every office or office worker.

“About 30 percent of the workforce is still made up of introverts,” Awtry said. “These workers need their own territory. Management might want a collaborative environment. But there are a lot of jobs that don’t require collaboration. Everything from accounting and technical jobs to customer service people who serve external clients, these jobs often don’t require collaboration.”

Those companies that are moving back to cubicles, though, aren’t always returning to the cubicle of old, the one surrounded by 8-by-8 10-foot panels. Today’s modern cubicle walls usually stand up to 54 inches tall. And modern cubicles usually feature some sort of glass element.

These cubicles provide privacy, then, but also prevent employees from walling themselves completely off from their co-workers. Consider the modern cubicle a happy medium between the world of wall-less workspaces and the cubicle mazes so often derided by workplace critics.

How strong is the demand today for the semi-traditional cubicle? Awtry says that Rightsize sold 800 cubicles in Chicago last month alone. And these cubicles are going to a wide range of companies. Awtry said that he sold about 100 to a law firm, 40 to a technology/data-storage firm in the suburbs and 76 to an insurance firm.

“The cubicle is making its way back in. It’s on its way back,” Awtry said.

Those companies that are adding cubicles to open-air floor plans are doing so for one main reason, Awtry said: They want their employees to be more productive.

Awtry points to an entertainment company in downtown Chicago. Such a company — filled with creative types — would seem to be ideal for the open office concept. But the company instead has requested a shipment of cubicles from Rightsize.

Why?

“Their specific comment was that they needed more privacy,” Awtry said. “Their employees needed to be less distracted.”

It’s true that the cubicle has long been derided by office workers. But here’s the truth: Many of these same office workers missed their cubicles once they were taken away. Many found, too, that they work more efficiently when they have at least a small space to call their own.

“Although the concept of the open office, Google-like space is one that people find aesthetically attractive, it does not necessarily hit the functionality requirements for every company,” Awtry said.

So if you do miss your former cubicle? Don’t despair. It might be coming back.

Posted in Chicago Commercial Real Estate, Illinois, Illinois real estate, office | Tagged , , , , , | Leave a comment

Good news for the office market — mostly

Courtesy of Marcus & Millichap

Courtesy of Marcus & Millichap

by Dan Rafter

The recession hit the office market hard, and this commercial real estate sector is still trying to recover.

That’s the bad news. The good news? According to the latest research from Marcus & Millichap, that recovery is underway in full force.

Courtesy of Marcus & Millichap

Courtesy of Marcus & Millichap

Marcus & Millichap’s 2015 national office report predicts plenty of strong numbers for the office market across the country this year. According to Marcus & Millichap, the national office vacancy rate should fall by 80 basis points by the time this year ends, dropping to 14.5 percent.

Those falling vacancies will result in rising rent growth. Marcus & Millichap predicts that asking rents will rise 4.1 percent this year for office space across the country.

Demand for office space should be strong throughout this year, according to the numbers. Marcus & Millichap predicts that the office market will see net absorption of 104 million square feet in 2015.

Most of the markets expected to see especially low office vacancy rates are not in the Midwest, with three exceptions. Marcus & Millichap says that office vacancy rates in Nashville, Louisville and Columbus will be lower than the U.S. average of 14.5 percent.

The news wasn’t as good for Cincinnati, Chicago and Detroit. These three markets should have some of the highest office vacancy rates in the country, with Marcus & Millichap predicting that Detroit’s rate of office vacancies will rank second overall in the United States in 2015.

Still, the Marcus & Millichap report is mostly good news for the office market. And that, of course, is good news for commercial real estate in general.

Posted in Chicago Commercial Real Estate, Cincinnati commercial real estate, Columbus real estate, Detroit commercial real estate, Illinois, Illinois real estate, Kentucky commercial real estate, Louisville commercial real estate, Michigan commercial real estate, Nashville, office, Ohio commercial real estate | Tagged , , , , , , , , , , , , | Leave a comment

Think the Internet is changing the way you do business? Try being a mortgage loan officer

online businessby Dan Rafter

The Internet has certainly changed the way commercial real estate professionals do business. But the impact hat the Web has had on other professions has been positively enormous. Just look at the latest survey by Discover Home Loans for proof.

According to the survey, released earlier this year, 36 percent of home buyers who took out a mortgage loan said that they would prefer to complete the entire financing process online with no phone calls or in-person meetings.

Think about that: More than one-third of buyers would prefer to have no contact that wasn’t online with a mortgage loan officer.

The message here is clear, for commercial real estate professionals and anyone else who serves the public: More consumers want to do more of their business online. And this trend isn’t about to slow down. You can bet that when Discover Home Loans does the survey three years from now, that figure is going to be higher than 36 percent.

The commercial real estate industry is in many ways a bit old-fashioned, with many deals relying on networking and many years of relationships. But those CRE pros who hesitate to embrace the online world already find themselves at a competitive disadvantage. That disadvantage is only going to grow.

