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Some things never change: Omaha’s commercial real estate market remains a model of consistency, even during challenging times
By Dan Rafter, Editor
It’s a constant refrain when asking brokers and developers about the Omaha commercial real estate market: Everyone points to its resilience.
The Omaha CRE market seems to be built to weather challenging times. And that’s never been more evident than in 2024. High interest rates and construction costs remain major challenges in commercial real estate. The struggles of the office sector show few signs of lessening.
But in Omaha? Yes, the city does face these same challenges. But its commercial real estate market continues to display its resilient nature. Investment sales activity and new development are down here. But deals and developments are still happening, despite the country’s economic challenges.
And leasing activity? It remains strong in most sectors, especially for industrial and retail space.
The professionals working this market say that they expect 2025 to be an even stronger year, one that should feature an increase in sales and development, while leasing activity remains strong.
Blumenthal, chair of the Real Estate Group at Omaha-based law firm McGrath North, said that demand for industrial buildings in and around the Omaha market remains incredibly high.
“Leasing demand remains very strong in Omaha’s industrial market,” Blumenthal said. “There are still more users looking for data, warehouse, storage and production sites than there is existing supply. Omaha’s office and retail markets are not as robust as in past years, but remain active and resilient.”
Industrial supply throughout the Omaha market still can’t keep up with demand, even though developers are building new options.
But while industrial is seeing the most leasing activity, at least one other sector is also performing well today, retail.
And this sector is doing especially well in Omaha, Blumenthal said.
OMAHA (continued on page 16)
COLUMBUS
A look ahead: CRE pros predict increased sales, development activity for Columbus in the coming months
By Dan Rafter, Editor
Sure, the Columbus, Ohio, commercial real estate market has seen development and sales activity slow in 2024. But this market didn’t see slowdowns that were as drastic as what many other major markets across the country saw.
And that’s good news for the state of the CRE market in Columbus as 2025 arrives.
Jon
A new industrial building at Gretna Logistics Park in Gretna, Nebraska, developed by NewStreet Properties. (Photo courtesy of NewStreet Properties.)
Omaha’s commercial real estate market remains a model of consistency, even during challenging times: It’s a constant refrain when asking brokers and developers about the Omaha commercial real estate market: Everyone points to its resilience.
CRE pros predict increased sales, development activity for Columbus in the coming months: Sure, the Columbus, Ohio, commercial real estate market has seen development and sales activity slow in 2024. But this market didn’t see slowdowns that were as drastic as what many other major markets across the country saw.
Expecting a stronger year for commercial sales and development in Kansas City in 2025: This year has been a challenging one for the Kansas City commercial real estate market. That doesn’t make Kansas City an outlier: 2024 has been a tough year for every major city’s CRE market. But the future? That again looks bright.
How will AI change commercial real estate? JLL Falcon provides early clues: AI is bringing big changes to industries across the country. It’s little surprise, then, that AI is changing the way commercial real estate professionals work, too.
CBRE report: Office conversions gaining momentum in the Midwest, Texas: Since the start of the COVID-19 pandemic, vacant office space in U.S. downtowns has increased by about 136 million square feet. To deal with this? A growing number of office building owners are converting this vacant space to other uses.
Not all multifamily markets are created equal: Chicago, Detroit, Kansas City, Columbus and Indianapolis all ranked among the top 10 markets in the United States for multifamily rent growth as of September of this year, according to the latest research from Coldwell Banker Commercial.
COLUMNS/DEPARTMENTS
38 December Marketplace 1 12 14 24 25 1 8
The big spend: In a competitive college landscape, universities investing more on student housing, athletic facilities: Colleges are competing for students today, and they’re often investing in new student housing and athletic and recreation facilities to attract the interest and tuition dollars of these potential newcomers to their campuses.
Number of new apartment units to plummet across United States in 2025 and beyond: The number of new apartment units coming online in the United States is expected to decrease through 2027, according to the latest forecast from Yardi Matrix.
6 Editor’s Letter
26 A deep dive into the Midwest multifamily investment environment
28 Two keys to making the design-build process even better.
30 Market trends drive strategic value for multi-tenant shallow-bay industrial assets
32 A successful healthcare real estate strategy requires research and trusted partners
34 Three tips to find “hidden money” in your real estate leases and contracts
36 3 key factors for Midwest property owners considering alternative insurance
The Midwest’s commercial real estate publication, providing useful, unbiased and accurate coverage of the industry and its professionals since 1985.
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The New Harvey Dutton Lofts Now Leasing
Harvey Dutton Lofts at 800 Broadway Blvd in the historic Garment District is officially available for lease! This beautifully redeveloped building features 38 residential units and 3,600 square feet of commercial space, blending modern living with Kansas City’s rich architectural history
Studios starting at $1,200/month
One-bedrooms at $1,600/month
Special Offers:
Up to 3 Months free rent
Six months of free parking
The development includes a restaurant, café, retail space, and a revitalized pocket park, adding energy to downtown Kansas City’s vibrant scene
Introducing 929 Walnut: Exact Architects’ Next Exciting Project
Exact Architects is excited to announce 929 Walnut, our next downtown Kansas City project This former office building will transform into 50 modern residential lofts and 4,000 square feet of commercial space
Project Highlights:
Timeline: Q4 2024 - Q3 2025
Budget: $10.5M, including $8M in Historic Tax Credits
Incentives: 10-year LCRA tax abatement
Location: Steps from Power & Light and Kansas City Streetcar
929 Walnut will bring sustainable urban living to the heart of downtown, offering access to dining, entertainment, and transit
For leasing inquiries or more information about Harvey Dutton Lofts and 929 Walnut, contact:
Exact Architects info@exactarchitects.com
Mayer, MPA
Colliers report: Plenty of positive signs in U.S. industrial market
By Dan Rafter, Editor
It’s long been the darling of commercial real estate sectors. And the latest research shows that this hasn’t changed. But while the industrial sector continues to generate strong leasing activity, it is seeing a slowdown in both new development and investment sales activity.
That’s according to a new report from Colliers.
According to Colliers’ third quarter 2024 national industrial report, the U.S. industrial vacancy rate is beginning to plateau as the new supply of industrial properties begins to fall. Colliers said that the average industrial vacancy rate in the United States climbed by 19 basis points to 6.6% in the third quarter of this year.
That is an increase, but it’s a small one. Colliers reported that last quarter’s increase in vacancy rate was the smallest quarterly jump since the industrial
vacancy rate began to increase in the latter months of 2022.
Part of this is because of the slowdown in new industrial supply. According to Colliers’ numbers, new industrial supply totaled 76 million square feet in the third quarter. That is the lowest since early 2021 and 54% below the 163 million square feet of industrial space delivered during the third quarter last year.
Tenants are still claiming industrial space. Colliers reported that net industrial absorption across the United States totaled 39 million square feet in the third quarter. That brings the year-to-date amount of U.S. industrial absorption to 115 million square feet.
Expect a continued slowdown in new industrial construction. Colliers says that the development of new U.S. industrial space has decreased by 53% since its peak in 2022. New develop-
ment will fall below 300 million square feet by early 2025.
While the U.S. industrial market is no longer in its boom phase, Colliers did report that 35 tenants across the country moved into spaces of 500,000 square feet or larger during the third quarter. Nearly half of these tenants were third-party logistics providers or packaging users.
What U.S. industrial markets performed well during the third quarter? Houston saw more than 5.7 million square feet of net absorption to lead the country, while Dallas-Fort Worth ranked second with more than 5.5 million square feet.
Chicago ranked second in the country for total inventory with 1.5 billion square feet of industrial space on the market. Chicago also saw its industrial vacancy rate fall to 4.9% during the third quarter, down 29 basis points.
The Dallas-Fort Worth market had 1.1 billion square feet of industrial inventory as of the end of the third quarter.
A special issue
Just a note here that our next issue of Midwest Real Estate News is a special one. We reserve our first issue of the year to highlight the newly inducted members of our Midwest Real Estate News Commercial Real Estate Hall of Fame. This year is no exception.
