Midwest Real Estate News - September 2021 by RE Journals

W W W. R E J O U R N A L S . C O M

SEPTEMBER 2021 VOLUME34

ISSUE5

CRE MARKETPLACE PAGE 45: ARCHITECTS/DESIGN-BUILD FIRMS BROKERAGE FIRMS DEVELOPERS LAW FIRMS

Steady times in Omaha:

Nebraska city remains resilient in face of pandemic By Dan Rafter, Editor

Noddle Companies is planning a new mixed-use project, Block 181, at the corner of 180th Street and Dodge Street in downtown Omaha.

ew cities across the country enjoy a commercial real estate market as steady as Omaha’s. Each year, this Nebraska city’s commercial real estate industry hums along, notching an impressive number of sales, leases and new development.

But what happens when a pandemic hits?

family and industrial sectors have continued to thrive despite the pressures of the pandemic. What’s Omaha’s secret? CRE pros here point to a pro-business government, a conservative nature when it comes to new development and a high quality of living that makes Omaha an attractive place for companies to locate.

Turns out, Omaha’s CRE market stays steady. That’s the consensus of the top commercial real estate pros serving this market. They say that the last 19-plus months have been challenging. But despite this, Omaha has proven resilient, and the city’s multi-

And even in those commercial sectors hit hardest by COVID, Omaha continues to be resilient, say the commercial real estate brokers here. OMAHA (continued on page 36)

FINANCE

Looking toward a big 2022: No slowdown expected in commercial financing requests By Dan Rafter, Editor

Like everyone working in commercial real estate during the last 19-plus months, the financial pros in the commercial lending industry have faced plenty of challenges as the COVID-19 pandemic refuses to fade. But like others in this industry, commercial finance professionals have worked hard to overcome these challenges. What has the last year-and-a-half-plus been like for the commercial finance industry? Midwest Real Estate News spoke with Jim Doyle, FINANCE (continued on page 33)

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FEATURES 12

Delays, labor shortages and rising prices challenge construction firms:

The construction industry is busy again.

Chicago industrial’s big moment:

The Midwest’s commercial real estate publication, providing useful, unbiased and accurate coverage of the industry and its professionals since 1985.

The Chicago industrial market

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But being active doesn’t mean that there aren’t challenges to overcome.

remains red-hot. What’s behind the strength of this sector? We find out.

Still steady in Omaha: Like all Midwest cities, Omaha is dealing

A look back at multifamily’s busy 19 months: The multifamily sector

with the continuing COVID-19 pandemic.

thrived during the COVID-19 pandemic.

But even that hasn’t stopped the steady,

Why is that?

stable CRE market in this key Nebraska city.

Looking toward a bright future in Des Moines: The CRE market is on

Financing requests back on the

another upswing in Des Moines. We look

rise: After a brief lull, developers

at what’s behind this Iowa’s city strong

and investors are again turning to

commercial real estate industry

commercial financing professionals to

An industrial surge in Ohio: Ohio’s biggest markets are enjoying an

industrial boom. The pandemic didn’t hurt industrial here; It powered it.

Rebuilding ailing cities: The Center for Urban Transformation is making

its headquarters in Detroit. It’s the right move for several reasons.

Bringing new hope for veterans in Minnesota: A new veterans home is

fund their projects and acquisitions. We

opening its doors in Minnesota. The path

look at the latest trends in the world of

to reach this point? It was a long one.

commercial finance.

Online shopping still on the rise: With consumers’ habits changing,

there seems to be no stopping online shopping today.

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Editor’s Letter

Hope on the menu at Columbus

Cleveland CRE Summit: Commercial

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FROM THE EDITOR

Midwest Real Estate News

SEPTEMBER 2021

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Office, hotel sectors still awaiting the return to normal By Dan Rater, Editor

ore than 19 months in, the COVID-19 pandemic continues to hit the main commercial real estate sectors in wildly varying ways. Industrial and multifamily? They are thriving. But other sectors? They continue to struggle, most notably the hotel and office markets. Consider the hotel sector. While it’s true that leisure travel has mostly returned, a big dip in business travel means hat hotels are still suffering. The latest research from the American Hotel & Lodging Association and Kalibri Labs found that the hotel industry will end 2021 down more than $59 billion in

business travel revenue when compared to 2019. This comes after the industry lost nearly $49 billion in business travel revenue last year.

The dip in business travel revenue is expected to be 61 percent in Ohio, 62.1 percent in Tennessee and 63.5 percent in Wisconsin.

This isn’t surprising. A survey released Aug. 31 by the American Hotel & Lodging Association found that 67 percent of U.S. business travelers plan to take fewer trips and 52 percent plan to cancel existing business trips without rescheduling them because of rising COVID cases.

Then there’s the office sector, which is still mired in uncertainty. No one yet knows when employees will return in large numbers to the office as the country continues to deal with the Delta variant.

These are grim numbers. And they’ve led the hotel industry to dramatically shed jobs. According to the lodging association, hotels are expected to end 2021 down nearly 500,000 jobs when compared to 2019. Several Midwest states have been especially hard hit. The lodging association said that in Illinois hotel business travel revenue is expected to be down 80.2 percent in 2021 when compared to 2019. In Indiana, that figure is 56.6 percent while it is 47 percent in Iowa. The lodging association said that hotel business travel revenue is predicted to fall by 51.4 percent in 2021 compared to 2019 in Kentucky, 59.8 percent in Michigan, 72.2 percent in Minnesota, 58.8 percent in Missouri and 49.5 percent in Nebraska.

The latest research from CommercialEdge shows just how stagnant the office market has been since the pandemic hit. In its September National Office Report, CommercialEdge said that the average office asking rent in the United States’ 50 largest office markets stood at $38.72 a square foot in August. That figure is a stagnant one. It represents an increase of just 1.2 percent from August of last year and a jump of just 10 cents from July. CommercialEdge reported that the average office vacancy rate in August was 15.4 percent. That’s 210 basis points higher than the same time in 2020. In somewhat good news, this vacancy rate was down 10 basis points from where it stood in July.

Despite its struggles, the office market has still attracted buyers. CommercialEdge reported that high-quality office assets are still appealing to investors, with office transactions totaling $45 billion in 2021 throughout the end of August. Office properties that sold in the 50 biggest U.S. markets traded for an average of $287 a square foot. The pandemic might have slowed office construction, but it hasn’t stopped it completely. CommercialEdge says that as of August, there was a total of 156.7 million square feet of new office stock under construction. This amount of new construction is lower than usual, as just 38.2 million square feet of new office product was delivered during the first eight months of 2021. More than 90 percent of the new office space is in the Class-A or Class-A-plus categories. When will life return to normal in the office and hospitality sectors? That’s a good question. Unfortunately, no one yet knows the answer to it.

Midwest still a haven for multifamily investment By the Laramar Group

Multifamily investment in the United States continued at a strong pace at midyear 2021, with markets such as Indianapolis surpassing 45 percent annualized sales growth. According to research from Newmark, U.S. multifamily investment sales in the second quarter of 2021 surged by 238.1 percent year-over-year to reach $52.7 billion. Rents in most U.S. markets have recovered to pre-pandemic levels and have pushed higher in some markets. Against this backdrop, investors are increasingly focusing on regions where population growth and business expansion are driving demand, said Ben Slad, senior vice president of investments for The Laramar Group, a multifamily investment and property management firm based in Chicago and Denver.

Among the Midwest markets with yearover-year rent growth were Indianapolis (7.8 percent), Kansas City (4.6 percent), Cincinnati (4.5 percent), St. Louis (4.4 percent) and Milwaukee (3.2 percent). “We expect investment activity to grow in many of these mid-sized Midwest markets due to their stable market dynamics and relative affordability,” Slad said. “Those factors may allow for slightly advantageous cap rates.” According to an analysis by the Indiana Business Research Center at Indiana University’s Kelley School of Business, Indiana’s population growth over the past decade was driven by gains in Indianapolis and a few other areas. \

The 11-county Indianapolis-Carmel-Anderson metro led the way by adding 223,163 residents between 2010 and 2020, an 11.8 percent increase. The Indianapolis metro area’s numeric growth accounted for 74 percent of the state’s net population gain over this period, according to 2020 Census statistics. With a population now at more than 2.1 million people, this central Indiana region’s share of the state’s total population increased from 29.1 percent in 2010 to 31.1 percent in 2020. Multifamily construction trends In the second quarter of 2021, residential construction across the United States continued to shift toward the suburbs and more moderately priced markets, and this trend is especially pronounced within the multifamily sector, according to a Home Building Geography Index (HBGI)

released in September 2021. During the second quarter, multifamily construction posted double-digit percentage gains in small metro core and suburban areas, while large metro areas experienced a decrease for multifamily building activity. The HBGI shows that multifamily residential construction grew by 14.3 percent in small metro urban cores and 25.5 percent in small metro suburban areas in the quarter. In contrast, large metro core areas recorded a 0.5 percent year-overyear decline, reflecting the ongoing effect of the pandemic on housing in many major metropolitan areas.

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DES MOINES

Midwest Real Estate News

SEPTEMBER 2021

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A speed bump, not a stop sign: Des Moines’ multifamily market thriving even during latest COVID wave By Dan Rater, Editor

he COVID-19 pandemic has hit the commercial real estate market in every city across the country. Some markets, though, have been more resilient than others. One of those? Des Moines.

and industrial sectors are thriving. We are seeing record sales volumes and record sales prices in the multifamily market. We are stronger in this sector than we were even pre-COVID. For us, COVID was mostly a speed bump, not a stop sign.

Midwest Real Estate News recently spoke with Jared Husmann, founder and chief executive officer of the Katalyst Team at KW Commercial in West Des Moines, Iowa. He said that the CRE market in the Des Moines market remains vibrant, even as the country continues to fight through the pandemic.

Why is the multifamily market in Des Moines so hot right now?

The COVID-19 pandemic is obviously still a major concern across the country. How has the pandemic impacted the commercial real estate market in the Des Moines area?

Husmann: Across the board, multifamily is doing really well. People are looking to invest in multifamily. A lot of it comes down to the appetite investors have for multifamily. It’s a hedge against inflation. Credit and debt are also widely available. Additionally, in the Des Moines market, we are seeing very strong population growth. Employment is strong here, too. I point to our pro-business environment in Iowa and Des Moines, too. During and after COVID, all those factors have continued to drive investment in our multifamily market.

Jared Husmann: Right now, we are actually stronger in several sectors than we were pre-COVID. The multifamily

How about new developments? Are developers building new multifamily projects in the Des Moines market?

Here is some of what Husmann had to say.

Husmann: We went though a period in 2015, 2016 and 2017 when we brought quite a few multifamily units online in the Des Moines market. The pipeline of new units then dried up a bit after that. Even this year, we had a relatively low supply of new apartment units coming online. Our market has absorbed what came online and now that we’ve absorbed that, we are seeing renewed interest in multifamily development and construction to keep pace with the new influx of residents. How strong is the demand from Des Moines residents for new apartments? Husmann: As we are seeing across the country, there has been an increase in the price of single-family homes, both resale and new development. That higher price is forcing more individuals to rent for a longer period. They don’t have the financial ability to buy a single-family home. We are seeing more people who are choosing to rent while they try to find a house that is in their price range.

We don’t have enough single-family housing product available right now, and much of what we do have is at a high price point. How is the multifamily market performing in downtown Des Moines? Husmann: Suburban multifamily is doing better right now. The urban market has been hit a little bit by the pandemic. But it’s not been as bad in downtown Des Moines as it has been in other markets. Iowa didn’t shut down as much during the pandemic. And by now, everything has opened back up. Our downtown urban is still fairly strong. We have some new projects being proposed now in Des Moines’ Bridge District and in the Gray’s Station neighborhood. We are continuing to see investment and development in downtown multifamily. In the urban setting, it’s been a bit of a tail of two cities. We have a few operators in the urban sector who DES MOINES (continued on page 10)

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have some issues with occupancy rates. A couple of other operators in the urban market have done really well. Some projects have suffered in the urban market, and those have dragged down the overall urban market. But overall, even the urban market has strong occupancy rates and rent collections. The suburban multifamily market is still the strongest, but the urban market is holding its own. We never overbuilt as much as some other markets did. Are you surprised at how strong rent collections have been? Husmann: Collections have been strong since the beginning of the pandemic. That’s been the best surprise to everybody. With that being said, operators, management and owners did pivot from the early days of the pandemic to find ways to work with

Midwest Real Estate News residents. They promoted payment programs and educated their tenants about the eviction moratorium and how that will end. There’s been a pretty strong consensus that the residents who were struggling to pay or unwilling to pay their rents prior to COVID have been the same ones who’ve caused the most issues during the pandemic and eviction moratorium. What about concessions? Are owners still boosting their concessions to attract new residents? Husmann: From what I’ve seen, that is going away. Major concessions are only being offered in brand-new products that are looking to lease up. Most of those are in an urban setting. I’m not seeing many concessions in suburban markets. That could change as more new multifamily development comes in. But right now, we are not seeing much in the way of concessions except in new product.

