Whole Foods’ new distribution center to make big impact on Chicago’s South Side, entire Midwest

Officials, including Chicago Mayor Rahm Emanuel, kick off the construction of Whole Foods' new distribution center.

Officials, including Chicago Mayor Rahm Emanuel, kick off the construction of Whole Foods’ new distribution center.

by Dan Rafter

Whole Foods this week began construction of a new Midwest distribution center that will bring more than 100 new jobs to the South Side of Chicago and help the company better serve its growing roster of stores throughout the Midwest.

Whole Foods broke ground July 26 on a 150,000-square-foot Midwest distribution facility in Chicago’s Pullman neighborhood. The new facility, which is expected to open in the early days of 2018, will initially provide jobs for 150 people.

The new center will also play a large role in Whole Foods’ Midwest plans, providing distribution services to up to 70 of the grocer’s locations in Illinois, Indiana, Michigan, Wisconsin, Minnesota, Missouri, Nebraska and Iowa.

Whole Foods’ decision to build the center in the Pullman neighborhood makes sense. The location is close to major highways and will serve as a key part of the grocer’s plans to increase its presence in Chicago.

Chicago Mayor Rahm Emanuel at a ground-breaking ceremony said that the new distribution center is just one more positive for the South Side Pullman neighborhood.

“There is a renaissance happening in Pullman, and this Whole Foods center will only make it stronger,” Emanuel said. “By investing inour neighborhoods and supporting projects like this distribution center, we are creating economic opportunities for families throughout Chicago.”

Chicago’s gain, though, is Indiana’s loss. Whole Foods will close its existing Midwest distribution center in Munster, Indiana, with this move.

The Pullman distribution center will be twice the size of the one in Munster, and will occupy 17 acres of empty land owned by U.S. Bank. It is also just the latest bit of good news to hit this neighborhood. Chicago Neighborhood Initiatives has already invested $130 million in the neighborhood since 2011, including funds that helped transform the former Ryerson factory site into the Pullman Park retail center. That project has created more than 750 permanent jobs in Pullman. In 2015, Method Products built its first U.S. factory here. Construction is still taking place on a $15 million community center in the neighborhood, too.

“We are thrilled to begin construction of our new distribution center,” said Bobby Turner, Whole Foods Market Midwest regional vice president. “We’ve grown so much since opening our first Midwest store in Chicago in 1993 and as our growth continues, this distribution center helps us continue our mission of supporting the communities where we do business.”

Whole Foods is in the middle of an expansion on Chicago’s South Side. The grocer has recently opened a market in the Hyde Park neighborhood and will open a store in the Englewood neighborhood in the fall.

Ryan Companies US will build the distribution center. The new project is the third collaboration between Ryan Companies and Whole Foods.

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As industrial market continues to soar, more users buying instead of leasing

Trinity Scurto

Trinity Scurto

by Dan Rafter

The officials at Elk Grove Village, Illinois-based Brown Commercial Group are seeing a trend: Industrial users today are growing ever more interested in buying their warehouses and distribution centers. More of them are buying instead of leasing space at industrial facilities.

Trinity Scurto, senior vice president with Brown, said that this trend is only gaining traction as the industrial market as a whole continues to see more activity.

What’s behind the trend? Scurto said that a variety of financial factors makes buying a smart money move for end users today.

“Prices for properties are still at a decent rate, even with the increased activity in the industrial market. At the same time, interest rates are still low,” Scurto said. “A lot of people have regained some of their capital. They are excited to make a move in the real estate market, to put some money in real estate. They want to make a new home for their businesses. They don’t want to just lease on a two- or three-year plan. They’re committing to a location and to growing their businesses in these locations.”

It’s a trend that others are seeing in the industrial market, too. And the buying-over-leasing trend isn’t the only positive for industrial at the halfway point of 2016: Commercial real estate pros say that the industrial market remains one of the strongest commercial sectors today, in the Midwest and across the country.

The best news? These same pros say that they expect activity to only increase in the industrial market throughout 2016 and into 2017.

No crystal ball

Scurto says that though she can’t see into the future, she does have high hopes that the industrial market will continue to see even more sales, leases and new construction in the coming months. She also said that she believes even more end users will elect to buy their own industrial spaces instead of leasing.

“It’d certainly be nice to see sales continue to be so strong,” Scurto said. “I would say that, yes, this is a growing trend and one that will continue. More people are done with the leasing end of the spectrum. They really want to have a more permanent place. They don’t want to be paying someone else to run their businesses. They want to pay themselves to run their business.”

Scurto says that interest rates are playing an important role here. As long as rates stay low, more end users will be encouraged to buy industrial space. And it looks like interest rates aren’t rising in the near future.

It helps, too, that banks are steadily becoming more business-friendly when it comes to loaning money.

“Banks are still being careful about the money they are loaning out, but isn’t nearly as difficult for end users to close smaller deals with the banks today,” Scurto said. “The banks are actually excited. They see hope and promise today.