The newest class of inductees have all displayed remarkable resilience, working long hours, thinking creatively and doing everything they can to serve their clients during these still challenging days in the commercial real estate market.
Who knows? You might pick up a few strategies of your own to boost your business after reading our upcoming Winter 2025 issue.
Image courtesy of Colliers.
Block & Company’s Mark McConahay: Expecting a stronger year for commercial sales and development in Kansas City in 2025
By Dan Rafter, Editor
This year has been a challenging one for the Kansas City commercial real estate market. That doesn’t make Kansas City an outlier: 2024 has been a tough year for every major city’s CRE market.
But the future? That again looks bright, as the prospect of lower interest rates should result in more investment sales activity and new development in the Kansas City market in 2025.
We asked Mark McConahay, vice president with Kansas City, Missouri-based Block & Company, Inc., Realtors, for his thoughts on the state of the local CRE market. Here is what he had to say:
How would you describe leasing demand for the major commercial sectors in the Kansas City market today? Is the market still a resilient one?
Mark McConahay: Overall, the Kansas City commercial sectors have remained resilient. Leasing demand is strongest in the industrial markets, specifically warehouses, distribution and last-mile facilities, driven by e-commerce growth and Kansas City’s central location.
Retail leasing demand has been mixed depending on the submarket, with demand high in properties that are well-positioned with strong demographics and near customer draws.
The office market continues to lag but has shown signs of some recovery, especially in Class-A properties. But older product will likely continue to struggle.
What about investment sales? Have those picked up at all in any sector during the last, say, three or four months?
McConahay: Investment sales have remained steady with a recent uptick based on ongoing interest rate drops and the conclusion of the election. The industrial, single-tenant net-lease retail and multifamily sectors continue to see the most deal velocity and compressed cap rates.
Kansas City is seeing significantly less 1031 money from out-of-town investors compared to the last several years.
Which commercial sectors are still seeing strong leasing activity in the Kansas City market?
McConahay: Demand remains strong for all sizes of industrial space with overall vacancy at less than 5%. In the retail sector, well-positioned sites with strong retail fundamentals continue to be in demand. Vacancy rates are currently at 9% across the market.
Class-A office space has seen some recent leasing activity but other older office space continues to be very challenging.
I know new development activity has slowed throughout the United States. But how about in Kansas City? Are commercial developments still
Mark McConahay (Photo courtesy of Block & Company, Inc., Realtors.)
Photo courtesy of Block & Company, Inc., Realtors.
being built or at least planned? Has development activity picked up at all during the last three months?
McConahay: Yes, new commercial developments continue to make progress throughout the Kansas City area in all commercial sectors. We’ve seen substantial development and redevelopment plans for both the CBD and suburban markets. High construction costs and longer entitlement periods continue to challenge the developers.
Can you identify any significant commercial developments that are having a positive impact on the Kansas City market?
McConahay: Kansas City continues to ready itself for hosting the FIFA World Cup matches in the summer of 2026. An important project that has already been completed is the new terminal at the Kansas City International Airport. Work is underway on the expansion of the streetcar lines. Developers are also adding additional hotel rooms.
Plans have been made to begin construction of the South Link Loop, which will cover Interstate-670 in the CBD,
“Kansas
creating four city blocks of parks and green space, allowing for pedestrian connections from the Crossroads Arts District.
Kansas City continues to seek replacement sites for both the Chiefs and Royals. These decisions will impact the overall market for decades to come.
Also of note, Panasonic is nearing completion of a $4 billion, 4.7-millionsquare-foot facility in DeSoto, Kansas,
which will employ 4,000. The ancillary development spurred by the project is flourishing.
What are some of the factors that make Kansas City such a strong market for companies looking to expand, relocate or open new locations?
McConahay: Kansas City’s combination of location, affordability, business-friendly policies, skilled workforce and high quality of life make it
an ideal market for companies seeking to expand, relocate or open new locations.
The city’s strategic position at the crossroads of the U.S., low operational costs, growing innovation ecosystem and investment in infrastructure make it a highly attractive destination for both established companies and startups.
The big spend: In a competitive college landscape, universities investing more on student housing, athletic facilities
By Dan Rafter, Editor
Colleges are competing for students today, and they’re often investing in new student housing and athletic and recreation facilities to attract the interest and tuition dollars of these potential newcomers to their campuses.
An example? The Opus Group in August began construction on the Gerdin Fieldhouse for Athletics and Wellness at Luther College in Decorah, Iowa.
The project includes a major renovation of the existing 200,000-square-foot athletic facility and a 15,787-squarefoot addition.
Jeff Smith, senior vice president with The Opus Group, said that the Luther College work is just one example of the investments that colleges continue
to make to upgrade their housing and athletic facilities.
“This is often about keeping up with their competition,” Smith said. “In Iowa, all the high schools seem to have athletic facilities that are almost over the top. In some ways, these smaller private schools must up their game to not make it feel like a downgrade from what students were used to in high school.”
Smith said that during the last 10 years, Opus has taken on a steady stream of construction and renovation work at colleges across the country.
“We haven’t won all the jobs that have come up that we have competed on, but it sure seems like a trend that colleges and universities across the board are investing more in their facilities,” Smith said. “There are new pressures
on colleges and universities. They are trying to be strategic about how they invest in their programs and facilities to better compete.”
The Regents Center, built in 1963, has long housed the athletic teams at Luther College. College officials decided it was time to invest in the facility to support its student-athlete recruitment and retention efforts.
Construction on the Gerdin Fieldhouse for Athletics and Wellness, possible through a historic $10 million gift from Michael and Nicole Gerdin and the Gerdin Charitable Foundation, marks one of the largest renovation projects in Luther’s 162-year history.
Opus is the college’s design-build partner on the Gerdin Fieldhouse and has worked on several athletic facilities
and additional campus improvements over the last 25 years, including construction of its Center for the Arts, the Sampson-Hoffland Science Center, an addition to the Jenson-Noble Hall of Music and renovations to Valders Hall of Science and Miller and Dieseth Halls.
Work on the Gerdin Fieldhouse includes construction of a 5,787-square-foot public lobby on the facility’s north end to include a new concession stand, restrooms and a Hall of Fame space.
A new 10,200-square-foot wrestling training complex will also be built and extensive renovations will be made to the existing basketball and volleyball arena.
In addition, athlete training and rehab facilities, locker rooms and meeting and study spaces for use by all 21 Norse ath-
Construction has started on the Gerdin Fieldhouse for Athletics and Wellness at Luther College. (Photo courtesy of The Opus Group.)
letic teams will also be renovated. Construction is expected to be complete by December 2025.
Opus is the design-builder working in partnership with RDG Planning & Design.
The work that universities and colleges are putting into athletic and recreational facilities is matched by their efforts to improve their student housing.
As Smith says, the old cinderblock dorm rooms of the past aren’t good enough for many colleges and for many students.
“It was common in my time as a college student for student housing to be four block walls, two beds and two desks in a dorm room,” Smith said. “That is how it was. That is not cutting the mustard anymore. It’s the same thing that we are seeing with sports facilities, universities are investing again in student housing. The college landscape has become more competitive.”
Part of this reason? Many of the students coming to colleges are coming from households in which they have
“When done right, this housing with in-unit and common-area amenities proves to be very popular. Students gravitate toward them.”
their own bathrooms, high-end swimming pools and home theaters. As they hunt for colleges, they are demanding more comfortable living conditions.
Opus has completed a significant amount of student-housing work during the last decade. And most of the housing that the company builds now features granite countertops, stainless-steel appliances and high-end common-area amenities.
The common-area amenities include study rooms and spaces for students to collaborate and work on projects. They
also include club rooms, outdoor patios, fire pits and pools. Some student-housing projects boast golf simulators and movie theaters. On-site fitness centers and pickleball courts are popular, too.