SEPTEMBER 2021

What are renters looking for when it comes to amenities? Husmann: What renters really want are the cheapest monthly rent and the most space. Most of our renters who choose to live in Class-A and new product don’t necessarily want all the fanciest amenities you might see in other markets. They want new product that is affordable. They want a nice product that comes with affordable rent. There is a lack of affordable housing in our country. That has been the biggest success in our market: new Class-A projects that are affordable. I don’t mean subsidized or low-income housing, but a good basic new property that is Class-A in finishes and quality but without all the fanciest amenities. In the Midwest, we aren’t as inspired by the flashiness as maybe people in New York City or the coasts are. We can have a nice product and that’s enough. Renters here don’t

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need or want all the extra amenities. If it’s something that is affordable versus something with added luxuries, they’ll choose affordable every time. I know it’s difficult to predict, but what do you see for the near future in Des Moines? Do you think the commercial real estate market here will continue to be active throughout the rest of this year and into 2022? Husmann: I don’t see any slowing of our economy locally in terms of development or construction. The amount of development taking place in Des Moines is impressive. We are looking at billions of dollars throughout multiple projects. I don’t see Des Moines having any slowdown in its commercial real estate market. There is enough capital in the market searching for deals and yield, that investors will continue to find our market attractive.

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CONSTRUCTION

Midwest Real Estate News

SEPTEMBER 2021

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Delays, labor shortages and COVID stress: Construction firms working through challenging times

By Dan Rater, Editor

onstruction firms are busy again as developers react to increasing demand for new commercial properties, especially in the industrial and multifamily sectors. But being busy doesn’t mean being stress-free.

You are seeing that now with the chips that automotive makers need. There are huge delays with that. There was the freeze in Texas that caused a plastics shortage. It seems like there is something new every day that causes shortages.

Commercial construction firms are facing a severe shortage in key materials. They’re also dealing with a lack of labor and rising prices.

Does St. Louis’ central location help make it an attractive location for companies opening new warehouses? Gowin: We have a great highway system here. We have a good river system. We have all the Class-5 railroads, too. St. Louis is a good logistics hub. I’d say our main competitors are Kansas City, Indianapolis and Memphis. From what I hear, I do know that Kansas City is really busy, too. Indianapolis has been extremely busy. We have a lot of work in the Kansas City market, too. Columbus, Ohio, is good, too.

How are they tackling these challenges? We spoke with Eric Gowin, founder and managing member of Contegra Construction Company, to find out. Contegra has offices in St. Charles, Missouri, and Edwardsville, Illinois, both in the St. Louis market. Gowin, then, is familiar with the difficulties construction firms face today. How busy is Contegra today? Is construction activity on the rise?

How busy do you think the commercial construction industry will be the rest of this year and heading into 2022?

Eric Gowin: We have been pretty steady. When the pandemic hit, we had a couple of jobs hit the pause button. Within 30 days, we started seeing a lot of new opportunities, mostly in the warehouse and distribution and ecommerce space. Warehouse/distribution is a big part of our business now. It probably accounts for 70 percent of our business. We’ve started seeing an uptick in new spec buildings and build-to-suits, too, with the warehouse work. Some even have some manufacturing component. How about other commercial sectors? Are you seeing any demand for new construction there? Gowin: Office and retail requests went way down. Office, for us, we haven’t seen much movement at all. With retail we are starting to see some activity again. Some retailers have poked their heads out again and are starting to look for new space. What are some of the reasons for the big upswing in warehouse construction?

Gowin: There is still plenty of demand. And it’s not just this year and next year that should be busy. From what we are seeing, it seems like the next three to five years are going to be brisk.

“There is still plenty of demand. And it’s not just this year and next year that should be busy. From what we are seeing, it seems like the next three to five years are going to be brisk.” Gowin: The pandemic probably highlighted some of our constraints in logistics and delivery throughout the country. It made companies think about the amount of warehouse stock they could sit on and how quickly it turned over. During the pandemic,

demand for product sped up so fast. It depleted a lot of warehouse logistics capacity. Out of that, grew a need for more space. Companies are still reacting to that and building new warehouses across the country.

Can you talk about the materials shortages that are hitting construction projects across the country? How big of a challenge is that? Gowin: It is a major challenge. Two major components that are in short supply are structural steel and roof insulation. For structural steel, the lead times used to be 12 to 16 weeks. Now it is taking 30 weeks or more to get it. That has really been a challenge. Some developers are choosing to pre-purchase steel and then assign it to general contractors to make sure they can meet their development schedules. That has helped somewhat. We are also seeing big delays with CONSTRUCTION (continued on page 14)

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CONSTRUCTION CONSTRUCTION (continued from page 12)

polyiso roof insulation. That has been in incredibly short supply. Those lead times are getting way out there, too. How are you dealing with these delays? Gowin: For the steel, we have been working backwards from the delivery date to make sure we can stick to our schedule. On the roof insulation, we have been putting temporary membranes down to keep construction on pace. If we are working on a large office development, say, we’ll put a membrane down on one corner of the building. It’s not practical to put it on all over the building, especially if you’re building on spec. But in a build-to-suit, temporary membranes in some locations have worked well for us. Have you ever seen material delays of this length before? Gowin: Not in my lifetime. Another one we’ve run into is getting dock doors.

Midwest Real Estate News

SEPTEMBER 2021

“Everyone in the country is busy. General contractors are all busy. Everyone is looking for the same type of labor. That makes it difficult to find enough people for all the projects.” Those delivery dates are getting way out there, too. The delays are really hitting all facets of construction. Do clients understand this? Gowin: They do. They probably have it built into their core businesses, too, with their supply chains. It can still be difficult, though, when they have lease commitments and are moving out of a facility before moving into a new one. It can be tough for clients to juggle that.

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Are you seeing any signs of relief from these delays? Gowin: We had heard that this winter and in the first quarter of next year that some of the kinks will work themselves out. That is yet to be seen. So far, it doesn’t seem to be heading in that direction. What about labor? Is it difficult to find labor on construction projects? Gowin: That has been another challenge. Our biggest shortage of labor

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has been building superintendents who travel to projects in different towns. Even project management inhouse has been tight. It seems like in every job description in construction there is a shortage. I don’t know why it is. I think, especially when it comes to the construction of new distribution centers, everyone in the country is busy. General contractors are all busy. Everyone is looking for the same type of labor. That makes it difficult to find enough people for all the projects. On a more positive note, are you seeing any good trends in the construction industry? Gowin: We are hearing people talk more about planning for new projects other than warehouse and distribution centers. A lot of people are waiting to see how the pandemic plays out. I still hear that the multifamily market is strong. The interest rates are still good. In multifamily and industrial, we continue to see projects roll in the door or enter the planning stages. For the rest of the sectors, it’s wait and see.

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CHICAGO

Midwest Real Estate News

SEPTEMBER 2021

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Distribution’s big moment is leading to exponential growth for industrial property owners and logistics operators

By AJ LaTrace

n May, RJW Logistics announced that it had leased a new 452,000-square-foot Class-A industrial building in suburban Lockport, Illinois to expand its warehouse and distribution operations in the Chicago area. When reviewing the biggest lease deals during the second quarter of 2021, RJW’s commitment to the Lockport space was the largest lease along the I-55 corridor and the sixth overall biggest industrial lease in the Chicago region. “Just wait until Q1 and Q2 of next year, and we’ll be on [the list of biggest leases] again,” says Kevin Williamson, CEO of RJW Logistics, on the company’s big lease commitments and rapid growth in the area. But RJW Logistics isn’t alone. Kenco Logistics, Dynamic 3PL, and of course, Amazon, are other businesses committing to large lease deals for industrial space in and around Chicago for warehousing and distribution. The industrial real estate boom occurring in major metros throughout the country can largely be attributed to the exploding demand and opportunities within the broader logistics realm. And the Chicagoland area is no different. If anything, the region’s long standing reputation as a vital transportation and freight hub has only bolstered its logistics credentials and led to a flood of new investment as developers feverishly add new Class A industrial space along the Chicago area’s major interstate and rail arteries. Companies like RJW Logistics are meeting an usual moment; one where the very nature of retail, e-commerce, and supply chain logistics are evolving at a breakneck pace. According to Williamson, the company has leased up 3.2 million square feet of space since 2016, and plans to take on another 500,000 to 1 million square feet of space over the next 12 months.

In its May announcement, RJW Logistics said that its Lockport facility would service 60 to 100 customers and handle 550,000 pallets and ship over 66 million cases annually. And that’s just one building in its network of seven logistics facilities in the Chicago area. And there’s still more room to grow because there is still a major need for retailers to keep up with supply and demand, Williamson says. But there’s also been increasing competition within the 3PLs as well. “Recently, you’ve seen a surge of growth because there’s been disruption within the supply chain,” Williamson explains. “Since June, we have seen 12% of cancellations of POs due to lack of inventory. [Retail customers] don’t have enough inventory to hold in our space and to fulfill the orders of the demand by the consumer — that’s huge because it means that we need 12% more space than we actually have.” The company has taken a different approach to its logistics strategy

by consolidating its operations and expansion efforts solely within the Chicago area. This not only gives RJW Logistics a greater regional presence, but the model is really designed for optimal performance, Williamson suggests.

of the sheer number and diversity of client retailers.

“These buildings that we’re putting up are organic growth that’s not necessarily expansion with the suppliers that are in our program,” says Williamson. “It’s suppliers that are coming to us because other 3PLs are not performing at a high level and don’t have the infrastructure and the technology in order to keep up with that.”

“The methodology that we use for that one-inventory strategy is really proving itself through the pandemic,” he says of the business model. “We’ve got 1,600 employees within five miles of one another, so we have no disruption within our seven buildings.”

That infrastructure, he suggests, is the model where RJW Logistics operates its own buildings and manages its own fleet of vehicles while employing a single-market methodology. There are numerous benefits to the model, Williamson says, from handling last-minute staffing changes between nearby facilities, to meeting on-time performance standards for local customers, and even attractiveness as a tenant to industrial landlords because

And because each building serves dozens of client businesses, there are economies of scale for both large and small retailers in delivery of goods.

Another entity who is seeking to quickly become a regional player in the booming distribution and last-mile delivery game is the Israel-based Faropoint. The company announced its first purchase of a Chicago-area industrial building only in June, but has set an ambitious pace for future property acquisitions, says Senior Vice President, Jordan Kovalsky, who manages the midwest region for Faropoint.

CHICAGO (continued on page 18)

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“Our first fund, which launched in 2018, had about $350 million in purchasing power,” Kovalsky says. “This next one, which we just kicked off in July, is over $1 billion in purchasing power.” Kovalsky says that Faropoint is on pace to close 100 assets this year, doubling what it did in 2020. The company is targeting smaller buildings, for example, the 30,000-square-foot Glendale Heights property Faropoint paid $2.2 million for in June or the 43,500-square-foot building in Mount Prospect the company closed on in August. Acquiring smaller buildings not only allows Faropoint to level up its portfolio quickly, but there’s still a lot to be determined in how last-mile logistics will ultimately look in the coming years, Kovalsky suggests. “If you asked what last-mile was a few years ago, it could be a 200,000-,

Midwest Real Estate News

SEPTEMBER 2021

“Our first fund, which launched in 2018, had about $350 million in purchasing power. This next one, which we just kicked off in July, is over $1 billion in purchasing power.” 300,000-, or 400,000-square-foot building, and that’s really pivoted to where now you might see a 20,000-square-foot building in the heart of Chicago,” she explains. “They’re not necessarily racking, but they are distributing product that needs to be in downtown Chicago in under 10 minutes.” But it’s not just downtown Chicago.

There’s a need for last mile delivery facilities in many other inner- and outer-ring suburbs and edge cities, she adds. But being the new kid on the block has its challenges, Kovalsky concedes.

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challenging,” she says of the entry into the Chicago market. “With all of that increased competition, I think it’s probably pushing pricing a little bit — whether that’s justified or not, I’m not sure — but it’s also just increasing the competition on the bid sheet.” Building inroads with the brokerage community is going to be a key to Faropoint’s success in the Chicago market as there’s so much competition for deals that commercial brokers may not have to shop properties around like they used to. “A lot of these deals were probably trading off market before, but now brokers are saying, well, I may as well bring [an opportunity] to three, four or five groups, just to see if I can push pricing a little bit,” Kovalsky describes. “We probably would have bought twice as many deals by now if not for that, but we’re almost at a million square feet and we just started buying here four months ago.”

“Faropoint gives us the leverage to be a good buyer, which I believe helps, but those first couple of deals were

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OHIO

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SEPTEMBER 2021

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Not a bubble waiting to pop: JLL pros say industrial demand in Ohio is here to stay By Dan Rater, Editor

teady demand, with no end in sight. That’s the best way to describe the industrial markets in Ohio’s three biggest cities of Columbus, Cleveland and Cincinnati. Just look at the numbers: JLL forecasts that demand for warehouse space in Columbus was expected to surge 61 percent in 2021 when compared to a year earlier. JLL’s Industrial Tenant Demand Study found that Cincinnati is fueling more than 1 million square feet of demand for consumer products, making it one of the key cities for industrial demand in the nation. And Crain’s Cleveland Business said that Cleveland has seen a year-overyear increase in demand for industrial space of 22 percent, something that has inspired developers to deliver more warehouse and distribution space to the market. Midwest Real Estate News spoke with three industrial pros with JLL about these trends, Dan Wendorf, senior managing director with the Columbus office of JLL; David Stecker, JLL vice president in Cleveland; and Brian

“We see no headwinds here. This is not a blip. This is not a bubble that is going to pop. This is a new point in industrial real estate that is here to stay. ” Leonard, managing director with JLL’s Cincinnati office.

