News from the Chicago Chapter

CHICAGO CRE MARKET PROGRESSES AT MID-YEAR 2018, REPORTS PANEL AT LUNCHEON HOSTED BY IREM CHICAGO

Mid-Year Market Review Luncheon July18 Also Featured Installation of Members Who Earned IREM Designations, Updates on IREM Care Days and 65th Anniversary Announcement

ROSEMONT, IL: July 2018 – The metropolitan Chicago commercial real estate market continued to show resiliency and growth at the midway point in 2018, with the industrial and multifamily markets demonstrating concerted growth while office and retail properties were holding steady and adapting to economic, social and technological changes.

Those were among the perspectives and insight shared by a panel who participated in the IREM Chicago Mid-Year Market Review held during the chapter luncheon July 18.

Moderated by Danny Nikitas, principal of Avison Young, panelists were optimistic that Chicago’s robust and diverse economy would keep the market advancing into next year.  One conclusion shared: Technology will continue to play a role in commercial real estate. 

Below are key points presented by the panelists.

Susan Bergdoll, Vice President at Duke Realty.  The vacancy rate for the industrial market remains very robust nationally, driven by demand from companies like Amazon. Ms. Bergdoll noted: “Every quarter, the vacancy rate keeps going, going down.” During 2010, the national vacancy rate for industrial assets was 10.2%. In mid-2018, the rate is less than 4%.  In Midwest markets, the vacancy rate is around 7%, with some Chicago submarkets like O’Hare and DuPage County showing rates of less than 4%. Developers of industrial properties were finding challenges in securing land for new projects.

Rawly Lantz, Executive Vice President at Cawley Chicago.  The metropolitan Chicago office market in 2017 was described as “slow and steady” by Mr. Lantz. “I tried to change that perspective for 2018, but I don’t think I can,” he added. The vacancy rates for suburban office properties are around 20%, with submarkets like O’Hare and the East-West Corridor faring better at around 14%; the downtown Chicago market vacancy rate is around 12%, even with new office construction underway. He said lease renewals have been a challenge for landlords, but on the flipside average rental rates have increased. Owners of office properties have improved amenities in order to retain existing and attract new tenants.

Gail Lissner, CRE, SRA, Managing Director at Integra Realty Resources.  In 2018, the suburban multifamily market should cap off a “really big year,” with delivery of 2,800 units. Ms. Lissner said most of the new suburban apartment properties are in suburban downtown areas near Metra train stations, with some fringe developments also under way. In Chicago, 2017 was a record year for new multifamily properties, with 4,350 units offered. An estimated 3,000 new apartments will be on the market in 2018, with many landlords offering attractive concessions to improve leasing.

Deena Zimmerman, Vice President of SVN.  Despite news of doom and gloom, there is no “retail apocalypse.” According to Ms. Zimmerman, vacancies created by the closure of big box retailers result in opportunity as the asset class responds with reinvention.  For example, some vacant retail spaces of 40,000 to 60,000 square feet may be converted to distribution centers. “People need the brick and mortar experience,” she said, adding that Target is responding with plans to open 35 smaller-scale stores in the next few years.

Prior to the panel discussion, Chapter leadership conducted business and shared news on upcoming events.  These four IREM Chicago members were installed by 2018 Chapter President Jim Vocos, CPM® for earing IREM professional designations:

  • Certified Property Manager (CPM) -- Kimberly Bejovec of EQ Office, and Paul Crump of Crump Realty Group
  • Accredited Commercial Manager (ACoM) – Kristina Grbavac of Boardwalk Capital Holdings
  • Accredited Residential Manager (ARM) – Jazmin Carranza of Owl Management

Chapter member June McCrory, CPM® provided an update on the volunteer work completed June 14 through IREM Care Days at LYDIA Home, the Chapter’s official 2018 charity.  She thanked IREM members and Industry Partner companies for their volunteer efforts and for donating materials, and she encouraged donations to the Silent Auction that will be held following the 32nd Annual Golf Outing August 6 at Kemper Lakes Golf Club. Shari Vass, CPM®, noted that an auction held during the luncheon raised $1,600 for LYDIA Home, and she encouraged donation of prizes for the Silent Auction.

 

President-Elect Kris Haskins, CMP® reported on upcoming Chapter events for the balance of 2018, including the 65th Anniversary celebration, which will be held in November and correspond with the installation of the 2019 Executive Council; details will be announced in the near future.  And, 2017 Chapter President Angela Aeschliman, CPM® recognized these companies and properties for earning the IREM Certified Sustainable Property designation:

  • Habitat Group – Steve Burlingame and Regina Harris
  • APT Property Management – Jeff Gustafson and Barbara Montes

 

These 12 IREM Industry Partner companies sponsored the July 18 luncheon:

 

The next IREM Chicago event will be the 32nd Annual Golf Outing and Silent Auction August 6. Tickets are still available for the reception and Silent Auction.