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Stability and predictability in CRE? Property management offers them both

Randel Waites

Randel Waites

By Dan Rafter

How important is a strong property management division for commercial real estate companies that want to continue to grow? Randel Waites, principal for property management with the Chicago office of Avison Young, says that it’s not only important, it’s critical.

The reason? The commercial real estate industry remains a competitive one. To attract long-term clients, firms need to offer them a full suite of services.

And property management is one of the important divisions that a full-service CRE firm is expected to provide today, Waites said.

“To compete in the market with so many other players, you need a full option of services,” Waites said. “You need the capital transaction, leasing and property management to completely service your clients. And really, the best way to keep a long-term relationship going with clients is to offer that property management service.”

Stable and predictable

Property management might not be the flashiest of divisions in a typical commercial real estate firm. But it is one of the steadiest. And in a business as competitive as commercial real estate, that’s a bonus, Waites said.

Commercial real estate firms can count on the revenue coming from their property management divisions each year. Sure, clients can come and go. But the revenue production of these divisions is far less volatile than it is, say, for the leasing side of a CRE company.

“It really is the most stable, predictable reoccurring income for a commercial real estate firm,” Waites said. “Property management is just more predictable. It is something that firms know they can rely on.”

Convincing clients

The key to growing a property management division is to attract and retain a steady stream of clients who don’t want the hassle of managing their own commercial assets. This sounds obvious, but the trick lies in convincing potential clients that your property management division will provide them with the best service.

The property management divisions of companies vary in their approaches, usually depending on their sizes. Waites said that Avison Young’s property management division, for instance, prides itself on being large enough to provide all the resources that clients expect while also being nimble and flexible enough to meet any unique needs that clients might have.

Waites said that his division has an entrepreneurial mindset. The pros who work here understand how difficult it can be to build and maintain a business. So they make sure that their clients don’t have to add worrying about the management of their properties to their list of daily worries.

“We like to say that we are more nimble than our competitors,” Waites said. “To me, it’s about building a better mousetrap.”

Target areas

The property management divisions serving Illinois deal with a wide variety of buildings. But certain property types are more common.

Waites, for example, said that Avison Young’s property management division targets retail, office and industrial owners. And these days, industrial is a particularly hot area.

“The industrial market here is very strong,” Waites said. “That’s not much different than it is around the country. It’s also a great market to serve when it comes to property management. Many of the owners who get into the industrial market, have little interest in having to manage these properties. So they call on companies like ours to take over that job. This is a segment that I only see growing in the near future.”

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Absorption levels soar in Indianapolis industrial market

 

by Dan Rafter

The greater Indianapolis market absorbed more than 1.9 million square feet of industrial space in the second quarter of this year. If that sounds like a strong number, it is: Cushman & Wakefield, in its second-quarter industrial report, said that the Indianapolis industrial market saw its greatest level of occupancy gains in this quarter since the third quarter of 2014.

For the year-to-date, the Indianapolis market has now absorbed more than 2.8 million square feet of industrial space. That’s up about 600,000 square feet from the same period last year, said Trevor Kirsh, research analyst in Cushman & Wakefield’s Indianapolis office.

The overall vacancy rate in the Indianapolis industrial market fell to 4.9 percent in the second quarter. This is the first time this rate has fallen under 5 percent in more than two years.

Not surprisingly, asking rents increased, too. Cushman & Wakefield reported that average asking rents in the industrial sector stood at $4.33 in the second quarter, up from $4.36 in the second quarter of 2015.

The busiest submarket in the Indianapolis area was the Southwest market, with more than 1.6 million square feet of industrial absorption. The Northwest submarket saw industrial absorption of 288,392 square feet.

Developers have responded to this strong market, with Cushman & Wakefield reporting that three new speculative warehouses are scheduled to come online here in the next year.

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Savvy retailers use Pokemon Go to boost foot traffic at their shops

The Blue Goose Supermarket in St. Charles, Illinois, has branded itself a Pokemon Go Friendly zone.

The Blue Goose Supermarket in St. Charles, Illinois, has branded itself a Pokemon Go Friendly zone.

 

by Dan Rafter

Smart retailers take advantage of hot trends. Just look at the way some are having, and boosting their foot traffic, with the Pokemon Go mobile game.

If you don’t know what Pokemon Go is, here’s a crash course: It’s an app that you can download to your phone based on the popular trading-card game and cartoon. In the game and cartoon, your goal is to collect creatures called Pokemon. The app lets you walk through your town and find Pokemon hiding in the wild.

The game qualifies as a legitimate craze. Just look around the parks and sidewalks of your community. The odds are high that you’ll find kids, and adults, staring down at their phones on the hunt for Pokemon.

The game also allows users to tag certain locations in their hometowns as Pokemon gyms. What happens next can actually be a benefit to business owners.