Let’s take a look at the industrial markets in each of Ohio’s biggest cities. I’ll start with Columbus: How strong is demand for industrial space here?

was at 3.8 percent for industrial in the Columbus market. That’s the lowest since we’ve been tracking data. We forecast that we are going to be near that level of vacancy for the next 24 to 36 months. The amount of demand that we are seeing puts Columbus in the top echelon of demand markets across the Midwest. What’s especially impressive is the diversity of that demand across various user groups. It’s not just ecommerce. There is demand from a variety of sources.

Dan Wendorf: We are sitting at record-low vacancies. Our vacancy rate

We do have a healthy development pipeline, but it is barely meeting the

All three said that industrial demand in their markets continues to rise. And a future slowdown? Neither of them has seen any evidence yet of that.

demand we are sitting at today. We are seeing rental rates increase, and we are seeing developers starting to push out and put some dirt into development sites that otherwise might have been looked over. We will continue to see this demand. We see no headwinds here. This is not a blip. This is not a bubble that is going to pop. This is a new point in industrial real estate that is here to stay. How about in the Cincinnati market? How strong is industrial demand there? Brian Leonard: The demand is certainly outpacing our supply in Cincinnati. During the last 24 months, we have seen six to eight build-to-suits in the market. Historically, we would have seen just one or two during that period. We are also seeing emerging markets. Developers are pushing out to areas that they rarely targeted in the past. They’re doing that because our market can’t keep up with the demand for industrial product.

OHIO (continued on page 22)

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OHIO (continued from page 20)

And how about in Cleveland? David Stecker: Historically, a lot of the industrial space in Cleveland has been manufacturing space that had been repurposed into distribution space. We have seen an influx of spec industrial construction during the last 48 months to account for an increase in demand and the outdated supply. That speculative inventory has preleased or leased within 90 days of delivery. Our rental rates are continuing to grow. We are also seeing larger developers who had shied away from Cleveland in the past now exploring our market. They are looking for quality land sites to build more spec product. The labor pool here is strong compared to some other competitive markets. Some larger big-box users, those seeking close to 1 million square feet, have now landed in Northeast Ohio because of the availability of labor. The industrial sector has thrived

SEPTEMBER 2021

“Our rental rates are continuing to grow. We are also seeing larger developers who had shied away from Cleveland in the past now exploring our market.” during the COVID-19 pandemic. Do you think many of the habits that consumers have developed during the last 18-plus months, which have fueled the need for more warehouse and distribution space, will continue after the pandemic passes? Leonard: I do a lot of work with a national grocer. That client certainly thinks that online ordering and delivery will continue. I just look at myself and my family. I had never done any sort of grocery delivery to my home. Now it is something we do on a fairly regular basis. Grocers had planned

that during the next five years maybe some young people would move to online ordering and delivery. Grocers didn’t expect that COVID would fast-forward that trend. The movement to online delivery was five times faster than what they had anticipated. The pandemic changed the behaviors of the consumers, which changed the behaviors of grocers and Amazon and the groups that feed Amazon. Wendorf: The demand for online shopping was definitely rising before the pandemic, and it was expected to continue to increase. It was not ex-

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pected to increase as much as it did in one year, though. The other aspect of this is that there is arguably not a single company that wasn’t exposed with supply chain vulnerabilities during 2020. A lot of these companies had to implement new supply chain strategies. They were running lean and had to beef up a bit to meet the new demands. Stecker: We are seeing a push from companies that want to have warehouse space closer to their customers. We have been the beneficiary here of that trend. We weren’t a heavy distribution hub traditionally. Our market was served out of other distribution-hub markets. Now we are starting to see these hub-and-spoke supply chain models. We have been the beneficiary in Cleveland of groups trying to get closer to their customers. Are you worried at all that it will be difficult to fill the new spec industrial space coming to these Ohio markets? Wendorf: I have zero worries about OHIO (continued on page 24)

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OHIO OHIO (continued from page 22)

it being filled. Seven of the last 10 spec developments in the Columbus market have filled prior to roofs being placed on them. A lot of tenants want to get into their new buildings in four months. The only space they can go to is a spec building, an existing building. The speed at which people are making decisions today has boosted the need for spec product. A lot of users are also not build-to-suit candidates. They are not comfortable with the lease terms they’d have to commit to. They are not comfortable with the capital allocations you need to get into a build-to-suit building. There is not a market in the United States that has a great oversupply of industrial spec based on the industrial market right now. Leonard: There are certain parts of our market in which companies do have trouble finding enough labor to staff their properties. That’s the one thing developers have to look at: Is there enough labor in an area to staff these spec properties once they are built? If they stay true to the analytics of labor, developers are having no issues filling any spec buildings in our whole industrial corridor.

Midwest Real Estate News

SEPTEMBER 2021

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“Cleveland’s available inventory is an important part of why you’d want to do business here.

Companies want to do business where there are

existing facilities or where facilities are going to be delivered in short order. Then there is the strength of our labor force and the lower cost-of-living here.”

What makes your industrial markets so attractive to developers? Stecker: Cleveland’s available inventory is an important part of why you’d want to do business here. Companies want to do business where there are existing facilities or where facilities are going to be delivered in short order. Then there is the strength of our labor force and the lower cost-ofliving here. That is an attractive piece for site selectors. Wages go further here. There are good schools. This is a good place to live.

Leonard: The biggest draw for Cincinnati is the ability companies have to hit the population density of the United States in a one-day truck ride. You can go east/west or north/south and reach most of the country quickly. We also are an affordable place to live. We have a strong labor force. And as you stretch our market, you have the ability to almost connect Dayton to Cincinnati. That makes us a wide, deep market.

rely on just one or two industries. Then there’s our location. People don’t understand that you can reach 10 percent more of the U.S. population in a one-day truck drive from Columbus than you can from Indianapolis. From Central Ohio, you can reach more households, people and retail stores. People want their stuff quicker and quicker. Two-day delivery seems like weeks now. Being close to the consumers is a key, and that bodes well for Columbus.

Wendorf: We have such a diversity of industry here in Columbus. We don’t

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COLUMBUS

Midwest Real Estate News

SEPTEMBER 2021

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Resiliency the focus of REjournals’ Columbus Commercial Real Estate Summit

By Dan Rater, Editor

ore than 100 CRE professionals attended REjournals’ Columbus Commercial Real Estate Summit held in late July. And the focus of the event? Resiliency. This isn’t surprising. Columbus, like all Midwest CRE markets, is still fighting through the COVID-19 pandemic. And while the availability of vaccines have brought plenty of hope, the rise in COVID cases because of the Delta variant has brought about its own challenges. The commercial pros working this market continue to watch, like the rest of the country, for a slowdown in the number of new cases.

Mark Lundine, economic development administrator for the City of Columbus, delivered the event’s opening remarks.

The good news? Columbus’ industrial market remains hot. In fact, the indus-

trial market in the Columbus region is busier today than it was before the pandemic. Credit the rise in demand

of online shopping for this: Companies need to get more products to more consumers in less time. This

means they need more warehouse and distribution centers across the country, including in the Midwest.

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COLUMBUS

Midwest Real Estate News

Speaking during the Multifamily panel were moderator Rob Vogt, partner, Vogt Strategic Insights; Brian Schottenstein, president, Schottenstein Real Estate Group; George Skaff, vice chairman, Newmark; Sari Lehtinen, associate senior architectural designer/LEED AP, M+A Architects; and Stash Geleszinski, managing director, CAPSTONE

Speaking on the Development panel were moderator Mandy Mallot, business development specialist, City of Columbus; Frank Kass, founder/chairman, Continental Real Estate Companies; David Pizzoti, principal, Trident Capital Group; Joseph Henderson, economic development director, city of Upper Arlington; Deron Kintner, general counsel, Flaherty & Collins.)

And multifamily remains strong, especially in suburban Columbus. Developers continue to build new product in the suburbs surrounding the city, products offering the latest in amenities. As companies continue in work-from-home mode, many

downtown Columbus and its suburbs will be full again. And retailers have had to evolve and rely on their creativity to survive the last 18 months.

employees have moved to the suburbs in search of more space and better amenities. Retail and office? These sectors continue to face struggles. No one knows when office buildings in

summit were hopeful that better times are ahead for the Columbus CRE market. And many pointed to this city’s and industry’s resiliency as the key to these better times.

But overall? Speakers during the

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3 2

1) Michael Deemer, president and chief executive officer of the Downtown Cleveland Alliance, kicked off the summit as the keynote speaker

2) Speaking on the Downtown and Suburban Development — Game Changers panel were David Jenkins, executive vice president and chief operating officer of the Cleveland Browns; Tracy Green, chief strategy officer with Weston; Jon Pinney, moderator and managing partner with KJK; Anthony Delfre, managing director and partner with Brown Gibbons Lang & Company; and Elie Weis, partner with Midwest Development Partners 3) Participating in the Market Update panel were moderator Stephen Nowak, associate with Siegel Jennings; Joseph Khouri, first vice president with CBRE; Tim Breckner, senior vice president with Colliers; Rico Pietro, principal with Cushman & Wakefield/CRESCO; and Craig Miller, president of Duffy+Duffy Cost Segregation Services, Inc. 4) The Multifamily panel featured Taylor Hawkins, senior vice president, Bellwether Enterprises; Nick Soeder, president and principal broker, Adams Lynch Associates; Daniel Burkons, senior managing director of investments, Marcus & Millichap; and Svetlana Kertesz, chief operating officer, My Place Group.

REjournals’ Cleveland CRE Summit: Looking to a brighter future

s in most Midwest cities, Cleveland’s commercial real estate market is still in recovery mode thanks to the COVID-19 pandemic. But there are plenty of reasons for hope in the Cleveland market, hope that was on full display during REjournals’ recent Cleveland Commercial Real Estate Summit. The event, held in late July, featured a roster of the biggest names in the Cleveland commercial real estate market. These speakers admitted that working through the COVID-19 pandemic has been a challenge. But they also said that the future in Cleveland looks bright.

By Dan Rater, Editor

And who’s to doubt them? There are plenty of new CRE projects either in the beginning stages of construction or the planning phase that promise to provide a boost to the city and its suburbs. This includes a new proposal by the ownership of the Cleveland Browns to provide a jolt to the lakefront area around the NFL team’s FirstEnergy Stadium. These plans call for enhancing the lakefront area that includes the Browns’ stadium, the Great Lakes Science Center and the Rock and Roll Hall of Fame. There’s also plenty of hope for the former Ford plant in Brook Park, Ohio, near the Cleveland airport. Weston Inc., DiGeronimo Companies and

Scannell Properties earlier this year joined forces to acquire the 210-acre site in a transaction valued at $31.5 million. The buyers have not yet released their final redevelopment plans, but the purchase has generated excitement in the Cleveland area. Then there’s the Circle Square project in Cleveland’s University Circle neighborhood. Construction crews earlier this year began construction on the first pieces of this development, the Library Lofts and The Artisan residential developments and a new branch for the Cleveland Public Library. The Artisan will be a 23-story, 298-unit luxury high-rise apartment building

with retail on its ground floor. The Library Lofts will be another apartment development, with the new branch of the library on its lower level. The Circle Square project will also include a 13story office building. So, yes, Cleveland faces plenty of challenges as it slowly recovers from the pandemic. But the speakers at the summit all agreed that the commercial real estate professionals here are poised to overcome these hurdles.

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The Centre for Urban Transformation and Detroit: Ready to play a key role in shaping the future of cities

By Dan Rater, Editor

he last two years have been challenging ones for big cities. The COVID-19 pandemic hit cities hard, especially in its earliest stages. Then came the Black Lives Matter protests after a Minneapolis police officer murdered George Floyd in that city. And even today, the centers of many major cities are struggling as companies push back their plans to return employees to the office. The timing, then, is right for the Global Centre for Urban Transformation, a group that will be based in Detroit and will focus on increasing public-private collaboration in cities across the globe. The goal is to harness both the power of public, government agencies and private businesses and enterprises to tackle some of the greatest challenges that cities face. The World Economic Forum, an independent international organization based in Cologny, Geneva Canton, Switzerland, is teaming up with Detroit-based CRE firm Bedrock, to launch the Centre for Urban Transformation in October. The hope is that this centre will help mobilize the global business community to support governments in their efforts to bring new services and programs to cities. Midwest Real Estate News recently spoke with Jeff Merritt, head of urban transformation with the World Economic Forum and a member of the Centre for Urban Transformation, about this new organization and the hope its members have for the future of cities across the globe. Why did the World Economic Forum decide that Detroit was the best location for the Centre for Urban Transformation? Jeff Merritt: As you know, Detroit has been through a lot. When we look at the challenges and opportunities that are facing cities today, Detroit provides a good example of how cities have to constantly adapt and reinvent themselves. Cities are grappling with

systemic issues, climate change, equality and budget deficits. Cities are expected to do a lot more with less. And they are facing these massive global issues while a pandemic is going on.

and inclusive. That helped provide the foundation and scope for this center.

What are the issues cities face when it comes to economic development?

This is a big question, but what are some of the bigger challenges that cities face today?