“We’ve done it all,” Smith said. “When done right, this housing with in-unit and common-area amenities proves to be very popular. Students gravitate toward them.”
Student housing in general has become a desired commercial product by both residents and investors, Smith said. The demand for new housing on college
campuses continues to rise. The only recent slowdown? During the middle of the pandemic. Today, though? Opus continues to be called upon to build or renovate student housing on campuses across the country.
“Demand for new student housing is definitely coming back,” Smith said. “We are seeing enrollment growth at many colleges. These colleges need new student housing to meet the demand. We often develop and build student housing and then sell it. Student housing continues to be an asset class that institutional investors have a desire for.”
Kansas City | Commercial Real Estate Services
How will AI change commercial real estate?
JLL Falcon provides early clues
By Dan Rafter, Editor
AI is bringing big changes to industries across the country. It’s little surprise, then, that AI is changing the way commercial real estate professionals work, too.
An example? JLL’s new JLL Falcon, its artificial intelligence platform designed to serve JLL commercial real estate professionals and their clients.
JLL Falcon is made up of a suite of AI-enabled software services that JLL professionals can use to compile research for their clients, pull key information quickly out of massive reports, quickly write emails, provide workplace planning advice to clients, improve the efficiency of buildings and generate 3D leasing visualizations.
And the best part? JLL Falcon’s services aren’t designed to replace company employees. They’re designed to make them more efficient.
“People here understand that this is a way to make employees more effective in their jobs. It’s not about taking away their jobs. We want to give them the tech they need to focus on what they are good at,” said Yao Morin, chief technology officer of JLL. “These services free people up to brainstorm with clients, to understand what their clients need. Nobody needs to sit for hours to scroll through a document to find one piece of information. AI can do that for you.”
One of the services offered through JLL Flacon is JLL GPT. This program allows brokers and other JLL professionals to
quickly draft documents, summarize documents and brainstorm ideas. They can also turn to JLL GPT to quickly comb through the reams of data that JLL harvests and then use that data to help their clients make key real estate decisions.
The Falcon suite of services also includes an AI-enabled assistant. Morin says that this service can help JLL employees whose first language is not English quickly translate from their local languages to English, an important service considering how much of JLL’s business is conducted in the language.
Falcon includes tailor-made chatbots that employees can use to pull specific information quickly from documents that might stretch for 30 pages or more.
“We deal with a lot of contracts and leases,” Morin said. “Sometimes you want something extracted quickly from a document. We have a tool that does that.”
On Nov. 12, JLL introduced the latest tool in the Falcon suite, JLL Azara. This tool is designed to make it easier for business professionals to access and use corporate real estate and facilities management data.
JLL Azara uses natural language queries so that facilities managers and business analysts can research complicated topics such as portfolio optimization and occupancy planning.
In its pilot testing, JLL Azara quickly showed its promise. According to a press release from JLL, the application’s
Photo by Tara Winstead.
conversational interface played a key role in helping a company identify a no-fault work order volume anomaly at one of its locations. The company was able to take quick action to solve the problem before it became a more expensive one.
“With JLL Azara, we’re able to put valuable data, decades of client queries and deep industry knowledge directly into the hands of our customers,” said Sharad Rastogi, JLL’s chief executive officer of Work Dynamics Technology.
“JLL Falcon is about reducing the time it takes for business leaders and JLL professionals to make decisions,” Morin said. “Opportunities can come and go quickly. You don’t want to sit on data and wait for a long time. You don’t want to wait for an analyst to turn that data around. You could lose that opportunity if you do.”
Before tools such as JLL Falcon, real estate professionals often had to read through 300 pages of documents to get the information they were seeking, Morin said.
Falcon eliminates that busy work.
“Now, you can ask a question and it will bring you to the right place,” Morin said. “It will summarize the answer to your question and bring you to the right paragraph if you want to cross check the information.”
Morin said that JLL employees have bought into the suite of AI-powered tools. As of the writing of this story, more than 47,000 JLL workers have used JLL GPT alone, Morin said. More than 25,000 use it monthly.
“I predict that AI will be something that commercial real estate professionals will not be able to live without”
And the future of AI? Morin says that commercial real estate companies have only begun to use this tool.
“We are in a unique position to adopt technology that can advance the efficiency of buildings and help our clients meet the sustainability goals that they have,” Morin said. “We are just starting with that. There is a lot more that we can do.”
Morin compares AI to the early days of the Internet and smartphones. There was a time when most people
looked at those tools as a luxury. Today, people rely on them in their daily lives.
“I predict that AI will be something that commercial real estate professionals will not be able to live without,” Morin said. “Just look at smartphones. You’re more upset if you leave your home without your smartphone than you are if you leave without your wallet. This AI technology is similar: It will soon become a part of life. It’s already a part of my life.”
Yao Morin (Photo courtesy of JLL.)
CBRE report: Office conversions gaining momentum in the Midwest, Texas
By Dan Rafter, Editor
Since the start of the COVID19 pandemic, vacant office space in U.S. downtowns has increased by about 136 million square feet. To deal with this? A growing number of office building owners are converting this vacant space to other uses.
And the office-conversion trend is gaining momentum in the key Midwest market of Minneapolis-St. Paul, according to a December report on conversions from CBRE.
According to CBRE’s report, the Minneapolis/St Paul market has seen 44 office conversions or redevelopments totaling 5.4 million square feet since 2016.
The report also found that 13 office conversions or redevelopments were
underway in the Twin Cities market in the third quarter of this year. These projects will remove 2.4 million square feet of office space from this market, according to CBRE.
An additional 15 conversion or redevelopment projects have been announced or are planned. These additional conversions will remove 3.4 million more square feet of office space from the Minneapolis/St. Paul market, CBRE says.
According to CBRE, the Minneapolis/ St. Paul market ranks as the eighth busiest U.S. market for planned or underway office conversions as a percentage of its total office inventory.
Leading this list is Cleveland, with Cincinnati in second place. CBRE says that Cleveland had 3.8 million square feet
of office conversions that were either planned or underway in the third quarter, while Cincinnati had 3.2 million.
Also on CBRE’s list is Dallas/Fort Worth, which had 4.8 million square feet of office conversions planned or underway in the third quarter; Columbus, Ohio, with 0.9 million square feet of conversions planned or underway; Houston, 5.9 million square feet; Kansas City, 1.1 million square feet; Chicago, 4.8 million square feet; and Milwaukee, 0.8 million square feet.
CBRE says that 71.4 million square feet of office conversions were either planned or underway in the United States in the third quarter of the year.
Office conversions can help reduce the amount of vacant space in markets. But they are not a cure-all. Conversions are
costly, and not all office buildings make for good multifamily properties, retail centers or other uses. The building must be in the right location, and the construction work of converting the space must not soar too high.
These conversions can help reduce office vacancies in many Midwest markets, though, including in the Twin Cities. CBRE says that the Minneapolis office vacancy rate stood at nearly 24% as of the end of the third quarter.
CBRE says that Minneapolis ranked third among all U.S. markets for the number of completed and underway or planned conversions and office redevelopments in the third quarter of 2024.
Image by Kate Trysh from Pixabay.
“Although there has been a fair amount of ‘coming and going’ with turnover, retail leasing remains brisker than in other parts of the country,” he said.
A high amount of leasing activity, though, still hasn’t translated to a sizable jump in investment sales, in any commercial real estate sector in the Omaha market.
Blumenthal says that investors are being more selective than in the past, thanks to interest rates that remain elevated. But as interest rates trend down, albeit slowly, Blumenthal says that the savviest of investors are hunting for high-quality commercial products of all sectors.
Particularly popular? Blumenthal says that investors are still actively looking for triple-net buildings with strong credit tenants.
Another positive trend in Omaha? Commercial developments across the market continue to bring new life to the city and its surrounding communities.
“Omaha is experiencing exciting growth in both the downtown, midtown, and suburban markets,” Blumenthal said.
He pointed to Mutual of Omaha, which is continuing construction of its new headquarters building downtown. Once built, it will be the tallest building between Chicago and Denver.