Consider what the Blue Goose supermarket in the Chicago suburb of St. Charles, Illinois, has done. The store, which has been tagged as a Pokemon gym, has declared itself a “Pokemon Go Friendly Zone.” The supermarket has placed signs around the shop advertising this fact. At noon each day, the store gives away two free doughnuts to every Pokemon Go player who visits the shop’s bakery.

Why do this? Pokemon Go players aren’t all kids. Many are in their late teens and mid-20s. Others are in the 30s and 40s. When they gather around the Blue Goose, the odds are good that they’ll stop in to make a purchase or two.

National video game retailer GameSpot is taking advantage, too, of the press that comes with being named Pokemon Go gyms. The retailer is now releasing what are known as lures in their stores, items that are designed to attract wild Pokemon. GameStop is inviting users to come into their stores to play the game. If these players should happen to buy a video game or phone accessory while there? That’s a nice bonus.

According to a story in Supermarket News, national supermarket chains Martin’s Super Markets, Rouses and Stew Leonard’s are advertising when their locations become Pokestops, locations players can visit to find the virtual objects and gear that increase their odds of finding Pokemon.

It will soon be easier for businesses to capitalize on Pokemon Go. The developer of the game, Niantic, has plans to partner with businesses to offer sponsored locations in the game. These locations will pay a fee to Niantic to become Pokestops. This has already happened with a similar game that Niantic has created, Ingress. Companies such as Zipcar paid to become important locations in that game as a way to increase their foot traffic.

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Cincinnati industrial market absorbs more than 19 million square feet since start of 2012

cincinnati-industrial-1024x683

by Dan Rafter

The Cincinnati industrial market is showing no signs of a slowdown, according to the latest numbers from CBRE.

CBRE reported that the availability rate in the Cincinnati industrial market fell from 5 percent to 4.4 percent in the second quarter of the year. This means that the Cincinnati market boasts one of the five lowest industrial vacancy rates in the country.

This doesn’t look to change soon. CBRE says that the greater Cincinnati industrial market continues to absorb space in high volumes, seeing more than 2.3 million square feet of net absorption in the second quarter and more than 3.5 million for the entire year.

This industrial market has been strong for a long time. CBRE reports that the since the first quarter of 2012, the Cincinnati industrial market has seen more than 19 million square feet of positive net absorption.

The area did not see any new industrial construction starts in the second quarter, but CBRE says that the region should see just under 3 million square feet of industrial completions in the third quarter of the year.

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When the deals make a difference: Bringing Niagara Bottling to the Columbus area

The solar panels outside of Niagara Bottling's facility in Gahanna, Ohio.

The solar panels outside of Niagara Bottling’s facility in Gahanna, Ohio.

 

by Dan Rafter

Some commercial deals make a greater impact than others. Brad Kitchen points to the deal he helped close in 2012 that brought Niagara Bottling to Gahanna, Ohio, a community located less than 10 miles from Columbus.

Niagara Bottling purchased a 308,000-square-foot facility in Gahanna for $7 million. The bottled water business resulted in the creation of more than 70 jobs in the area, jobs with an average hourly wage of nearly $20.

For Kitchen, president of Alterra Real Estate Advisors in Columbus, the deal was a chance to make a positive impact in his community.

“We got a great deal on the building and they have an excellent facility in a great community,” Kitchen said.

Niagara Bottling supplies single-serve, private-label bottled water to grocery, club store, convenience and wholesale customers across the United States. The Columbus-area plant focuses on product manufacturing.

When looking for locations, Niagara also considered Louisville and Detroit before choosing Columbus.

Kitchen said that the city of Gahanna “rolled out the red carpet” to attract the bottling company. Economic development corporations helped, too, such as Columbus 2020 and JobsOhio. Kitchen said that Ohio Gov. John Kasich also took time to promote the benefits of doing business in the state and region.

“It was great to be part of the team to help get the deal done, incuding economic incentives,” Kitchen said.

Kitchen, of course, had to do his part, too. This meant performing what he called an “exhaustive and fast” search of area properties. The key was satisfying the heavy power requirements that the plant would require while also finding a site that had easy access to groundwater.

Niagara even took Kitchen on a tour of one of their potential spring-water suppliers. As Kitchen says, he learned plenty about the process of sourcing and bottling water.

“There is a lot more that goes into it then you would think,” he said.

Finding the right facility took time. Kitchen said that he and his team would find buildings that looked right. They would then call the power company only to discover that it would not be able to provide the amount of power that the building needed without a delay of 18 months. The problem? Niagara needed the facility up and running in just a few months, not 18.

Eventually, Kitchen and his team found Niagara the right facility, at 1700 Eastgate Parkway in Gahanna. The company has been operating at the facility since 2013.

Today, the facility is employing local residents and providing an economic boost to the Columbus region. And Kitchen is proud to have played a role in bringing the company to the area.

“Gahanna really impressed them on how quickly they would work to help Niagara, and do whatever it takes to get them there,” Kitchen said.

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