Detroit has been through a lot. It’s weathered a lot of storms. It also has a strong community fabric. It has a history of innovation and entrepreneurship. When looking to build this global effort to advance public and private cooperation, it made a lot of sense to look at Detroit as a potential testbed and model for how cities can grow and evolve.

Merritt: At the core, the challenge that cities face is that they are expected to do a lot more, deliver more for their residents, with limited resources. The only way in which we are going to see continued improvements in the quality of life and the continued growth of economics that benefit everyone is through a stronger public-private collaboration. It can’t just be governments that work on these issues. It has to be the private sector, too, that is helping to shape the future of cities. And so, in many ways, we are trying to create a shift in mindsets in the way we plan for the future of cities. We want to put the government and the private sector together around the table to design this future.

Merritt: it’s very clear that as we begin to come out of this pandemic, that the world has changed. A lot of cities must rethink and reimagine their economic development strategies. For years, we’ve talked about technology changing the future of work. We really saw this during the last year-and-a-half. We now have a much stronger understanding of how you can do work irrespective of your location. The idea of working remotely means something real today. It was a bit more of an abstract concept just a year-and-a-half or two years ago. This can help level the playing field among a lot of cities. Traditionally the biggest cities, New York City, Chicago, Los Angeles, had an advantage in terms of economic opportunities and attracting companies. But when you think of a more decentralized workforce, cities like Detroit now have new opportunities.

And why has the World Economic Forum partnered with Bedrock to form this center? Merritt: Your partners matter. When you are launching a new initiative, it is important to have strong collaborators. This initiative was borne out of discussions I had with the team at Bedrock. The chief executive officer at Bedrock, Kofi Bonner, is someone who understands the challenges that cities face and the opportunities to bring new life to them. When Kofi and I were having early conversations, we found that we shared a vision for what cities needed to do to be more sustainable

What are the big areas of focus for the centre? Merritt: We will bring more clarity when we launch the centre in October. But the three priority areas in my mind are economic development issues, urban design and city services.

At the same time, industries are changing dramatically today. Look at the auto industry. You can’t just flip a switch and move to electric autos and alternative energy. It’s a completely new ecosystem that you have to build. At the World Economic Forum, we have the world’s leading CEOS looking

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SEPTEMBER 2021

at how industries are transforming. We can connect the dots between the work that is happening at an industry level globally and local development strategies. A city like Detroit or Chicago can develop a strategy from insights and direct conversations with leading CEOs and companies. It’s not just about guessing what the future holds for these industries. The cities already know the plans that are being put in place by the leaders in these industries. What are some of the urban design issues that cities face today? Merritt: The issue that is front-andcenter now is the COVID stimulus money that cities have received and how that will play into the infrastructure investments that cities need to make. In Detroit alone, out of that first wave of COVID money, more than $800 million came into Detroit. A lot of people think of that money as a straight benefit, but it is actually a burden on cities. If cities are in a rush to spend that money, they are more likely to spend on shovel-ready projects instead of shovel-worthy projects. We are providing support to cities to make sure they are making long-term strategic decisions with their infrastructure investments and urban planning. We are providing support as they develop their neighborhoods. You also mentioned city services. How is providing services becoming a challenge for cities today? Merritt: Just think of everything that cities have to take on today. Cities have to become more resilient. They have to take on climate change. They must develop net-zero carbon strategies. They are tasked with improving public safety and boosting their transportation offerings. Our goal is to look at new models that take some of that burden off the cities. The goal is to have public companies work with cities to help provide some of these services. If a city has set a de-carbonization goal, what can the private sector take responsibility for and what can the public sector take responsibility for? In the past, it’s always been thought that anything the private sector can add was icing on the cake. That is the wrong approach. If it’s a goal for the city, the private sector in that city should take steps to help reach that goal.

DETROIT

Midwest Real Estate News

“The pandemic acted like a

pressure cooker. It exposed

those long-running systemic

issues that are always there and

brought them front-and-center.” Can you give me an example of how the private and public sectors can work together to solve a problem? Merritt: There was something I worked on in New York City. We had more than 10,000 phone booths in the city. When I first moved to the city, those phone booths were vital. If you needed an apartment, you’d get a copy of the Village Voice and go to the pay phones to book appointments. They were something that was once a core part of the city. But phone booths became obsolete quickly. We had more than 10,000 just sitting there that had become an eyesore on city streets. What do we do with them?

For a public-private partnership to work, the private sector companies must receive some sort of benefit, right? Merritt: There must be a clear value to the businesses. Companies need to be making long-term investments in the cities where they are working and doing business. You as a business are a resident of the community like any homeowner. The business’ future is tied to the economic future of that city. It is tied to the qualify of life in

that city. If you are going to employ workers in that city, you want those workers to have a vibrant city in which to live. There is a direct relationship between your business’ interests and having a vibrant, thriving community. It’s wrong of companies to think of this as charity. They ultimately benefit when the community benefits. How has the pandemic exacerbated the issues that cities face? Merritt: The pandemic acted like a pressure cooker. It exposed those long-running systemic issues that are always there and brought them front-and-center. We see that the communities most hit by the pandemic are low-income communities that have less access to quality healthcare, who don’t have the financial resources to recover when they are out of work. It exposed a need for us to make sure we are building more inclusive communities and strengthening the social safety net.

Rather than just pull them out, can we replace them with something more beneficial to the city? Through a series of public challenges and RFPs, we ultimately recruited a group of companies to create new kiosks that provided gigabyte-speed Internet free across the city without costing the city a single penny. All the city had to do was give right-of-way access to private sector companies that then covered the investment and recouped their funds based on advertising at the kiosks. This idea created a much-needed city service while also providing revenue to the city. That is the type of creative problem-solving, involving both the public and private sectors, that we need more of. There are several collaborations where the private sector might pitch in to handle public safety or sanitation issues in the area around where they have a large campus or operation, ways in which we can decrease the burden on government simply by taking advantage of the efficiencies some of these companies have. Say a university is investing in public safety on its campus. Can that university provide some security to the neighborhood surrounding the campus, too?

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The time is now for office landlords to adopt flex strategies

By Jeremy Bernard

OVID-19 has drastically changed the relationship employees have with the office. When millions of professionals had no choice but to work remotely, companies and employees alike reconsidered what they need and want in an office setting. While some organizations are tentatively looking to implement a full-time return to the office, many are embracing hybrid models or flexible policies that give employees more choice about where they work. This shift in work and office policies is inevitably having an impact on landlords and workspace providers. It’s become apparent that landlords need to embrace flexible strategies that make the physical and digital workplace effective, efficient and, more importantly, engaging, to stay relevant in a fast-evolving market. More companies are looking for dynamic, turnkey spaces and services that suit their requirements. Much of that pressure then falls on landlords to deliver the spaces both employers and their employees want. Despite this reality, many landlords have been slower to adapt than their tenants. A recent study by independent market research firm Verdantix draws on 50 in-depth interviews with asset managers, owners and owner-operator landlords with combined office portfolios of more than 2.5 billion square feet, and heads of real estate at corporate enterprises such as American Express and Honeywell. They were looking to understand the real estate challenges and opportunities ahead for both landlords and occupiers. The research addresses the market trends driving the demand for flex space, the financial benefits for landlords that effectively provide flexible space and the key concerns tenants have with flexible space products. In response to the most pressing market trends, 90 percent of landlord respondents said that tenants’ rising focus on productivity and the overall tenant experience was very influential. On a similar note, 60 percent of occupier respondents believe that

supporting employee productivity through an enhanced occupant experience was the most important benefit of using flex space. Changes to indoor layouts and interior designs that do not resemble old office setups remain a priority. The study found that landlords must respond to changing tenant expectations around in-building experiences, from flexible design to flexible technology. In the coming years, a flight to quality for office tenants will dominate the discussion about the future of offices. Many tenants will opt for the services and customizations of spaces that come with technology-powered turnkey flex offerings if given a choice between that and a traditional alternative with a long-term lease. The ability to condense or expand rented spaces as teams scale up—or even set up new offices in new regions that can be seamlessly integrated into a corporate real estate portfolio—will be differentiators for building owners. Similarly, tenants—and importantly their talent—want frictionless environments where they can access everyday services, spaces and locations aligned with their needs (when they need them). The workplace is a major factor in attracting and retaining talent, and so employers need it to be

digitally enabled and seamless. In the increasingly popular hub-and-spoke or distributed working model, an employee may work from the HQ office one day and a flexible workspace the next. Landlords, then, need to provide access to a fully connected campus of workspaces – whether in one city or across multiple regions. It’s about giving tenants flexibility, a consistent experience and easy movement across an entire network of spaces. Technology that enables these experiences is key. According to the research, one of the top-of market trends driving demand for flexible workspaces is technology services that offer amenities and seamless access for tenants. Lease flexibility is another top trend: 86 percent of landlords said it was either an influential or very influential factor in driving growth for flex space. Coincidentally, tenants also rated lease flexibility as one of the most important market trends, with 66 percent labeling it as very important. Historically, landlords have been wary of flexible leasing contracts and 87 percent of surveyed tenants believe this statement to be accurate. However, landlords must proactively find ways to reduce vacancies without lengthy fit-out processes. Lease flexibility in

turnkey spaces is an elegant solution that makes a commercial building a compelling option for tenants in the long-term. When underpinned with the right software and technology, workspaces can be activated quickly and efficiently. This ultimately goes back to the key factor at the heart of the future of office space: If there is a flight to quality underway, then landlords need to make sure that tenants see their buildings as premium. A renovated lobby and amenities are important, but a landlords need to be active partners for their tenants. This means having the flexibility to meet their evolving requirements one year or five years after the lease is signed. Ultimately, the demand for flex space is driven by three main factors: a desire for shorter leases, interior designs that support all work tasks, and technology services that allow for seamless entry and access to amenities. The shift to flexible office space has become universal, and landlords must provide the services and office experiences that occupiers demand. Jeremy Bernard is chief executive officer, North America, at essensys.

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But lenders working in those asset classes hit harder by COVID are requiring more of borrowers, Doyle said.

FINANCE (continued from page 1)

executive vice president in the Cleveland office of Bellwether Enterprise, and Joseph Platt, senior vice president with the Kansas City, Missouri, office of Grandbridge, to find out.

“We see lower loan-to-value ratios and more conservative deals from lenders willing to do office and retail today,” Doyle said. “In the hotel space, you are paying a higher price in rate and you will see conservative terms. You will see much more conservative terms from lenders willing to lend and invest in those asset classes.”

Doyle and Platt both said that the industry has faced struggles throughout the pandemic. But they also said that it has been surprisingly resilient, too. “Things feel more like normal today,” Doyle said. “When we were sitting back and staring the pandemic in the face last April, May and even June, there were real concerns about where the commercial real estate market would be. There were worries about whether lenders would be willing to lend. Fortunately, that dissipated quickly.” Platt said that any slowdown in financing requests after the start of the pandemic was short-lived. “Many lenders did retreat to the sidelines at the beginning,” Platt said. “There was probably a two- to fourmonth period, depending on which lender you were talking with, when lenders took a pause. But after that initial period when things were locked up and frozen, we have been very fortunate. After everything unlocked again, we have been very pleased with the overall production we’ve seen during the last 16 or 17 months.” Platt said that there remains a strong appetite for commercial mortgages through Fannie Mae, Freddie Mac and life insurance companies. The CMBS market remains a viable option, too, he said. “I wouldn’t say we’ve seen a rise in business, but our business has been very strong and steady since mid-summer of 2020,” Platt said. “Interest rates are still holding steady and we have seen credit spread yields that are also quite attractive. That is a sign of a competitive market.” A robust lending environment Today, Doyle said, the lending market remains robust, led by Freddie Mac and Fannie Mae on the multifamily side. But it’s not just Fannie and Freddie that are active. Doyle said that life insurance companies and bridge lenders, which did drop out of the

The multifamily market continues to dominate commercial financing requests.

market during the earliest days of the pandemic, have returned and are now being aggressive with their pricing and terms. That’s good news. But it doesn’t mean that there aren’t challenge in today’s lending market. One of the biggest? Doyle says that all these lenders are chasing the same types of deals: multifamily and industrial transactions. That means that financing for other deals can be trickier to find. “We have never seen on the sales side cap rates being bid down this aggressively both on multifamily and industrial,” Doyle said.

companies to open new distribution centers and warehouses across the country. The developers building these facilities need money to fund their projects. “Everyone is delivering products quicker and quicker,” Doyle said. “People want their products delivered overnight. Because of this, the distribution market has taken off. COVID helped fast-forward that. People have been home and they are getting everything delivered to them, from groceries to whatever else they need from Amazon. There has been such incredible growth in the distribution market.”

It’s not surprising that industrial and multifamily are attracting the most attention from lenders.

The multifamily sector has benefitted from outside forces, too. First, renters have largely paid their monthly rents on time throughout the pandemic. That has helped the multifamily sector remain strong throughout the last 19plus months.

On the industrial side, consumers continue to flock to the Internet to buy everything from electronics and toys to groceries, sporting goods and cleaning supplies. The pandemic has only boosted the rise of online shopping.

Secondly, the costs of single-family homes continue to rise. This has priced many would-be owners out of the market. Instead of buying a home, then, these people are continuing to rent. This, too, has boosted the strength of the multifamily market.