The City of Omaha continues construction on its new streetcar route, too, a route that will connect midtown Omaha and downtown Omaha and should provide a boost to local business owners.
The Blackstone District continues to grow with new retail and multifamily options, while Heartwood Preserve in suburban Omaha is drawing new office and retail tenants at a fast rate.
“All of these projects throughout different parts of the city are a testimony to Omaha’s strong leadership and disciplined development community,” Blumenthal said. “It’s a great time to live and work in all areas of Omaha.”
Blumenthal said that none of this positive activity is new. Omaha has long had a reputation as one of the steadier
OMAHA (continued from page 1)
Omaha’s The Capitol District at dusk. (Photo courtesy of The Lerner Company.)
“Omaha has had strong, stable leadership in city government and our planning department. We have a wonderful and active philanthropic community. We have active participation from multiple Fortune 500 companies, and they all work together with the development community to continue to grow our city.”
commercial real estate markets in the Midwest.
Blumenthal points to the city’s leaders as one reason for this.
“Omaha has had strong, stable leadership in city government and our plan-
ning department,” he said. “We have a wonderful and active philanthropic community. We have active participation from multiple Fortune 500 companies, and they all work together with the development community to continue to grow our city. This combination ensures that smart development
continues to move forward, even when momentum is slowing in other parts of the country. Omaha has traditionally been built smartly, while not being overbuilt. Our developers are thoughtful, creative and don’t get ahead of their skis.”
The power of resilience
Mandi Backhaus, associate broker with The Lerner Company, said that Omaha remains one of the more resilient commercial real estate markets in the country.
Why is this the case? Backhaus points to several reasons.
“With its robust and diverse nature,
anchored by industries such as healthcare, technology and finance, Omaha, although sometimes called a ‘flyover city,’ remains a hidden gem for those
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looking for a steady yet vital lifestyle at an attractive cost,” Backhaus said. “This favorability trickles down to how real estate is valued and utilized in the area.”
Backhaus agreed that commercial real estate leasing activity in Omaha has remained strong. This isn’t only becaause of high demand, though.
Backhaus said that a growing number of tenants are choosing to lease existing space instead of purchasing land to build because of today’s still-high interest rates and the elevated cost of new construction.
Like other CRE professionals working the Omaha market, Backhaus has seen a slowdown in investment sales in 2024. This slowdown is only a temporary one, though, she said.
As 2024 moves into its ending days, Backhaus says, she has started to see investment sales activity pick up, at least slightly.
“This is especially true in the unique situations where groups are looking for owner-user opportunities,” Backhaus said. “And given limited supply, some groups are also looking at multi-tenant buildings with some vacancy to secure both the owner-user criteria and rental income potential, as well.”
And when it comes to individual sectors? Backhaus says that most of the
main sectors are each seeing steady leasing activity.
Retail continues to be robust with extremely low vacancy, especially in the Class-A product, Backhaus said. She added that she has seen base retail rents increase year over year on certain retail spaces because of the high demand for them.
“Retailers continue to think outside the box and be creative just to plant their brick-and-mortar flag in the Omaha MSA,” Backhaus said.
As in other cities, the office sector remains in flux, experiencing significant ups and downs, Backhaus said. Office owners, though, are getting creative with their spaces today, something that could help bring some stability to this troubled sector.
“I think we have seen both landlords and tenants alike get creative on how to best utilize the space,” Backhaus said.
Agreeing with other local CRE professionals, Backhaus said that the industrial sector continues to be strong. She pointed to the Sarpy County submarket as a particularly strong industrial hotbed, one that has seen a significant amount of new inventory.
Multifamily, too, remains a hot sector, Backhaus said, with demand here driven by the need for affordable housing in the Omaha metropolitan area.
The Beam, a 17-story, 261-unit multifamily apartment building being developed by Nustyle Development Corp. in downtown Omaha adjacent to the Heartland of America Park at the RiverFront. (Photo courtesy of The Lund Company.)
“Historically speaking, multifamily buildings have outpaced single-family homes in terms of development over the past decade in Omaha,” Backhaus said. “On the Iowa side of the river, there is an extreme demand for new affordable housing in Council Bluffs, Iowa, opening a plethora of opportunities for multifamily developers. As a whole, I think we will continue to see more development and strong leasing, especially in the growing submarkets of the metro areas.”
As in most Midwest markets, new commercial development has slowed in Omaha as interest rates and construction costs have risen. But Backhaus said that this, too, is only a temporary setback. She said that she expects to see more development activity in 2025 and beyond.
“Even with elevated interest rates, inflated construction costs and labor challenges, the landscape of new development in Omaha is certainly not doom and gloom,” Backhaus said.
The activity in Omaha backs this up. The metropolitan area continues to see new projects, such as retail projects near the 180th and West Maple corridor and 192nd and Highway 370.
The Omaha market is also seeing important redevelopments, such as Crossroads near 72nd and Dodge and the repurposing of old boxes into mixed-use projects.
“As the Omaha-Council Bluffs MSA continues to evolve, savvy investors and developers are well-positioned to capitalize on the opportunities presented by adapting to changing consumer preferences, leveraging strategic locations and embracing innovative concepts,” Backhaus said.
“The future of Omaha’s retail landscape holds promise, driven by a resilient economy and a commitment to staying ahead of the curve in the dynamic world of commercial real estate.”
Looking toward an even brighter future
Jack Warren, broker with Omaha’s Investors Realty, said that even the troubled office sector is showing resilience in the Omaha market.
Warren pointed to the 7.8% office vacancy rate in the Omaha market. That’s higher than it’s been in the past. But it’s significantly lower than the national office vacancy rate of 13.9%.
“Toward the end of 2024, we have started to see larger tenants in the market that we have not seen in the past 18 to 24 months, which is a great sign heading into 2025,” Warren said.
Warren said that the office sector still faces challenges in adapting to the hybrid work model. A growing number of companies in the Omaha market,
though, are asking their employees to come back to the office on a more frequent basis, he said.
said.
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That could bring some relief to the Omaha office sector in 2025 and beyond, Warren
“The Omaha Streetcar will be completed in 2027, which has sparked projects along the line that will have a significant impact on life in the urban core. While The Duo and Mutual of Omaha’s new headquarters continue to rise, the recently announced Omaha Children’s Museum is the latest exciting development in Downtown Omaha.”
Warren, too, identified the industrial sector as a standout performer, boasting an exceptionally low 3.3% vacancy rate and strong demand fueled by e-commerce and onshoring trends.
But while leasing activity remains strong here, Warren, too, said that investment sales activity in the Omaha
market has been subdued compared to previous years.
Certain sectors, though, are seeing more investment sales, Warren said.
“Sectors such as industrial continue to attract significant interest, particularly for speculative developments,” Warren said. “This contrasts with
the office sector, where investment activity is more cautious. With that said, you are still seeing quality office buildings trade at better than market cap rates.”
slowed, Omaha’s steady growth and strategic projects keep activity alive,” Warren said.
Sotolongo said that the strength of Omaha’s downtown core continues to help it attract new developments. The decision to boost downtown with new parks and amenities has turned out to be a wise one, he said.
GROUND UP
Jorge Sotolongo, senior associate for investment services with Cushman & Wakefield|The Lund Company in Omaha, agreed that investment sales activity should increase in the coming year and beyond.
As Sotolongo says, Omaha’s commercial real estate market remains an attractive one for investors looking for steady returns.
“While investments sales volume remains down in 2024, we are seeing a slight increase in activity as investors look toward 2025 and beyond,” Sotolongo said. “With the potential for rates to tick down again, Omaha’s stable and steady market will continue to attract local and out-of-state investors alike.”
Omaha’s resilient nature is showing up in the amount of development activity that is still taking place here, despite high interest rates and construction costs.
Warren said that about 1.2 million square feet of office and 3.7 million square feet of industrial space are under construction in the Omaha market.
