by Dan Rafter
Studley, Inc. is committed to the Midwest. It’s committed, too, to the industrial market. That’s why it’s little surprise that the real estate company is in the middle of boosting its industrial presence, starting from one of its key Midwest bases in Chicago.
Studley earlier this fall hired Michael Mangan as an associate director in its Chicago office. He is now working closely with Bruce McConnell, Studley’s senior managing director in Chicago, to build the company’s industrial presence in the Midwest.
Chicago will serve as the home base for this expansion. But McConnell said that Studley will boost its activity in industrial throughout the Midwest, not just in the city.
“We look at things differently at Studley,” said McConnell. “We add or expand our business according to what our customers are telling us. We don’t create lines of business to try to sell something to them. If there is a need or reason for it, we’ll add strength or depth in those services.”
The industrial market made sense for an expansion, McConnell said. That’s because this commercial sector is continuing a strong recovery. Industrial has long been a key sector in several Midwest makrkets.
And, McConnell says, this is a trend that doesn’t look to end any time soon.
“The industrial market is really stabilizing,” McConnell said. “It has been much better now than it has been for the last few years. We are at historically good vacancies. There is also some new construction, some spec construction going on. That is a positive. When new construction is going on, that provides more options for our tenants.”
Tenants are important to Studley. The company also does tenant rep and occupier business. It doesn’t represent developers, investors or landlords when buildings are sold.
When vacancy rates are tight, this creates a challenging environment for tenants. Landlords can boost asking rents when their products are in demand.
But the tighter vacancies ca also provide some benefits to tenants.
“There is a tightening of vacancy and availability that is giving developers the go-ahead to build new and better products,” McConnell said.
What are tenants looking for today in industrial space? McConnell said that most want Class-A modern buildings with 32-foot-plus clearance. Many are looking for buildings that boast automated systems.
It’s not always easy to find these buildings in all markets today.
“There really has been a flight to quality,” McConnell said. “But what has been grat is that our clients are for the first time able to plan in advance. During 2007, 2008, 2009 and 2010 there was some real uncertainty about projecting inventories and the space that you needed. That caused a lack of movement, made planning difficult. Clients are now getting to the point where the economy, though it is not great, is solid.”
McConnell says that the future looks positive for both the Midwest and its industrial market. He said that the industry has mostly moved on from the worst days of the recession, when the market was filled with uncertainty.
The economy is stronger today. It’s not great, as McConnell readily admits, but it’s moving in the right direction.
“I wouldn’t say the recovery is very strong,” McConnell said. “But I would say that things have definitely stabilized. People are willing to take a leadership role in moving and acquiring additional space. It feels like we are on the precipice of a stronger recovery. There is still some uncertainty, though, about which way this is going to go. But it’s been refreshing to see things get better. There is an energized atmosphere around the industry. We are on the cusp of doing something strong in the industrial group.”