“Apartments and industrial are getting most of the love right now,” Platt said. “Apartments have remained the darling asset class. And industrial is doing so well because consumers have changed the way they shop, turning to online shopping more often. When it comes to acquisition financing, the majority we are seeing today is in the apartment and industrial space, with office and retail, probably in that order, third and fourth.”

“There is so much capital in the market on the buy side, and there are few greater alternatives to get returns right now then the multifamily market,” Doyle said. “Multifamily is still in a very good place.”

Two booming asset classes

And as this trend continues, it’s forcing

Platt agreed. He said that lenders are disciplined today and are making sure not to make risky decisions during the pandemic. “Just because capital is available today doesn’t mean that we are back to the early 2000s underwriting where people were basing decisions on a pro forma basis or that lenders are offering a whole menu of interest-only options,” Platt said. “The lending and credit environment is very disciplined today. None of the lenders we work with are acting in a haphazard way. Everyone is being smart, even though this lending environment is fast and competitive.” Platt did say that Grandbridge is seeing a rise in refinance activity. This makes sense because of the high number of 10-year loans that borrowers took on in 2010, 2011 and 2012. Those loans are now reaching their maturity, so it’s not surprising that refi activity is increasing. The hotel sector is an especially interesting one today. As Doyle said, leisure travelers have largely returned, helping hotels fill more rooms throughout the summer. But many hotels rely on business travelers, and business travel has not yet returned. And there’s little indication that companies will be sending their employees on the road again anytime soon. “It’s tough to pinpoint when business travel will come back and to what extent,” Doyle said. “Are we going to be on the road as often as we were previously? Or have Zoom calls and Microsoft Teams calls replaced some of that?”

A disciplined industry Doyle said that despite the struggles some commercial sectors face, Bellwether Enterprise is still seeing a wide variety of deals. That includes some office and retail financings.

The office sector faces some of the same uncertainty, and that makes lenders a bit more wary when debating FINANCE (continued on page 34)

FINANCE FINANCE (continued from page 33)

whether to finance deals in this space. As Doyle says, it’s too early to know whether companies will embrace flexible work schedules that allow employees to work from home several days a week. If they do, will these companies need as much office space? And will the owners of office towers and campuses struggle, then, to find tenants? “Lenders do think it’s again too early to know what the answers to these questions will be,” Doyle said. “Many companies still have several years left on their office leases. We aren’t going to see big changes in office space overnight. But ultimately, will companies shrink their office footprints?”

Midwest Real Estate News considering whether financing deals make sense? Not surprisingly, COVID-19 is playing a role. Lenders want to know how a particular property performed during the pandemic before they close a financing deal. “One question that gets asked today is ‘How has the property been affected during COVID, if at all?’” Doyle said. Lenders who are looking at a multifamily deal will ask if all the apartment building’s renters have been paying their monthly rents on time. If it’s a retail deal, they might ask whether owners had to give concessions to keep tenants in place and if all these tenants are current on their rents. If it’s office, they’ll ask when tenants are bringing employees back.

Despite the challenges, Doyle says, it has been mostly business as usual in the commercial lending business for life insurance companies, banks and CMBS lenders. As Doyle says, lenders are looking and hungry for deals.

“These are issues we never had to deal with before,” Doyle said. “But these are questions borrowers will have to know the answers to. Outside of that, it’s still core real estate principals.”

But what do companies such as Bellwether and Grandbridge look at when

Platt said that sponsorship and the cash-flow of properties are key.

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“At the end of the day, lenders want to know that a company has good, experienced people operating, managing and owning the property,” Platt said. “But equal to that is the need for strong, stable cash flows in the event that there are some challenges downstream.”

said. “The returns on real estate should still be better than what investors can get with bonds or stocks. Because of this, real estate attracts a lot of capital. That will continue to drive the market. We are still very active. We don’t see that changing going into early next year.”

A peek into the future

Platt said, too, that he expects demand for commercial financing to remain steady throughout 2021 and into next year.

And what does Doyle expect to see in the commercial lending business during the next several months and into 2022? He’s predicting steady business. Some owners, for instance, are considering selling now because they fear changes are coming to the way capital gains will be taxed. Because of this, they are eager to sell before the end of the year. But otherwise, Doyle says, lending requests should continue to come in at a steady pace. “As long as interest rates stay where they are and all other things being equal, real estate should still bring strong returns to investors,” Doyle

“With rates as low as they are and with the amount of capital that is hungry to find deals, I do think demand will be steady,” Platt said. “When investors are looking at commercial assets versus other investment opportunities, commercial real estate looks like a good relative value. The yields are still very attractive. And all the while, you get a tangible asset when you invest in commercial real estate. If we have made it through the pandemic and a fairly volatile election year without demand dropping, it is our view that both debt and equity capital are abundant enough to fuel this steady amount of business we are seeing.”

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Even the hotel industry is showing signs of life in Omaha, with the recent opening of The Peregrine Omaha Downtown by Hilton.

pandemic. Today, that rate stands at around 10.6 percent for the Omaha office market as a whole, she said.

OMAHA (continued from page 1)

Just ask Chris Mensinger, vice president with the Omaha office of Colliers. She said that Omaha never saw overly high vacancy rates in the office sector, even during the worst days of the

And retail, that other sector that has struggled so much in markets across the country? Mensinger said that Omaha’s retailers, though they have

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faced challenges during the pandemic, have adapted to the changing needs of customers and have been resilient throughout the last 19-plus months. Mensinger said that the vacancy rate in the Omaha retail market stands just a bit over 8 percent.

al impacts with the bankruptcies of retailers. But a lot of that was baked into the cake last year.”

“People in Omaha are employed. Our unemployment rate is very low,” Mensinger said. “Because of that, people are spending money in Omaha, and that has helped the retailers.”

“This year has been robust,” Meier said. “We are selling retail investment assets. It seems that the coastal buyers are realizing that we don’t have the severe ups and downs here. Our ups and downs are slow and can be worked around. Investors like our market. Really, it’s this way throughout the Midwest. But in Omaha, we have been going like crazy the last nine months.”

And Jay Noddle, president and chief executive officer of Omaha-based development compnay Noddle Companies, used the word “excellent” to describe the state of his city’s commercial real estate market today. “Omaha has fared extremely well under the circumstances,” Noddle said. “We are seeing quite a lot of new development activity of all kinds.”

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Local retailers overcoming the challenges Ben Meier, vice president of brokerage services with Omaha’s The Lerner Company, also focuses on the retail sector. Like others, he said that while retail in Omaha has faced challenges, it has also been resilient throughout the pandemic. “Omaha has fared as it has in general recessions in the past,” Meier said. “In the downturns that we have seen historically, the impacts in Omaha have been muted. That doesn’t mean there aren’t impacts. There are nation-

And this year? So far, it’s been a solid one for retail, Meier said. Investors have taken notice, he said.

Mensinger said that smaller retailers especially are expanding in Omaha today. This comes as many national retailers hold off on making their own expansion plans. This has left an opportunity for smaller retailers to move into spaces and locations that preCOVID might not have been available to them. The office market in limbo There’s a similar dynamic in the office market. Smaller companies are seeing more of their employees returning to the office. Bigger, national companies, though, have largely pushed back the return of their workers. That has left the Omaha office market in a type of limbo. As Mensinger said, OMAHA (continued on page 38)

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whom he is working have requested no major changes to the layout or design of their office spaces. This might come as a surprise. Brokers in some markets have reported that companies are looking to rework office space to allow for more space for employees and to meet the demands brought on by hybrid working arrangements. Noddle, though, says that this doesn’t seem to be the case so far in Omaha.

Omaha is in the middle of a massive redevelopment of its riverfront, which should provide another boost to downtown.

OMAHA (continued from page 36)

companies that don’t have to make long-term decisions are hitting the pause button. “We are seeing some short-term office lease renewals,” Mensinger said. “We are seeing one- to three-year lease

renewals. A lot of people talk about the sublease market. We do see sub leases here. But as far as our market goes, sub leases are only 1.3 percent of our total office inventory. There aren’t many companies leaving their leases early here. People are holding in place if they can.”

ha’s office market remained so low? Mensinger points to the more conservative nature of the Omaha commercial real estate market. The office market here hasn’t been overbuilt. While the vacancy rate in the office sector has risen during the pandemic, it’s only jumped from 7.4 percent to 10.6 percent.

“I really don’t think we’ll see any major changes in the way office spaces are designed in Omaha,” Noddle said. “I think most of the office buildings seeing big changes are the bigger, taller and denser properties. In the type of office space we have in Omaha, I don’t think we’ll see major changes.” The retail market is in flux here, too. Retailers in the Omaha market weren’t forced to remain closed for as long at the beginning of the pandemic as they were in other markets across the country. That helped retailers survive those earlier months.

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“We are a strong market, but we are conservative builders,” Mensinger said. “We don’t build a lot of office space on spec. Our office developments have a significant amount of square footage secured by the time they deliver.” The pandemic has provided an opportunity for some companies to improve their office space. As Mensinger says, some companies have moved from Class-B office space to Class-A, while others have made the jump from Class-C to Class-B space. At the same time, office rents in the Omaha market have remained steady. This, too, has helped companies that have wanted to move to a higher class of office space. “We have had a lot of companies with under 100 employees return to the office,” Mensinger said. “When you don’t have as much density, you have the luxury of coming back earlier. A lot of our national companies might require people to stay home or work fewer days in the office.” Noddle, whose company has been working on several office projects in Omaha throughout the pandemic, said that the office tenants with

And Mensinger said that people in Omaha are shopping and spending money again, which has provided another boost to retailers. The challenge? Retailers in Omaha, as they are across the country, are struggling to find enough workers. “We are hearing a lot now that restaurants are having trouble attracting people to work the hours,” Mensinger said. “Our unemployment rate here is at 2.7 percent. That gets challenging. It’s one thing to be open, but you have to be able to staff your restaurant or shop.” Another challenge in Omaha? Downtown remains quieter than outlying neighborhoods or suburbs, largely because so many bigger companies haven’t brought their workers back to the office. This has a ripple effect, hurting the retailers and restaurants located in the center of the city. “All of us are living in a world now where we don’t fully know what is going to happen next,” Mensinger said. “My hope is that people do start to return to the office. That helps with daytime traffic in the office and retail sector. With the Delta variant we are all a little unsure now. But I do think

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the attitude in Omaha is a positive one. People feel that we will rebound quite successfully.” A development boom? What else is impressive about Omaha during the pandemic? Noddle points to the development boom currently taking place in the city. Omaha is fortunate enough to be home to several major development projects that are either about to launch or already under construction. One of the newest is Block 181, planned for the Southwest Corner of 180th Street and West Dodge Road. This mixed-use project, which Noddle has just announced, will include office, retail and multifamily. Noddle Companies is also planning to include experiential spaces, with parks, dog parks, pickle ball courts, outdoor yoga space and fitness areas. Noddle is working with Broadmoor Development Company on this project and expects construction to begin in the late spring or early summer of 2022. The Crossroads Development, planned to open in 2024, is another major development project taking place in Omaha. This mixed-use project, being developed by KJ Crossroads Venture LLC, made up of Omaha’s Lockwood and Century development companies, will bring new shops, offices, restaurants, apartments and entertainment options to the former Crossroads Mall at 72nd and Dodge. There’s also Project NExT, a public-private partnership to create a fedreal health security disaster response space at the University of Nebraska Medical Center during the next 10 years. The City of Omaha this March signed a $93 million Memorandum of Understanding to help support the multi-billion-dollar project. Noddle Companies is also working on the Builder’s District project that will cover eight square blocks in downtown Omaha. Noddle started this project with the completion of the corporate headquarters of Kiewit Corp. Noddle’s additional plans call for another office building and apartment project in this district. “We are extremely busy when it comes to new development,” Noddle said. “Industrial development is so

Noddle Companies is also planning a new office building project for the Builder’s District mixed-use development.

robust, with everything from data centers and distribution centers to warehouses. The industrial segment has been very active.”

Sciscoe said that the demand for industrial space continues to rise in Omaha. Prices, too, for industrial space are on the rise.

The big challenge with any development project is the long lead times for materials. Noddle said that it’s difficult to get materials on a job site on time today.

“COVID never was a challenge for the industrial market,” Sciscoe said. “Materials and cost increases, those are the biggest challenges we are

facing in the industrial market.” Industrial’s hot streak started long before the pandemic, though. Sciscoe said that rising online sales were already inspiring companies to open more warehouse space across the country. The pandemic, though, accelerated this demand, he said.

“If it is a big heavy industrial building, you don’t have steel or concrete for nine months,” he said. “That makes planning very difficult.” Sector-by-sector strength Dennis Sciscoe, an industrial specialist with Omaha’s Cushman & Wakefield|The Lund Company, said that the industrial market in Omaha, as it has across the country, has boomed during the pandemic. Omaha’s central location makes it an attractive market for industrial users who want to distribute their products as quickly as possible to a large swath of the country. That’s led to an increase in demand for new warehouses and distribution centers in the Omaha market. “If anything, COVID has accelerated the need for industrial space in our market,” Sciscoe said. “We need to build more industrial space. We are 100 percent out of space. If someone wants 100,000 square feet today, and they want Class-A space, there is nowhere to go until June of 2022 at least.”