“Omaha has invested heavily into its urban core, which has helped to counteract the slowing macroeconomic factors affecting real estate development,” he said. “The Omaha Streetcar will be completed in 2027, which has sparked projects along the line that will have a significant impact on life in the urban core. While The Duo and Mutual of Omaha’s new headquarters continue to rise, the recently announced Omaha Children’s Museum is the latest exciting development in Downtown Omaha”
That museum will add one more high-quality attraction to downtown Omaha. It will be constructed alongside The Beam, a 17-story, mass timber residential tower developed by Nustyle Development, a first for the Omaha market.
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This incudes high-profile projects such as Heartwood Preserve and the Omaha Airport terminal expansion
“While nationwide development has
While the last several years have been challenging ones, Warren said that he expects both new development and investment sales activity to pick up in 2025. Why? The Omaha commercial real estate market has too many positives for activity to not pick up.
“Omaha offers a business-friendly environment with moderate operating costs, a central geographic location
and strong infrastructure,” Warren said. “The city benefits from a growing population, a solid labor market and high quality of life. Additionally, public-private partnerships, such as those backing the downtown streetcar project, foster a supportive environment for growth in various commercial sectors.”
Spencer Secor, senior associate and office specialist with Omaha’s Cushman & Wakefield|The Lund Company, said that the Omaha CRE market has survived this era of high interest rates, soaring construction costs and post-pandemic anxiety as well as any in the country.
“The market continues to keep up with, and in some cases, outpace other similar-sized cities for leasing demand,” Secor said. “Couple that with vacancy rates that are lower than national averages, especially on the office side, and the market is healthy.”
Secor says that one reason for Omaha’s consistently solid performance is its more conservative approach to development.
“Overall, the market never gets too high or too low like some coastal and larger Midwestern cities, which helps us stay steady,” Secor said. “Omaha has always had a conservative mindset, and I think it carries over to users’ leasing approaches.”
Like the other brokers contacted for this story, Secor predicted that the coming months would continue to see improved commercial real estate sales, leasing and development activity.
“Specifically on the industrial side, I think our central location has always been attractive to users,” Secor said. “Having I-80 cut through the city allows for quick access for transportation to anywhere in the country. Up until a couple years ago, we didn’t have the supply of larger buildings to accommodate users, but since then multiple projects have been constructed, which has allowed for large users to expand or relocate.”
Working through the struggles to reach an even healthier market in 2025
Pat Regan, president of OMNE Partners, a brand of Omaha-based Seldin, LLC, said that leasing activity in the market varies by sector.
For instance, the retail sector remains solid because its vacancy rate is low and it hasn’t seen much new construction.
“For junior boxes and strip and neighborhood centers located in good trade areas, there is strong demand,” Regan said.
Regan said that the Omaha market is beginning to see some major land development and activity along the 204th corridor and Highway 370 for retail and grocery.
“Although lot sales are down year over year, with these new developments we feel there will be merchants looking for outlots,” Regan said.
The office sector’s leasing activity varies according to class. Regan said that office leasing remains robust for Class-A properties. Activity, though, is muted in Class-B and Class-C buildings not located in major employment areas.
Part of the reason for the strong leasing activity in the Class-A office niche? There has not been much spec construction of office properties.
The lack of new development that is resulting in lower vacancy rates isn’t about to change soon, Regan said.
The reason? It remains too expensive for private companies to develop new properties today, he said.
That doesn’t mean that there are no new developments rising in the Omaha market today, though.
“We are seeing a high level of development in the philanthropic circles or projects that are making Omaha a stronger community”, Regan said. “Therefore, projects continue to be announced in the downtown market and ancillary markets. Private development remains muted except for the major commercial areas.”
John Dickerson, executive vice president with OMNE Partners, said that while investment sales activity remains low throughout the Omaha market, he expects this to change in the coming months.
The reason for this is simple: The Federal Reserve Board is in the middle of what might be a long period of lowering its benchmark interest rate. That should result in lower interest rates on all loan types.
The same holds true for development activity. Dickerson said that lower interest rates should fuel an increase in development activity in 2025 and beyond.
And while development activity has been muted in most sectors, it has remained strong in the multifamily arena, Dickerson said.
“Omaha development has slowed, except for apartments,” Dickerson said. “Omaha has had a severe shortage of residential homes and apartments. Most apartment development has been in the urban area with both new construction and renovation/repurposing, such as a major multi-story office building being converted to 400 apartments in downtown Omaha.”
Like other brokers working this market, Dickerson said that the future looks bright for the Omaha commercial real estate market. That’s largely because of the many positives that this market boasts.
“Omaha is a low-cost market compared to other major markets in the Midwest,” Dickerson said. “We have been highly rated as a city to relocate to. Our population is growing and our metro area with three counties each in Nebraska and Iowa now has about 1 million people. Our unemployment rate is one of the lowest, if not the lowest, in the U.S. We are retaining college graduates more than ever. Many of our larger companies are highly rated in their sectors nationally.”
Since 1975, Investors Realty, Inc. has been helping clients buy, sell, lease, and manage commercial real estate in the Omaha Metro area. We’ve earned a reputation for providing straightforward advice, developing innovative solutions, and delivering results.
the reasons for Columbus’ steady performance even during economic challenges.
We spoke with two CRE professionals, Matt Von Bargen, principal and founder of Columbus’ Rocky Fork Capital, and Grant Fitzgerald, vice president and regional manager for the Columbus and Cleveland markets for Marcus & Millichap, about
Here is what they had to say:
How would you describe leasing demand for the multifamily sector in the Columbus market today? Is the market still a resilient one?
Matt Von Bargen: We continue to see robust leasing demand at our communities in Central Ohio. There is a real disconnect between supply and demand for housing units in the Columbus area and as a result we have seen strong conversion at renewal with our existing residents. When vacancies do come available they continue to fill quickly.
Grant Fitzgerald: The market is resilient. Year-to-date net absorption through the third quarter compared to the same period in the prior year is up for both multifamily and retail, flat for office and down slightly for industrial. The only major product type for which absorption is worse than last year, industrial, comes after many years of a record bull run for the product, so I’m not concerned.
What about investment sales? Have those picked up at all during the last, say, three or four months?
Von Bargen: In the second half of 2024 we have seen nearly as many acquisition opportunities as we did in all of 2022 and 2023 combined. Since this summer we have acquired four communities in the region, and we plan to be opportunistic on the acquisition front in 2025. This year we have seen more activity from institutional sellers who are recycling capital into new projects. Our hope is that smaller private sellers enter the disposition market in 2025 and bring more opportunities to market.
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COLUMBUS (continued from page 1)
Fitzgerald: Sales are mostly down across the board and it’s not surprising. We had record velocity from late 2020 through 2022 followed immediately by dramatic rate hikes. When so many more buildings than normal trade, it’s reasonable to expect a dip in activity to follow. And when you add in much higher cost of capital you’re guaranteed to see a drop in sales. That said, October showed a noticeable increase in transactions, possibly a sign of good things to come.
Which commercial sectors are still seeing strong leasing activity in the Columbus market?
Fitzgerald: Multifamily continues to be in high demand in Columbus and leasing activity is strong. As Columbus continues to grow in population, it will be difficult to build enough housing fast enough, supporting continued leasing demand and likely rent growth for multifamily.
I know new development activity has slowed throughout the United States. But how about in Columbus? Are commercial developments still being built or at least planned? Has
“We project 6,000 (multifamily units will be delivered in 2024, slightly fewer than the record 6,500 in 2023.”
development activity picked up at all during the last three months?
Fitzgerald: Multifamily deliveries remain elevated. We project 6,000 units will be delivered in 2024, slightly fewer than the record 6,500 in 2023. However, an all-time high of 7,500 new units are projected to come online in 2025. Industrial is projected to add 5 million square feet in 2024, which is down 50% from 2023 but in line with averages from 2015-2019. You might not be surprised to hear that office will deliver the lowest amount of new square footage since 2011.