Consider the other findings from the survey. Discover found that 92 percent of buyers who used online tools to submit documents to their lenders said that it saved them time, while 83 percent said that it helped them stay organized. The survey found that 86 percent of buyers felt comfortable sharing personal and financial information electronically with lenders, while 68 percent said that electronic communications made it easier to work with lenders.

Posted in national commercial real estate, residential real estate | Tagged , , , | Leave a comment

CBRE wraps retail leasing at Milwaukee’s Avenir mixed-use development

 

This slideshow requires JavaScript.

by Dan Rafter

It doesn’t seem like the biggest of retail deals: Zoup! — which, as its name suggests is a national soup-themed restaurant franchise — earlier this year leased 2,230 square feet in Wangard Partners’ Avenir mixed-use project in Milwaukee.

But with this relatively small lease, all of the 7,102 square feet of Avenir’s retail space was officially leased.

That’s good news for this mixed-use development in the Park East corridor section of Milwaukee’s Lower East Side. And it’s good news for downtown Milwaukee as a whole.

The Avenir brings much-needed luxury apartment space to downtown Milwaukee. The bulk of the project consists of 104 market-rate apartments. Like many apartment developers today, Wangard Partners is marketing the Avenir to young buyers who want to walk to public transportation, shops and restaurants and ditch their cars. The Avenir, because of its central location, allows renters to do just that.

The apartments are now up for lease, and demand, so far, has been strong.

A key component of the project is its retail strip. In addition to Zoup!, retailers Jimmy John’s, Elite Nutrition, Great Clips and Q Nail Spa now call Avenir home.

CBRE’s Sandy Golden, vice president in the company’s Milwaukee office, led the leasing efforts for the retail portion of the project.

Golden said the addition of the retailers makes the Avenir an even more attractive project for potential tenants.

“These retailers will provide a variety of options conveniently located for the new residents as well as the general area,” Golden said, in a written statement.

Posted in Milwaukee commercial real estate, multi-family, retail, Wisconsin commercial real estate | Tagged , , , , , , , | Leave a comment

Consolidations keep hitting Michigan’s healthcare market

Michael Kalil

Michael Kalil

by Dan Rafter

Consolidations have long been a trend in healthcare real estate, with large medical providers merging with or acquiring other health systems in big numbers. That trend has been especially prevalent throughout Michigan in the last two years.

How common are consolidations here? Michael Kalil, chief operating officer and director of brokerage with Southfield, Mich.-based NAI Farbman, can quickly reel off the recent consolidations: In 2013, Dallas-based Tenet Healthcare Corp. completed a $1.8 billion acquisition of Vanguard Health Systems, which was the owner of the Detroit Medical Center. This year, Toledo, Ohio-based ProMedica acquired Mercy Memorial Hospital System based in Monroe, Mich.

Last year, Prime Healthcare Services closed its acquisition of Garden City Hospital in Garden City, Mich. And also last year, Port Huron Hospital in Port Huron, Mich., became McLaren Port Huron, the 12th hospital in the McLaren Health Care system.

Kalil says that he doesn’t expect the consolidations to slow any time soon. They’re a way for medical providers to run more efficiently and reduce their sometimes exorbitant operating costs.

“The consolidations create economies of scale and more purchasing power,” Kalil told Midwest Real Estate News. “That is really what is driving this wave of consolidations, in addition to other efficiencies and an increased quality of care.”

Kalil says that he is also seeing consolidations on a smaller scale in the local healthcare real estate market, with healthcare systems purchasing physician groups. The benefits of such acquisitions? They reduce risk and expense for the physician groups, while the hospitals and healthcare systems gain greater market share.

These consolidations wouldn’t be happening, though, if healthcare real estate wasn’t so strong today.

The country’s aging population means that consumers are making more visits to medical offices and hospitals. With this increased demand has come higher occupancy rates in the medical office sector.

At the same time, healthcare systems are striving to meet the changing demands of patients, who would prefer to have more medical procedures completed at outpatient facilities and freestanding clinics than at busy, overwhelming hospital campuses. As patients increasingly look for medical options closer to their homes, and more convenient for them, healthcare systems are responding by building new real estate throughout the communities they serve, Kalil said.

“More ambulatory care facilities are being developed by healthcare systems in different regions and areas to accommodate patients,” Kalil said. “It’s all about making the healthcare experience more convenient for the patients and creating a less expensive delivery model. And it is all designed to feed the main hospitals that these healthcare systems operate.”

Think of it as the spoke-and-wheel model: Healthcare systems are opening more stand-alone facilities throughout their service areas. These facilities handle a larger percentage of patient visits. But when patients need more intense care, they are funneled to the healthcare providers’ main hospital campus.

“The healthcare sector has remained strong. It wasn’t hurt as much during the downturn,” Kalil said. “And we’ll see more development and consolidations in the future. We are already seeing healthcare providers in our market planning new development, and I’d predict that other developments in addition to these will be taking place, too. Demand is high in this sector.”

Posted in Detroit commercial real estate, healthcare, Michigan commercial real estate | Tagged , , , , , | Leave a comment