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But until those workers return? Employers are scrambling throughout Omaha, Jones said. “There is a huge labor shortage,” Jones said. “For retail, this has been extremely detrimental. Business owners are getting creative in how they are paying their workers to help keep them on board. They’re scrambling to even get them to show up for work or a job interview. But right now, restaurants, grocery stores, convenience stores, service businesses, they can’t get people to work.” Despite the challenges of staffing, retailers have learned to adapt during the pandemic, Meier said. And their creativity has been rewarded, he said. “With the hardship comes ingenuity,” Meier said. “Without a doubt, the pandemic has inspired many retailers to get creative.”

The Heartland of America Park is a key component of Omaha’s riverfront revitalization project.

“COVID accelerated industrial growth in 12 months what people expected to see happen in five years,” Sciscoe said. “The pandemic shoved all that anticipated growth into 12 months. I don’t think demand will stop anytime soon, either. COVID pushed consumers to go online even more frequently. They realized how easy it is to shop online and order whatever they want. Today, it’s about same-day or next-day delivery. That is why all the construction is happening.” Sciscoe said that industrial end users have finally discovered Omaha. The Amazons and Walmarts of the world have already filled in primary and secondary markets across the United States. Now they are turning to tertiary markets like Omaha. Companies also realized during the early days of the pandemic that they needed more product on hand to meet increased customer demand. This has led, too, to more companies building extra warehouse space to house additional product. “Companies have a fear that when people are out of something they won’t be able to get it,” Sciscoe said. “To alleviate that fear, they want more warehouses to house products if and when the next thing comes up. There is always something. The Suez Canal block-up had a huge effect on supply chains. So companies are putting real estate everywhere to get products to their customers as fast as they can.”

“With the hardship comes ingenuity. Without a doubt, the pandemic has inspired many retailers to get creative.” Holly Lee Jones, a retail specialist with Cushman & Wakefield|The Lund Company, said that the retail market in Omaha, while it has faced challenges, has remained steady throughout the last 19-plus months. And next year? Jones said that she expects good things from the Omaha retail market in 2022. “Maybe I’m just an optimist, but I think we are going to have a great 2022,” Jones said. “The retail market here has been busy since summer. I think part of it is that people did not do much in the retail sector last year, so they are ready to make a move now. Peope have been a little leery of making big decisions. But I think that is going to change in 2022.” Retail might receive a boost next year, too, if companies bring more employees back to the office, Jones said. As more workers return, they’ll need places to eat and shop during the day. That will help the retail sector grow.

This is especially true in downtown Omaha. The retailers and restaurants serving the city’s center are eagerly awaiting the return of office workers to the city’s core. “People often don’t think about how much retail is affected by the office sector,” Jones said. “If people are not going to work, they are not buying coffee and gas and going out to lunch. If people aren’t going into the office, or companies are relying on a smaller staff in the office, then that directly impacts the performance of retail.” The labor shortage continues to have a negative impact on the retail market, too, Jones said. Retailers and restaurants are struggling to staff their locations throughout Omaha. This might change as the federal government’s enhanced unemployment benefits end. As the extra money provided during the pandemic to unemployed workers disappears, more people might return to the workforce.

Meier points to national retailers such as Target and Walmart that have boosted curbside delivery. The ease of driving up to a Target, checking in with an app and having your items delivered with your car has been an eye-opener for several consumers who might not ever have tried online shopping before COVID-19 forced them to consider it, Meier said. Then there’s fast-casual chain Chipotle, which is building new restaurants with drive-though lanes. The difference here, though, is that customers order and pay for their food online before heading to the drive-through. They then simply pull up to the drivethrough to receive their meals. There is no ordering at the actual drive-though lanes. And these innovations will remain long after the pandemic fades, he said. “I’m a big fan of efficiency,” Meier said. “I haven’t been inside a Target store in a year. I just pull up, check in and have my items delivered. It’s a wonderfully convenient way to shop, and it’s not going anywhere.” The future of office Martin Patzner, an office specialist with Cushman & Wakefield|The Lund Company, said that the office market in Omaha, as it is across the country, continues to struggle with the impact of COVID. However, many of the city’s smaller and medium-sized businesses

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have already brought employees back to the office, a trend that started in early June. Larger, national tenants, though, have been slower in bringing their workers back, Patzner said. “They were all shooting for after Labor Day weekend. But now because of the Delta variant and increased cases, the bigger companies are moving toward January 1,” Patzner said. “Others are pushing for all their employees to get their vaccine shots before they bring them back.” And beyond the immediate return of their employees, companies are also debating how much time their workers will spend in the office, Patzner said. Some companies might rely more on flexible schedules, allowing their employees to work from home on some days and in the office on others. This will impact the future of the office market. Some companies might not need as much space. Others might decide that they need more space to spread out their employees. “For years in our market, companies were trying to be more dense, try-

OMAHA

Midwest Real Estate News

“Every company is different, but when we sit down with CEOs, they say they want their people back to work in the office.” ing to fit more employees into less space,” Patzner said. “Now because of COVID, companies might want to lease more space and provide more breathing room and flexibility for their employees. They are looking for spaces that are more flexible for employees who come into the office just two or three days a week.” Despite the uncertainty that hangs over Omaha’s office market, the sector remains resilient, Patzner said. Office landlords throughout the Omaha market did not make huge concessions to entice tenants to rent space, he said. Because of this, there aren’t many anxious office landlords here that are dropping rental rates in an effort to fill space.

The future? No one knows yet what offices wil look like as the country continues to move through and, hopefully, past the COVID-19 pandemic. “More and more of the business leaders are saying they want their people back to work,” Patzner said. “COVID has forced employers to be more flexible with their employees. To keep top talent, they are accommodating those who want a more flexible work schedule. Every company is different, but when we sit down with CEOs, they say they want their people back to work in the office. At the end of the day, the office market in Omaha is still vibrant. With COVID, changes are coming. People have to address it. They can’t ignore it.”

Ready for a strong 2022 Jon Blumenthal, a partner with Omaha law firm Baird Holm, used the word “resilient” to describe Omaha’s economy and commercial real estate market. And like others interviewed for this story, he predicted that next year will be another strong one for Omaha’s commercial real estate market. “Like all markets, we are waiting to see what happens next with regard to the trajectory of the pandemic,” Blumethal said. “But we haven’t seen some of the more draconian lockdowns that some of the other markets have gone through. So we have been able to withstand a lot of the pressure of the pandemic.” Blumenthal, like all observers of the Omaha CRE market, said that the local multifamily market is booming, with developers not able to build apartments fast enough. As Blumenthal says, new apartments here are fully leased as soon as they are built. The same is true of industrial, Blumenthal said. Industrial might be the only sector in Omaha that is hotter than multifamily.

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The Kimpton Cottonwood hotel in Omaha’s Blackstone District is another new hospitality option for travelers.

Office and retail, though, are both facing challenges. The reason? Uncertainty. “I think people don’t know what to expect when it comes to the return to the office,” Blumenthal said. “A lot of companies are just starting to get back to the office, at least on a parttime basis. But we don’t know what the future necessarily holds. So that uncertainty is placing some stress on the office market.” Retail faces its own uncertainty. And much of that has to do with the labor shortage. It’s difficult for retailers to make plans when they are struggling to hire enough workers to staff their stores and restaurants. “Like in all markets, Omaha’s retail sector has been hammered by the pandemic,” Blumenthal said. “Omaha is facing the same problems that so many other cities are having. They can’t fully staff. They can’t keep their restaurants or shops open to the extent that they’d like. Even absent the challenges of the pandemic, hiring is difficult for folks.” The good news remains, though, that Omaha’s multifamily and industrial

sectors are strong enough now to overcome other challenges. “Multifamily and industrial are so strong here, that it is giving people plenty to do,” Blumenthal said. Of course, as everyone who has studied the retail market knows, the sector was working through challenges before the COVID-19 pandemic hit. The pandemic just accelerated some of these, especially the rise of online shopping and how that affects brickand-mortar retail locations. In positive news, though, Blumenthal said that Omaha is seeing several creative new developments, even in the middle of the pandemic. This includes a new riverfront development project in downtown Omaha, one designed to bring more residents and tourists to the city’s riverside. Hotel operators are even bringing new rooms to the city. This includes the Peregrine Omaha Downtown by Hilton, the Kimpton Cottonwood Hotel in Omaha’s Blackstone District and Marriott’s The Farnam, Autograph Collection in downtown. “The timing is probably not ideal for

developers, but these are still great projects that are doing well here,” Blumenthal said. “To see three hotels come online during the pandemic is a testament to the city. We are excited about those.” Then there’s West Omaha, which Blumenthal siad is seeing a significant amount of new development. “I look out my window now and I see cranes downtown,” Blumenthal said. “That’s what we like to see. There are more positives than negatives right now. If you would have said in March of 2020 that we’d be seeing this amount of development, I’m not sure who would have believed you.” Why, then, is Omaha doing so well today? Meier points to Omaha’s conservative approach to new development. “We don’t have the overbuilding you might see in other parts of the country,” Meier said. “There is not as much spec building here. We also don’t have as many of the outside big firms that tend to drive that speculation coming here. We have a pretty tight-knit community of developers here.”

The difference today? Outside investors are starting to notice just how steady and stable the Omaha commercial real estate market is. “Just now, the national companies are coming into our market,” Meier said. “We’ve been a great little secret. We are starting to see the institutional folks coming in and seeing the opportunities in Omaha.” Meier said that Omaha remains attractive for retailers looking for new locations. First, the median annual household income is solid in Omaha, he said. At the same time, the cost-ofliving here is lower than in many other comparable cities. That’s a winning combination for retailers looking to open new shops. “People here also don’t go crazy with spending too much on new cars, new houses and new lake houses,” Meier said. “That kind of mindset permeates the overall culture of our community. That helps us maintain that slow-andsteady climate here that makes this such a stable commercial real estate market.”

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A project years in the making: Knutson ready to bring new veterans home to Minnesota community

By Dan Rafter, Editor

t took several years, but on Aug. 23, Knutson Construction Services along with state officials and veterans celebrated the ground-breaking of a new veterans home in Montevideo, Minnesota, that will serve 72 residents. How much effort did it take to reach this point? Knutson, the contractor for the Montevideo Veterans Home, was originally awarded the project in 2019. But the plans for a new veteran’s home in this part of Minnesota actually started back in 2007. It wasn’t until this year, though, that the funding and plans for the project were finally approved. Buddy Juusola, senior project manager at Knutson Construction Services and the project manager on the Montevideo Veterans home, said that last month’s ground-breaking was the cumulation of years of work by veterans, government officials, developers and architects. “We are proceeding. Construction is underway. All our subcontractors are on board. All the contracts are in place,” Juusola said. “This is an exciting time for this project.” The new state veterans home -- construction is expected to be mostly done by the middle of May in 2022 -- will serve 72 residents in a residential skilled care model. The project is designed to house four households of 18 residents each with private, single-occupancy resident rooms with full private bathrooms. The veterans home will also include living rooms, dining rooms, kitchens and dens in each household. Amenities include a cafe, club room, multi-purpose room, classroom, theater, library, meditation space and community amenity building. The U.S. Department of Veterans Affairs in its State Home Construction Grants Fiscal Year 2021 Conditional Approvals included funding three new veterans home in Minnesota, in Bemidji, Preston and Montevideo.

Photo courtesy of Wold Architects & Engineers.

The three new homes will receive more than $80 million in federal VA funds.

midji and Montevideo -- are within Fischbach’s Seventh Congressional District.

“As a veteran myself, I recognize the obligation we have as a state and a country to deliver on the benefits our veterans have earned,” said Minnesota Gov. Tim Walz in a written statement. “We are pleased to be able to expand our State Veterans Homes into three new communities to serve our elderly veterans living in all corners on the state.”

Juusola said that the home in Montevideo will definitely serve a need.

challenges, too, because of the lead times. We are constantly dealing with that today. It’s something that has hit the entire construction industry. It adds a level of complexity to every project.”

“There is definitely a need and a demand for these veterans homes,” Juusola said. “They will have waiting lists of people who want to get into this home.”

The Montevideo Veterans Home is also not located near a major metropolitan area. This means that Knutson has had to import most of the subcontractors from out of town.

Juusola said that the biggest challenge for Knutson now is the same one they face on all new construction projects: longer lead times on materials.

But even with these challenges, Juusola said he is looking forward to working on this project.

The three veterans homes are being built with a combination of federal grants and state and community money. The federal grants will account for 65 percent of the costs of building the homes. “These communities have been working for more than a decade to get this done, and I am glad to see these projects finally nearing the finish line,” said U.S. Rep. Michelle Fischbach in a press release. “They are going to make a big difference for veterans and their families in our state.” Two of the veterans homes -- in Be-

Since the COVID-19 pandemic began, construction companies have struggled to get the wood, steel and other materials they need for their projects. Lead times are now far longer for these materials. And this is a problem that is showing few signs of fading anytime soon. “In the current market, our joists have a 10-month lead time,” Juusola said. “Other components will present

“We are doing something that will benefit veterans and the community,” he said. “I have a lot of family ties to the military. To a lot of people, this is an important project. For the companies working on it, it becomes more personal. The community, too, is very eager to see this project. When you’re doing construction, that’s not always the case. You don’t always have full community support. This is a very positive experience, just seeing the community’s involvement and its level of commitment to this project.”