Can you identify any significant commercial developments that are having a positive impact on the Columbus market?
Fitzgerald: There are many projects positively impacting Columbus but the four the stick out to me are Intel, Honda, the new terminal at John Glenn and the Merchant Building at North Market.
What are some of the factors that
tion trends across the state of Ohio, there are significant tailwinds for Central Ohio that have been in place for the past 15 years and are anticipated to continue over the coming decades as a result of significant commercial developments such as the Intel project and other industrial projects that are bringing a meaningful number of new jobs to the area.
In the previous cycle from 2009-2020 annual demand for new housing nearly doubled the new supply and given where interest rates and construction costs are we expect that trend to continue creating an environment conducive to further rent growth in the region.
Fitzgerald: In my mind, business thrives with four key components and Columbus has all four. Those are an extremely educated population, a reasonable cost of living, a generally pro-business political environment and an ideal geographic location for the country’s supply chain. Because of
Not all multifamily markets are created equal: Coldwell Banker Commercial report shows rent growth soared in some, stagnated in others
By Dan Rafter, Editor
Chicago, Detroit, Kansas City, Columbus and Indianapolis all ranked among the top 10 markets in the United States for multifamily rent growth as of September of this year, according to the latest research from Coldwell Banker Commercial.
But other markets saw rent growth that stagnated. And most markets still offer a supply of multifamily housing that is not high enough to meet the demand for it from renters.
In its Fall Trend Report 2024, Coldwell Banker Commercial reported that Kansas City, Missouri’s, average apartment
rent was 4.2% higher in September of this year than it was a year earlier.
Kansas City ranked as the major market with the second-highest year-over-year rent growth, trailing only New York City, which saw its September rents increase by 5.4% when compared to the same month a year earlier.
Indianapolis ranked fourth on Coldwell Banker Commercial’s list with a year-over-year multifamily rent growth of 3.3%, while Detroit took home the sixth spot, with its September rent increasing by 3%.
Columbus’ rents jumped 2.8% on a
year-over-year basis, good for seventh on the list, while Chicago came in ninth place, with its apartment rents increasing 2.4% on a year-over-year basis.
Many major markets don’t have enough rental housing to meet demand. But which Midwest or Texas cities are seeing the largest supply of new apartment units? Coldwell Banker Commercial pointed to Dallas, which is expected to have added a total of 74,465 apartment units to its inventory from 2023 through 2025 and beyond. That ranks this Texas city second overall to New York City, which is expected to have added 143,383 rental units during this same time.
Austin came in third on Coldwell Banker Commercial’s list, expected to have added 67,550 apartment units from 2023 through 2025 and beyond, while Houston is expected to have added 55,367 during this same period.
In the Midwest, Coldwell Banker Commercial expects Nashville to have added 32,497 units, good for 16th in the country, and Minneapolis to have added 29,680, ranking 19th in the country. San Antonio ranks 21st on Coldwell Banker Commercial’s list, expected to have added 22,270 apartment units, while Chicago ranks 22nd, with 21,490 new multifamily rentals.
Photo by Zukiman Mohamad.
Number of new apartment units to plummet across United States in 2025 and beyond
By Dan Rafter, Editor
The number of new apartment units coming online in the United States is expected to decrease through 2027, according to the latest forecast from Yardi Matrix.
This isn’t surprising: The new-construction pipeline slowed dramatically this year and last, resulting in far fewer new apartment projects scheduled to open in the coming years.
According to the Yardi Matrix fourth quarter multifamily supply forecast, the United States is expected to see 508,089 new apartment units in 2025. That is down from the predicted 554,288 units expected to deliver throughout 2024.
And the number of new units is expected to only decline further, with Yardi Matrix predicting just 371,509 new apartment units delivered in 2026 and 326,911 in 2027.
This trend is only expected to begin reversing in 2028, when Yardi Matrix estimates that the United States will see 404,559 new multifamily units. And in 2029, Yardi Matrix predicts that 426,485 new apartment units will deliver throughout the country.
Among multifamily markets tracked by Yardi Matrix on or before January of 2020, the under-construction pipeline dipped 3.8% quarter-over-quarter to 1.16 million units. From September 2023 to June 2024, the under-construction pipeline was at or above 1.2 million units.
A total of 56,997 apartment units in the under-construction pipeline are in lease-up, according to Yardi Matrix. Lease-up units declined 9.7% on a quarter-over-quarter basis but increased 5.5% year-over-year.
Markets that are seeing a decrease in under-construction units include the North Dallas market, where 13,793 apartment units were under construction as of October of 2024 compared to 17,917 in the same month a year earlier, and the suburban Dallas market, where 8,962 units were under construction as of the October of this year compared to 12,288 in October of 2023.
In the Houston West submarket, 10,774 multifamily units were under construction in October compared to
14,741 in October of 2023. In Austin, 22,909 apartment units were under construction in October of this year, a big dip from the 40,895 in the same month a year earlier.
And in San Antonio, 6,109 units were under construction this October while 10,949 were under construction a year earlier.
Nashville is seeing a significant dip in new apartment construction, too. Yardi Matrix reported that 11,043 new units were under construction as of October of 2024, a drop of 29.7% from the 15,705 under construction during October of 2023.
Image Michal Jarmoluk from Pixabay.
A deep dive into the Midwest multifamily investment environment
By Todd Szymczak and Eli Wasserman, Farbman Group
One thing is clear for any investors looking at the current multifamily investment landscape— capital markets are exerting significant influence on the sector.
Recently, we have seen a notable cooling off, driven largely by the widening bid-ask gap. Sellers often hold onto past pricing expectations, resulting in listings that sit stagnant for months. Many properties have remained on the market for a year or longer, despite professional marketing efforts gen-
erating interest. The most aggressive buyers have left the market as raising equity for partnerships is more challenging today. With risk-free interest rates available around five percent, many question why they should take risk.
Like in the single-family home market, many owners of multifamily properties previously refinanced into long-term, low-cost debt. Low-cost debt, combined with Michigan’s property tax structure that limits tax increases on existing owners, results in significantly higher cash flow for existing owners
compared to what new buyers can underwrite. Even if a buyer can assume the existing debt, the tax basis reset can often lead to significantly lower cash flow for the new owner, creating further reluctance among sellers to engage in transactions based on their own cash flow expectations.
Growth Markets to Watch and Where to Have Caution
In the Midwest, certain markets continue to draw robust interest for multifamily investment. These markets offer growth potential with
limited product availability, making them ideal for long-term investment. Areas including Ann Arbor, Grand Rapids and the Traverse City region are highly sought after by investors. The west side of Michigan is generally viewed as a growth market compared to Southeast Michigan, which is still heavily tied to the auto industry. While Chicago office investments struggle, Chicagoland multifamily remains a hot commodity. Investors are historically drawn to regions with diverse economies, making them less susceptible to economic downturns.
Photo by Max Vakhtbovycn, Pexels.
Hotel Conversions Lead as Emerging Trend
As we look ahead to 2025, it is helpful to contemplate both opportunities and challenges within the multifamily sector. There’s a noteworthy trend of converting outdated hotels into workforce housing and senior living spaces. This is in-part due to the lighter lift in redevelopment compared to new construction, making it an attractive option for multifamily owners looking to pivot their strategies. Conversions of antiquated hotels are generally easier than office conversions due to smaller floorplates and in-place plumbing. These conversions are also a faster alternative deal than any ground-up development at this time.
While more challenging, we are seeing some office conversions. For example, there is a conversion project at 79 West Monroe St. in the Loop, where R2 Companies and the Campari Group are converting the 14-story office building into apartments—the first of four planned developments. The conversion will transform floors
seven to thirteen into 117 residential units, 41 of which will be designated as affordable housing. The project’s unit mix will include 56 studios, 54 one-beds, 7 two-beds. Note that this building is an ideal conversion project due to the older vintage with smaller floor plates, its brick façade, and punch-out style windows.
