News from the Chicago Chapter
xperts Agree Chicago CRE Market Continues to Demonstrate Resounding Resiliency at Mid-Year 2016
Provocative Panel Discussion Highlights June 15 IREM Chicago Chapter 23 Luncheon
Commercial real estate professionals representing the four major asset classes were bullish on the immediate future of the Chicago commercial property market, citing strong tenant demand, rising rental costs and new inventory as key factors driving activity.
This was the conclusion from the panel who participated in a discussion at the IREM Chicago Mid-Year Market Review held during the chapter luncheon June 15.
Moderated by Danny Nikitas, principal of Avison Young, panelists were optimistic that Chicago’s robust and diverse economy would keep the market strong for at least the next two years. One conclusion shared: The immediate future will be very good for landlords. Below are some takeaways from the panel.
Susan Bergdoll, Vice President at Duke Realty. Over the last five years, the Chicago industrial market has “been on fire.” Chicago, with 1.8 billion square feet of space, remains the second largest industrial market outside of greater Los Angeles. Three factors will help increase the amount of industrial space: Food distribution, consumer goods distribution and the continued growth of online behemoth Amazon.
Gregory Gerber, Executive Vice President at Savills Studley. The office market in metropolitan Chicago is a “tale of two cities.” Downtown, vacancy rates are at historic lows of 14.6%, while in the suburbs the figure is much higher at 23.3%. Corporate relocations to the city, most notably the recent announcement by McDonald’s, have tightened supply. The square footage of shared office space has soared recently.
Gail Lissner, CRE, SRA, Vice President at Appraisal Research Counselors. A decline in home ownership has resulted in a “tremendous demand” for rental properties in Chicago and many suburbs, where the occupancy rate is 96% and 4,000 new units are planned by 2018. Thousands of new high rise multifamily units are under development in the Gold Coast, South Loop and West Loop. But watch for as many as 2,500 new units to be built along Milwaukee Avenue.
Deena Zimmerman, Vice President of SVN. The retail market remains robust as “everybody wants to be main on Main Street.” On Chicago’s premier retail street – North Michigan Avenue – stalwart the Apple Store is relocating, and there’s talk that Crate & Barrell may leave its Magnificent Mile location. High end retailers are flocking to hip thoroughfares like Fulton Market in the West Loop. Landlords are asking, and getting, 10-year leases.
Prior to the panel discussion, Executive Council member June McCrory, CPM® provided an update on the volunteer work completed June 8 at the Almost Home Kids facility in Naperville as part of IREM Care Days. She thanked these IREM Industry Partner companies for their volunteer efforts and for donating materials to improve the transitional care home through painting, landscaping and other work: Brouwer Brothers Stematic, CertaPro Painters, Envision That, Inc., Landscape Concepts Management, Inside Out Painting and Showalter Roofing. Representatives from each company were recognized on stage.
Also, Shari Vass, CPM®, provided an update on the August 8 30th Annual Golf Outing & Silent Auction set for the Kemper Lakes Golf Club. Shari said the golf foursomes were sold out, but IREM members and property managers could purchase tickets for the sponsor showcase and dinner. Members were highly encouraged to donate prizes – especially electronics -- to the Silent Auction.