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Are consumers ready to return to physical stores? That depends on what they’re buying By Dan Rafter, Editor

But how can retailers best convince shoppers to make a purchase, whether these consumers are buying online or in person? According to the survey, product recommendations -- positive reviews posted on a company’s website or on sites such as Amazon or Walmart -- are a key. Lucidworks’ survey says that 85 percent of U.S. shoppers interact with product recommendations always or often. Even more impressive, twothirds of U.S. respondents said that either every visit to an ecommerce site or often they buy recommended items that they didn’t initially plan to purchase.

s COVID-19 restrictions have been lifted across the United States, will consumers return to in-person shopping? The answer might depend on what kind of shopping consumers are doing. Lucidworks, a San Francisco-based provider of software and cloud technology, recently surveyed 800 consumers in the United States and U.K. about their shopping behavior. The survey results indicate that the pandemic might have given online shopping yet another boost. According to the survey, a third of U.S. respondents said that they plan to avoid in-person shopping as much as possibe, even as pandemic-related restrictions are lifted. An additional 31 percent of U.S. respondents said that they plan to visit in-person stores less often than they did before COVID-19. There are certain types of shopping, though, that consumers are more likely to do in-person. Lucidworks said that while 65 percent of shoppers across the United States and U.K. currently buy at least some of

A total of 68 percent of U.S. shoppers said they prefer to do research on products by reading reviews on a company’s website. Almost half of all U.S. shoppers said they research by reading reviews at third-party marketplaces like Amazon, Google Shopping and eBay.

“To create a great customer experience, you have to understand the consumer’s goal in the moment. The ability to harness first-party data and in-session inferences are the keys to delivering a great experience.” their groceries online to have them delivered, 63 percent said that they plan to primarily buy their groceries in person as restrictions lift. Compare that, though, to the electronics category. Lucidworks found

that more than one-half of respondents said they currently order electronics online, and only 35 percent plan to purchase electronics primarily in-person as COVID restrictions are dropped.

And what about safety measures? Do consumers want COVID-era protocols to remain in place as the pandemic eases? Again, that depends. According to the Lucidworks survey, most shoppers in the United States and U.K. want stores to operate largely as they did before the pandemic hit. But they also want retailers to retain some COVID safety measures, includly physically distanced lines and contactless payments. “The shopper inhabits multiple personas,” said Peter Curran, general manager of digital commerce for Lucidworks, in a written statement. “To create a great customer experience, you have to understand the consumer’s goal in the moment. The ability to harness first-party data and in-session inferences are the keys to delivering a great experience. Brands must connect the dots between all of the actions a shopper takes to understand their goal and deliver the most relevant experience from research, to purchase, to support and back.”

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Midwest Real Estate News

2021 ANNUAL RESOURCE GUIDE

ARCHITECTS/DESIGN-BUILD FIRMS LAMAR JOHNSON COLLABORATIVE

35 E. Wacker Drive, Ste. 1300 Chicago, IL 60601 P: 312.658.0747 Key Contact: Lamar Johnson, FAIA, LEED AP 2199 Innerbelt Business Center Drive St. Louis, MO 63114 P: 314.429.1010 Key Contact: Chip Crawford, PLA, FASLA, LEED GA Website: theljc.com Services Provided: Lamar Johnson Collaborative provides workplace strategy, landscape architecture, urban planning, architecture, and interior design. Company Profile: Lamar Johnson Collaborative is a full-service design and architecture firm committed to enhancing the quality of the human experience and to improving how design and architecture can impact each individual’s emotional being. By harnessing the power of integrated design, including architecture, workplace strategy, interior design, landscape architecture, urban planning and engineering, the company achieves its clients’ goals and aspirations. Notable/Recent Projects: Fulton East, Horizon Therapeutics, Upshore Chapter, 24 E Washington Macy’s Flagship, Penn State Health Westview Garage, Savannah College of Art and Design - Victory, Blue Origin, Riverfront Fort Wayne Promenade Park, Kohl’s Distribution Center, 175 W. Jackson, EDGE @ BRDG, The John Buck Company, St. Louis County Library – Genealogy Library and Administrative Library Building, Iron Hill Mixed Use Development.

BROKERAGE FIRMS AREA REAL ESTATE ADVISORS

4800 Main Street, Suite 400 Kansas City, MO 64112 P: 816.895.4800 Website: openarea.com Key Contact: Tim Schaffer, Founder & President, tschaffer@openarea.com Services Provided: Landlord Representation, tenant representation, property management, project management, investment, research analytics and consulting. Company Profile: AREA Real Estate Advisors is a full-service firm with national brand recognition. Our firms’ expertise includes office, retail, industrial and multi-family brokerage as well as property management, project management and consulting. With a nimble approach and an entrepreneurial spirit, our teams focus is our client. Our business is people. Notable Transactions/Clients: Somera Road, ChowNow, MMGY, Punchbowl Social, Sally Beauty, Five Below, Dot Foods and C&C produce, Nordstrom Rack and Arvest Bank.

BARBER MURPHY GROUP

1173 Fortune Blvd. Shiloh, IL 62269 Commercial Real Estate Solutions P: 618.277.4400 | F: 618.277.4407 Website: www.barbermurphy.com Key Contacts: Wayne Barber, Jr., SIOR, Principal, Wayne@barbermurphy.com; Paul Murphy, Managing Broker, Principal, Paul@barbermurphy.com; Steve Zuber, SIOR, CCIM, Principal, Steve@barbermurphy.com; Collin Fischer, CCIM, Principal, CollinF@barbermurphy.com Services Provided: BARBERMurphy Group is a full service Commercial Real Estate firm offering their clients on the ground market knowledge and experience in the disposition and acquisition of commercial, industrial, land, retail, and investment properties. Company Profile: BARBERMurphy Group is the largest Commercial Real Estate firm in downstate Illinois. Our growing firm has 19 Licensed Brokers and more than 500 exclusive listings in downstate Illinois.

BERKADIA

521 Fifth Avenue, 20th Floor New York, NY 10175 Website: berkadia.com Key Contacts: Justin Wheeler, CEO, 646.600.7815 Ernest Katai, EVP, Head of Production, 248.208.3471 Hilary Provinse, EVP, Head of Mortgage Banking, 301-202-3580 Keith Misner, SVP, Head of Investment Sales, 301-202-3568 Services Provided: Full service, nationwide platform of mortgage banking, investment sales and servicing for all commercial property types including multifamily, retail, office, and industrial as well as specialties of affordable housing, seniors housing and healthcare, student housing, hotels & hospitality, land services, and manufactured housing communities. Company Profile: Berkadia, a joint venture of Berkshire Hathaway and Jefferies Financial Group, is a leader in the commercial real estate industry, offering a robust suite of services to our multifamily and commercial property clients. Powered by deep relationships and industry-changing technology, our people sell, finance, and service commercial real estate, providing support for the entire life cycle of our clients’ assets. Our unique ownership structure allows us to put the client’s interests first and creates a marketplace that delivers a superior experience.

BRADLEY COMPANY

112 W. Jefferson Blvd. Suite 300 South Bend, IN 46601 P: 574.237.6000 Website: bradleyco.com Key Contact: Brad Toothaker, President & CEO, info@bradleyco.com Services Provided: Commercial Brokerage, Commercial Management, Multi-Housing Management, Tax Consulting, Maintenance, Research, Auction Services, Asset Resolutions, Incentives and Location Advisory Services Company Profile: A seasoned and talented team of solution-driven, commercial real estate professionals serving the Midwest region. We provide innovative services for all commercial real estate needs. Bradley Company is committed to, and actively invests in, the growth and prosperity of our local communities. Our highest priority is to help our clients align their real estate requirements with their strategic business objectives. Our full-service approach ensures that every client’s experience with Bradley Company is outstanding from beginning to end. Our expertise in all sectors of the market allows us to create an environment that solves problems and strengthens relationships. Trust, loyalty and responsibility are at the heart of everything we do. With a corporate history that began in 1978, our team consists of more than 300 professionals throughout Indiana, Michigan, and Ohio. The benefit to you is a broader suite of services, real-time market knowledge and trend analysis that smaller, more localized firms, may not provide.

CRESSY COMMERCIAL REAL ESTATE

4100 Edison Lakes Pkwy., Suite 350 Mishawaka, IN 46545 P: 574.271.4060 Website: cressy.com Key Contact: Chris Fielding, CEO Services Provided: Brokerage Services, Property Management, Financial Management & Reporting, Maintenance & Mechanical Services, Development, Architectural Services, Design Services, Project Management, Construction Services. Company Profile: NAI Cressy, the brokerage division of Cressy Commercial Real Estate provides expert data, marketing and closing services. Our proprietary database and dedicated staff ensure our brokers are able to meet all of your real estate needs and goals. With corporate offices in South Bend, Mishawaka and Indianapolis, Indiana we are able to serve the vast majority of Central to Northern Indiana and Southwest Michigan. Also through our affiliation with NAI Global, we can provide a global network of data for markets nationwide.

CUSHMAN & WAKEFIELD/THE LUND COMPANY

450 Regency Parkway, Suite 200 Omaha, NE 68114 P: 402.393.8811 | F: 402.393.2402 Website: lundco.com Key Contacts: John Lund, CEO, john.lund@lundco.com; Jason Fisher, President, jfisher@lundco.com Services Provided: Our staff of innovative and creative professionals offer a wide range of real estate services including brokerage, commercial and multi-family property management, real estate consulting, investment acquisition, and project and development services. Company Profile: Cushman & Wakefield/The Lund Company markets and manages over eight million square feet of commercial properties valued at over $1 billion. Also, included in our management portfolio are more than 15,000 apartment units.

FRIEDMAN REAL ESTATE

34975 W. Twelve Mile Road Farmington Hills, MI 48331 P: 888.848.1671 Website: friedmanrealestate.com Key Contacts: David B. Friedman, President/CEO; Gary Goodman, Sr. Managing Director-Brokerage Services Services Provided: Friedman offers a full range of real estate services including commercial and multifamily property and asset management, tenant and landlord representation, investment and loan sale advisory, space planning, design and construction and a unique platform of lender-focused bankruptcy, receivership and distressed asset services. All services are provided in-house, though a single point of contact, which guarantees that clients receive the most timely and efficient service available in the marketplace. Company Profile: Founded in 1987, Friedman Real Estate is one of the largest privately held commercial real estate organizations in the nation; currently managing over 15M SF of commercial space and more than 15,000 apartment homes located throughout the country. Friedman’s commercial brokerage team has over 800 current listings with $20 billion in closed transactions. Notable Transactions/Clients: • Troy Technology Park - Troy, MI • Sakthi Automotive Industrial Portfolio - Detroit • Greyberry Apartments - Waterford • Tiffany Plaza - Youngstown • West 11 Tech Park - Southfield

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GERSHMAN COMMERCIAL REAL ESTATE

150 N. Meramec Ave., Suite 500 St. Louis, MO 63105 P: 314.862.9400 Website: gershmancommercial.com Key Contacts: Chris Fox, CCIM, SIOR / President & CEO, cfox@gershmancommercial.com; Molly Studer, Senior Vice President, mstuder@gershmancommercial.com Services Provided: Gershman offers an extensive array of commercial real estate services, including brokerage, landlord and tenant representation, investment sales, valuation advisory, market research, corporate services, property & facility management, project/construction management, client accounting and maintenance/engineering. Company Profile: Gershman Commercial Real Estate is a full-service real estate firm providing comprehensive, personalized services to owners and occupiers of commercial property. With an over 70-year history in St. Louis, and firm leadership based locally, we are uniquely positioned as the longest-standing independently owned firm in the metro area.

NAI HIFFMAN

One Oakbrook Terrace, Suite 400 Oakbrook Terrace, IL 60181 P: 630.932.1234 | F: 630.932.7258 Website: hiffman.com Key Contacts: Dave Petersen, CEO, dpetersen@hiffman.com; Michael Flynn, COO, mflynn@hiffman.com Company Profile: NAI Hiffman is the largest independent real estate services firm in the Midwest, providing leasing, property management, tenant representation, capital markets, project services, research, and marketing services for institutional and private owners and occupiers of commercial real estate. NAI Hiffman currently leases and manages over 100.5 million square feet, encompassing more than 800 properties in 28 states. With more than 200 employees, NAI Hiffman is the Chicago-area representative for NAI Global, the world’s largest managed network of real estate service providers, with more than 6,000 local market professionals managing more than 1.15 billion square feet of property. NAI Global has more than 375 offices strategically located throughout North America, Latin America, Europe and Asia Pacific. For more information, please visit hiffman.com.

GOODMAN REAL ESTATE SERVICES GROUP LLC

25333 Cedar Road, Suite 305 Cleveland, OH 44124 P: 216.381.8200 | F: 216.381.8211 Website: goodmanrealestate.com Key Contacts: Randy Goodman, President, Randy@goodmanrealestate.com; Richard Edelman, Senior Vice President/Principal, Richard@goodmanrealestate.com Services Provided: At Goodman, we combine experience, technology, a large support team and hard work to provide exceptional service to its clients in national investment sales and financing, tenant and buyer site selection, property marketing, leasing, sales and disposition. Company Profile: Goodman is a leading commercial brokerage firm based in Ohio specializing in national investment sales, tenant and buyer site selection with over 100 companies represented and marketing over 10 million square feet of retail properties for lease and development.