The Rise of Mid-Atlantic States
We expect to see a rise in “bounce back states,” where people consider
relocating to areas such as Tennessee, Georgia or the Carolinas, as Florida faces increasing natural disaster risks (and insurance costs). Many individuals who once pursued the dream of retirement in Florida are now weighing the benefits of moving to states with milder climates and fewer natural disaster concerns. Additionally, the Midwest may see less outmigration as the region’s winters become less severe.
Adapting to Demographic Shifts
Investors should also keep an eye on demographic shifts, particularly as younger populations increasingly seek affordable housing options. The trend toward smaller units has gained traction, aligning well with the conversions of hotels into affordable housing or senior living.
As the multifamily investment landscape continues to change, understanding the impact of capital markets, identifying promising regions, and recognizing emerging opportunities will be crucial for investors. The key lies in being proactive and adaptable, particularly as we approach a new year filled with potential challenges and opportunities.
Todd Szymczak and Eli Wasserman are investment sales experts at Farmington Hills, Michigan-based Farbman Group, a Midwest full-service commercial real estate firm. To reach Todd and Eli directly, email szymczak@farbman.com and Wasserman@farbman.com.
DEFINED BY DETROIT, BUILT FOR THE WORLD.
Todd Szymczak (Photo courtesy of Farbman Group.)
Eli Wasserman (Photo courtesy of Farbman Group.)
Two keys to making the design-build process even better on a construction budget
By Steve Wiley, Senior Vice President, Preconstruction Services, McHugh Construction
For more than 125 years, McHugh Construction has been adding to city skylines through a variety of construction methods and processes. We’ve built hundreds of buildings from rental skyscrapers to five-star hotels to sports arenas and award-winning restaurants with every material possible. And one trend we’re happy to see rising is the design-build method where developers tap their general contractor early to deliver the projects on time and on budget.
With the state of construction lending tighter than ever, most commercial property owners agree they don’t have the same wiggle room in their budgets as before. Some may even argue the
current construction loan environment should favor the traditional “plan and spec” method of project delivery where design drawings are created with written specifications that general contractors bid on – often, with the lowest bid being the winning bid.
Instead, we strongly encourage the design-build process, where the general contractor and architect work hand in hand and both are involved as early as possible in the design process. In our experience, design and construction happening concurrently saves owners money and allows projects to be completed faster.
While the amount of time in the pre-construction phase varies, a large
breaks ground. During this phase, we work with the owner/developer and design team to establish budgets and the scope of work. Putting in this time upfront maximizes time and cost efficiencies over the course of the project.
Making Informed Material Choices Through 3D Modeling
One way we make the design-build process better is through advanced modeling. Our first step is to turn conceptual sketches or 2D drawings from the architect or client into 3D models. From these 3D models, we can establish budgets and clearly define our scope of work. The models help us determine not only the amount of building material we will need, but also
multifamily high-rise usually requires approximately one year of planning and estimating before the project
Steve Wiley (Photo courtesy of McHugh Construction.)
Image by Borko Manigoda from Pixabay.
the types of structural, mechanical, electrical and plumbing systems required for the project. It also helps us determine if there are cost savings to be found as we’re able to show owners what an alternative material – that achieves the same aesthetic – will look like on the 3D model.
The models also give a developer or owner who isn’t as well versed in reading blueprints a better idea of how one slight change can create a major impact on the building’s budget and look. This can be especially relevant when tweaking a building’s exterior, which can be an expensive component of any budget. We can plug in alternative slab edge covers, window walls, balcony doors or metal panels and see new models reflecting those changes in only a matter of minutes.
Maximizing Structural, MEP Efficiencies
While a project’s structural system and its mechanical, electrical and plumbing (MEP) system aren’t usually part of a property tour – as would-be residents are much more interested in interior finishes and amenities – these two
systems do comprise between 50% to 70% of a project’s entire budget. So, to say they are an important part of the design-build process is an understatement.
At McHugh, we’ve realized over the years that the best cost-savings in this part of the process can be obtained by working with the project’s structural engineer to optimize the placement of columns, core and shear walls and floor slabs, and by using our sister company McHugh Concrete to pour the concrete for the structure. We also work with the structural engineer on drift and deflection issues to ensure the building’s strength to support lateral and vertical loads. We can shave it down to a system that’s very cost efficient and yet performs to the requirements of the project.
Based on our extensive experience, developers/owners are most likely to hit their project budget and schedule goals by engaging their general contractor as early as possible, and McHugh Construction will no doubt be leading the charge in these better building practices.
Image by Tom from Pixabay
Market trends drive strategic value for multi-tenant shallow-bay industrial assets
By Clear Height Properties
While institutional investors have historically gravitated toward big-box industrial logistics assets, multi-tenant shallow-bay properties represent an increasingly compelling investment opportunity.
These often-overlooked assets— which range from 25,000 to 150,000 square feet and are in “A” locations— offer unique investment advantages that deserve consideration.
One key advantage inherent in shallow-bay properties is their attractive premium irreplaceable locations. These
buildings were typically constructed in the 1970s through the 2000s. When these buildings were originally built, the areas surrounding them were on the fringe of urban areas where land costs were relatively low. Urban spread means these assets now sit in prime infill positions within dense population centers. This advantage cannot be replicated by new development, creating a high barrier to entry.
A diverse, stable tenant base creates consistent tenant demand and steady cash flow
Shallow-bay industrial properties attract companies across a wide range
of categories, including construction, logistics and distribution, consumer products, retail, professional and business services, food and beverage, health and more. Importantly, these tenants are local, regional and often even national. This broad appeal generates strategic advantages of owning and operating these assets:
• Natural diversification: Multiple tenants in a building or business park provide a range of industries to spread occupancy and cash flow risk.
• Local market connection: Tenants want to be near urban population centers and labor pools, and they are
prepared to pay rent premiums for these benefits.
• Embedded tenant growth: As shallow-bay tenants grow, they look to the current owner of their building or business park first when they require additional space.
• Ability to reposition rents as the market changes: Shallow-bay tenants generally want shorter lease terms of three to five years, compared to industrial logistics tenants who sign sevento 12-year leases, allowing an owner to reposition rents as the market changes every few years.
123 Ambassador Drive in Naperville, Illinois, is a 43,125-square-foot shallow-bay asset acquired by Clear Height Properties. It houses five businesses. (Photo courtesy of Clear Height Properties.)
Operational benefits of shallow-bay industrial assets
Multi-tenant shallow-bay industrial buildings are known to be management-intensive compared to larger single-tenant properties. With the right experienced operator and team at the helm, shallow-bay assets can be efficient to operate. Capital and operating expenses tend to be lower than modern spaces. Further, individual unit turnover costs such as tenant improvements and leasing commissions are significantly less than for office space.
In conclusion, given the short supply of shallow-bay properties—representing only about 20% of the industrial market—vacancy rates are consistently low, with very little volatility. In fact, research shows that demand has remained stable over the past decade or longer.
This is further supported by data demonstrating that shallow-bay properties historically lease faster than the overall industrial sector because these tenants can move into new
space quickly, multi-tenant shallow bay industrial assets are in diminishing supply, and demand remains steady. All these factors contribute to an investment strategy of owning and operating these often overlooked assets.
Piloted by an experienced leadership team, Clear Height Properties has built a solid platform for acquiring and operating industrial real estate in the most desirable locations throughout the Midwest and central United States.
From its headquarters in Oak Brook,
Illinois, the firm has bought and sold more than 200 assets totaling over $900 million during the past 10 years, establishing a record of strong risk-adjusted returns and becoming a leader in the industrial sector. Learn more at www.clearheight.com.
A successful healthcare real estate strategy requires research and trusted partners
By Bill Mooney, Bremner Healthcare Real Estate
Facing constant reductions in payor reimbursement rates, regional and community healthcare systems actively seek ways to improve margins and enhance their effectiveness. To achieve this, hospitals are thinking lean: less cost, fewer employees and less cumbersome processes. At the same time, healthcare providers are working toward enhancing the overall patient experience, ease of access, meaningful outcomes and greater market share.