KESSINGER HUNTER & COMPANY, LC

2600 Grand Boulevard, Suite 700 Kansas City, MO 64108 P: 816.842.2690 | F: 816.421.5659 Website: kessingerhunter.com Key Contact: John DeHardt Services Provided: Kessinger Hunter & Company, LC is a full-service, commercial real estate firm. Full service includes management, brokerage, development, accounting, and consulting services throughout the United States and globally. Company Profile: What really sets us apart is our People. Integrity, Passion, Knowledge, and Experience are a way of everyday life for us at Kessinger Hunter. Each group responds to our clients’ needs, and they work together to utilize the resources that come with more than 140 years of experience and 200 associates. We manage over 25,500,000 square feet of property and have developed in excess of 14,000,000 square feet of projects.

MARCUS & MILLICHAP

333 West Wacker Drive, Suite 200 Chicago, IL 60606 P: 312.327.5400 Website: marcusmillichap.com Key Contact: Michael Glass, Senior Vice President/ Midwest Division Manager, michael.glass@marcusmillichap.com. Services Provided: Marcus & Millichap is a complete brokerage offering investment sales, financing, research and advisory services. Investment specialists represent investors of apartments, multi-tenant retail, single-tenant retail, office, industrial, affordable housing, student housing, seniors housing, manufactured housing, medical office, self-storage, hospitality, golf and resorts, and land. Company Profile: Marcus & Millichap is a leading firm specializing in commercial real estate sales, financing, research and advisory services. The firm has the largest team of investment specialists in the industry, dedicated to meeting the diverse needs of private and major/institutional investors throughout the United States and Canada.

NAI FARBMAN/FARBMAN GROUP

28400 Northwestern Highway, Suite 400 Southfield, MI 48034 P: 248.353.0500 | F: 248.353.0501 Website: farbman.com Key Contacts: Andrew Farbman, CEO, afarbman@farbman.com; Andrew Gutman, President, gutman@farbman.com; Michael Kalil, COO and Director of Brokerage, kalil@farbman.com. Services Provided: Leasing & Brokerage, Construction, Investment Sales, Asset Management, Site Selection Services, Acquisition & Disposition, Medical Real Estate Solutions, Move Management, Property Management, Receivership Services, Facility Management. Company Profile: NAI Farbman, a full-service commercial real estate company, is one of the largest and most respected names in Commercial Real Estate.

PW COMMERCIAL REAL ESTATE

8725 W. Higgins Road, Ste. 800 Chicago, IL 60631 P: 773.714.9300 | F: 773.714.8253 Website: painewetzel.com Key Contacts: Jerry Sullivan, Principal, sullivan@painewetzel.com; Ed Wabick, Principal, ewabick@painewetzel.com Services Provided: Real Estate Strategy with dependable results in Brokerage, Consulting, Tenant Advisory, Corporate Services, Property Management, Development, Strategic Planning, Research and Construction Management. Company Profile: PW has been a leader in industrial, office and investment real estate since 1975. We pride ourselves on offering unparalleled brokerage services and superior market expertise to attain your real estate and business goals.

DEVELOPERS CENTERPOINT PROPERTIES

1808 Swift Drive Oak Brook, IL 60523 P: 630.586.8000 Website: centerpoint.com Key Contacts: Bob Chapman, Chief Executive Officer; bchapman@centerpoint.com; Michael Murphy, Chief Development Officer; mmurphy@centerpoint.com Services Provided: CenterPoint Properties is an innovator in the investment, development and management of industrial real estate and multimodal transportation infrastructure. CenterPoint acquires, develops, redevelops, manages, leases and sells state-of-the-art warehouse, distribution and manufacturing facilities near major transportation nodes. Our experts focus on large rail, port and trucking infrastructure assets. Company Profile: CenterPoint Properties continuously reimagines what’s possible by creating ingenious solutions to the most complex industrial property, logistics and supply chain problems. With an agile team, substantial access to capital and industry-leading expertise, we provide our customers with a competitive edge and ensure their success—no matter how great the challenge.

CONOR COMMERCIAL REAL ESTATE

9500 W. Bryn Mawr Avenue, Suite 200 Rosemont, IL 60018 P: 847.692.8700 | F: 847.292.4313 Website: conor.com Key Contacts: David J. Friedman, President, dfriedman@conor.com; Brian Quigley, Executive Vice President, bquigley@conor.com Services Provided: Conor Commercial identifies and implements the most suitable commercial real estate strategy to yield increased returns for each real estate opportunity. With offices and seasoned real estate professionals strategically located throughout the country, the firm provides the experience and resources needed to develop and stabilize real estate developments that maximize positive returns to investors and partners. Company Profile: Conor Commercial Real Estate is the integrated real estate development firm of The McShane Companies headquartered in suburban Chicago, Illinois with regional offices located in Dallas, Houston, Irvine and Phoenix. The firm is active on a local, regional and national basis in the development of master-planned industrial and office parks, multifamily properties, medical office developments and built-to-suit projects for lease or purchase.

www.rejournals.com CRG

35 E. Wacker Drive, Ste. 1300 Chicago, IL 60601 P: 312-658-0747 2199 Innerbelt Business Drive St. Louis, MO 63114 P: 314-429-5100 Key Contacts: Shawn Clark, President clarks@realcrg.com; Chris McKee, Chief Development Officer, mckeec@realcrg.com Website: www.realcrg.com Services Provided: Development, Site Selection, Site Planning & Cost Analysis, Engagement & Entitlements, Incentive Discovery & Negotiation, Financing, Development Management, Leasing & Administration, Asset Management and Investment Management. Company Profile: CRG is a privately held real estate development firm that has developed more than 9,000 acres of land and delivered over 200 million square feet of commercial, industrial, institutional and multifamily assets exceeding $12 billion in value. CRG leverages a powerful North American platform with local market expertise and offices in Atlanta, Chicago, Columbus, Southern California, St. Louis and Philadelphia. CRG’s philosophy of developing for the future and anticipating the enhanced needs of next generation users led to the creation of its industrial brand, The Cubes, and its multifamily brand, Chapter. For more information, visit CRG’s website at www.realcrg.com. Notable/ Recent Projects: CRG’s recent Midwest projects include Wildhorse Village, an 80-acre, mixed-use development in Chesterfield, Missouri and NorthPark Distribution Center in St. Louis. Nationally, the firm has various projects under The Cubes industrial brand, including The Cubes at DuPont near Seattle and The Cubes at Bridgeport in Atlanta.

CULLINAN PROPERTIES, LTD.

420 N. Main Street East Peoria, IL 61611 P: 309.999.1700 Website: www.cullinanproperties.com Services Provided: Cullinan Properties, Ltd. is a multi-disciplined real estate firm that develops, manages and owns mixed-use, medical, multi-family, office, governmental, industrial and retail properties throughout the U.S. Our dynamic team manages every facet our projects from inception to completion, exceeding expectations and delivering projects on-time and under budget. Company Profile: Cullinan Properties, Ltd. is a leading provider of real estate services specializing in commercial and mixed-use developments and acquisitions. Founded in Peoria, IL in 1988, Cullinan has offices in Chicago and Peoria, IL and St. Louis, MO. Cullinan is known and respected throughout the United States for developing distinctive projects while crafting winning relationships with our business partners and within the communities we work. Notable/ Recent Projects: Mixed-use developments - Streets of St. Charles, The Levee District, Grand Prairie Developments and Rock Run Crossings. Medical projects - Austin VA Outpatient Clinic, Tampa VA Clinic and Illinois Cancer Care.

SEPTEMBER 2021

Midwest Real Estate News

MELTZER, PURTILL & STELLE LLC

1515 Woodfield Road, Ste. 250 Schaumburg, IL 60173 P: 847.330.2400 | F: 847.330.1231 300 S. Wacker Drive, Ste. 2300 Chicago, IL 60606 P: 312.987.9900 | F: 312.987.9854 Website: mpslaw.com Key Contact: William J. Mitchell, Managing Partner, wmitchell@mpslaw.com Services Provided: The firm provides an exceptionally wide range of real estate-related services, including commercial real estate and leasing; land use, zoning, and entitlement; construction and finance- including TIF and other development incentives and commercial litigation. Company Profile: Meltzer, Purtill & Stelle LLC is a business-to-business law firm with exceptionally strong capabilities in all areas of real estate law. The firm provides a full range of transaction and litigation services to real estate developers, financial institutions, and businesses engaged in corporate, industrial, and retail development as well as financing, leasing, and investment.

REINHART BOERNER VAN DEUREN S.C.

1000 N Water Street, Suite 1700 Milwaukee, WI 53202 P: 414.298.1000 Website: reinhartlaw.com Key Contacts: Deborah Tomczyk, Attorney, dtomczyk@reinhartlaw.com; Services Provided: Reinhart is a full-service, business-oriented law firm that delivers cost-effective solutions for today’s most important real estate needs, including land use and zoning; tax-incremental financing; tax credits; and condemnation and eminent domain issues. Company Profile: With the largest real estate practice in Wisconsin and offices throughout the Midwest and across the country, Reinhart’s attorneys offer clients customized real estate insight rooted in broad knowledge and deep experience.

SARNOFF & BACCASH

Two N. LaSalle St., Ste. 1000 Chicago, IL 60602 P: 312.782.8310 | F: 312.782.8635 Website: sarnoffbaccash.com Key Contacts: James Sarnoff, jsarnoff@sarnoffbaccash.com; Robert Sarnoff, rsarnoff@sarnoffbaccash.com Services Provided: Sarnoff & Baccash is a leading and recognized law firm concentrating solely in the field of property taxation. We help client’s secure favorable taxes in Illinois through property tax appeals, incentives and consulting. Company Profile: Sarnoff & Baccash’s clients include Owners, Developers, Managers, REIT’s, Fortune 500 Companies, Private Equity Firms, etc., in connection with commercial property, high-rise and low-rise apartment buildings, condominium associations and single-family home portfolios.

TAFT LAW THE LUND COMPANY

450 Regency Parkway, Suite 200 Omaha, NE 68114 P: 402.393.8811 | F: 402.393.2402 Website: lundco.com Key Contacts: John Lund, CEO, john.lund@lundco.com; Jason Fisher, President, jfisher@lundco.com Services Provided: Our staff of innovative and creative professionals offer a wide range of real estate services including project and development services, brokerage, commercial and multi-family property management, real estate consulting and investment acquisition. Company Profile: The Lund Company markets and manages over eight million square feet of commercial properties valued at over $1 billion. Also, included in our management portfolio are more than 14,000 apartment units

111 East Wacker, Suite 2800 Chicago, IL 60601 P: 312.527.4000 Website: taftlaw.com Key Contact: Kathryn Kovitz Arnold, Chair, Real Estate & Condominium Groups, karnold@taftlaw.com Services Provided: Experienced legal counsel is a critical component to delivering successful real estate transactions. Taft’s 90+ real estate attorneys leverage our skills and depth of industry knowledge to help our clients mitigate risk and avoid obstacles, and deliver results to our clients in a timely, cost-effective manner. Company Profile: As a leading example of a modern law firm, Taft honors how we work together as a diverse team to be the inclusive employer of choice across all of our markets. Each Taft team member is positioned to excel. Our 630 attorneys collaborate to meet and exceed client expectations.

VON BRIESEN & ROPER, S.C.

LAW FIRMS KRIEG DEVAULT LLP

One Indiana Square, Suite 2800 Indianapolis, IN 46204 P: 317.636.4341 | F: 317.636.1507 Website: kriegdevault.com Key Contacts: David A. Adams, Partner, dadams@kdlegal.com Stephen A. Studer, Partner, sstuder@kdlegal.com Services Provided: Acquisitions and Dispositions, Leasing, Construction, Development, Environmental, Land Use and Zoning, Finance/Debt/Equity, Tax Structuring/Tax Credits, Foreclosure/ Bankruptcy. Company Profile: The professionals of Krieg DeVault’s real estate, environmental and commercial real estate lending groups provide practical, comprehensive legal services to our clients to assist them from concept to completion of their real estate projects.

411 East Wisconsin Avenue, Suite 1000 Milwaukee, WI 53202 P: 414.276.1122 Website: vonbriesen.com Key Contacts: Smitha Chintamaneni, Shareholder, schintam@vonbriesen.com; Adam Bazelon, Shareholder, abazelon@vonbriesen.com Services Provided: Providing representation and assistance in all areas of real estate law including acquisition, development, leasing, financing and sale of real estate, eminent domain and property tax assessment contests, construction, environmental, land use and zoning including TIF district development projects and planned unit developments, retail, office park, industrial, condominium, golf course, recreational property and residential subdivision development, community association law, real estate licensing law, fair housing law and ADA compliance, Section 1031 like-kind exchanges, foreclosures and real estate workouts, real estate and construction litigation. Company Profile: Founded in 1904, von Briesen is a Wisconsin-based law firm with more than 180 lawyers throughout Wisconsin and Chicago. Our Real Estate Group represents property owners, developers, lenders, landlords, tenants and local governments in all aspects of real estate law and practice. Clients of von Briesen’s Real Estate Group profit from the Group’s extensive knowledge, insight and well-established relationships in the real estate industry.

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