With this perspective in mind, an increasing number of health systems are expanding their footprint and
geographic reach utilizing creative ambulatory strategies that increasingly focus on deploying the right facilities in strategic locations. In the current competitive healthcare landscape, many of the larger players have found that smaller, more efficient facilities located closer to the populations they are looking to serve that incorporate a branded appearance and programmatic design will quickly build brand awareness with the consumer and provide speed to market resulting in increased market share. Whether it is an offensive or defensive play, this tactic has proven successful in the retail world, and it translates very well to the delivery of healthcare. However,
research and trustworthy partnerships are the key to the successful implementation of this strategy. After all, anyone can develop and build a new facility. Building the right facility in the right location is the critical factor for success, and this is no easy task.
The recent success of ambulatory surgery centers (ASCs), urgent care outposts and freestanding emergency departments (FSEDs) are convincing more and more healthcare administrators to grow their market share without having to invest in larger and economically draining healthcare facilities. Offering patients the convenience of having surgeries and
procedures performed safely outside the hospital setting has been gaining traction for years. Since this model was introduced, ASCs have shown an exceptional ability to provide the patient with improved quality, ease of access and customer service all at a reduced cost for the services provided.
There continues to be a surge of activity in this space because patients and payors alike are increasingly unwilling to pay for the high rates associated with procedures performed in a hospital, and there is increased comfort with preforming minor and routine surgeries in outpatient settings. Health systems and physicians have found
Photo courtesy of Bruno, Pixabay.
“The healthcare landscape is increasingly competitive.
Hospital systems are being forced to do more with less resources, and when it comes to adding new facilities, speed to market is usually at the top of the list of priorities.”
success in opening ASCs where lower acuity procedures can be performed much more efficiently and cost effectively. In addition, the development of a de novo facility might also present an opportunity for the health system to offer the surgeons working in these facilities the ability to invest in the facility itself, therein providing the health system with a useful tool in the recruitment and retention of top surgical talent.
FSEDs are another model that offers strategic growth potential for hospital systems. FSEDs can be strategically placed in suburban settings to capture patient volume from areas that might be on the fringe of a hospital’s geographic reach. They establish a place for suburban and rural residents to receive routine and emergency health care, expanding their patient base, and, when necessary, higher acuity services can then be directed to the main hospital of the system, which would otherwise be too far to travel for basic services. With changing population and demographics, it is possible that a properly branded FSED coupled with some ancillary service lines could be all that is necessary in a growing sub-
market. Alternatively, an FSED could potentially replace an aging hospital in a declining market that no longer has a critical mass of patient volume or has become too costly to continue operating.
Hospital administrations must build and depend on trusted relationships as they launch into any new development. It is critical to assemble the right team of designer, engineer and construction manager. Enlisting the help of a developer or development manager with specific experience in healthcare real estate on a local as well as national level will ensure that the right strategy is implemented. It is also imperative to fully understand the changing demographics and service line needs of a growing or evolving market as these metrics can help a hospital system improve services and develop the right strategy for growth and efficiency.
It is paramount to the success of a development to engage a trusted development partner that understands all the required metrics. That partner must have the knowledge of the differing components of inpatient and outpatient systems and building types as well as the ability to collaborate simultaneously with consultants and vendors in multiple jurisdictions. In addition, that partner needs to be independent, ethical and able to confidentially deliver the system’s mission into each respective market while at the same time leveraging the knowledge and expertise of the hospital staff and administrative team. The team at Bremner Healthcare Real Estate has learned over the past 35 years that serving its clients in this capacity is crucial to the success of any new development.
The healthcare landscape is increasingly competitive. Hospital systems are being forced to do more with less resources, and when it comes to adding new facilities, speed to market is usually at the top of the list of priorities. Navigating the chaos of healthcare facilities development can be particularly overwhelming, so having a research-driven strategy with dependable partners will ensure the smoothest path from concept to completion.
Bill Mooney is Executive Vice President, Partner, at Bremner Healthcare Real Estate in Indianapolis. For over 30 years, Mooney has been involved in the development and construction of major projects across the country, and as a partner with CEO Jim Bremner for over 20 years. His ability to listen and provide creative solutions to complex healthcare real estate issues as well as identify critical project hurdles are welcomed and respected on any development.
Bill Mooney (Photo courtesy of Bremner Healthcare Real Estate.
Three tips to find “hidden money” in your real estate leases and contracts: A deep dive into lease contract language to protect your business
By Claire Langland-Johnson, Forte Real Estate Partners
Iwork in a niche of commercial real estate that is critical to business decisions but rarely top-of-mind. In my world of lease administration and portfolio services, we dig into the details. Really dig into the details.
Those details can range from reviewing termination language in one or 1,000 leases to verifying exclusivity language in a potential new lease. At the heart of what we do is help businesses save money on real estate leases and help them avoid paying more than required.
Some clients want to handle parts of the lease administration work. Others want to hand it off and forget about it because let’s admit it: it isn’t the most exciting part of real estate.
But our work can save money and minimize losses by digging into the specific language and terms of real estate leases and contracts to avoid costs, manage critical contract dates, and review operating expenses.
#1. Don’t miss critical dates: You’ll leave money on the table and/or close the door to the future
Commercial lease contract language is complicated, considering operating expenses, maintenance requirements, and deadlines for extending, renewing, or terminating a lease. Whether a business has multiple or one location, we know our clients are hyper-focused on their operations and not on the deep details of contract language.
If your business is growing and needs more or different space, you’ll need to understand the deadline for notifying your landlord about your expected changes. Our healthcare clients have longer leases and may need more time than a standard office lease to consider a new location, build out the space, and move the clinic, equipment, and patients. Without attention to the critical dates, those clinics won’t have enough time to negotiate a deal that works best for them. Traditional office users – law, accounting, or other professional services – tend to have
Image by Jens P. Raak from Pixabay
shorter lease terms. Those end dates can sneak up on the business without having an advocate playing watchdog.
We also look for the financial penalties associated with early termination, or a request to renew or expand. In one case, the business missed a renewal option window and then asked about renewing. The landlord said, “Sure, but your previously negotiated renewal rate is no longer valid. Our rates have increased by 9%.”
Another way to find hidden money is in the tenant improvement (TI) allowance clause. If you don’t use it, sometimes you don’t lose it either. In one case, we were able to get a $500,000 payment to the tenant as rent credit because the language offered a credit or refund if TI expenses weren’t used. TI allowances can also be used for additional space improvements as long as the lease renewal date isn’t missed.
In another case, an unused tenant allowance of more than $1 million was on the verge of expiration; once identified by our team, the allowance was used to improve the healthcare clinic’s waiting room halfway through its lease term.
The short-term consequences of missing critical dates are that the business will have to pay more to exit an existing lease and may have a shorter timeline to find new space. A long-term consequence could be forcing the business to renovate to operate within the existing space. If that happens across multiple locations, the costs increase substantially.
#2. Audits of operating expenses can uncover hidden costs
In one instance, our client had employee turnover in their accounting team, which resulted in routinely paying invoices upon receipt without thoroughly
“Our work can be seen as akin to law enforcement. If the laws are on the books but no one is there to enforce them, what good are they?”
examining the charges, including those not allowable per the lease terms. Those expenses exceeded $15,000 over 12 months and, once caught by our team, led to changes in their internal process for evaluating leases for future locations.
Using our software and tracking systems, we often perform a reconciliation audit, which compares monthly charges to what is allowed in the lease contract. In those audits, we often find improperly charged costs including pass-through incidentals like janitorial supplies, renovation costs to the common areas, management fees, or incorrect charges for when the building isn’t fully occupied.
We’ve seen invoices for incidental cleaning fees for common areas, which are not allowed in most leases. In another example, recently there was a water leak in our client’s suite and the landlord sent an invoice to them for cleaning, even though, in this case, the lease dictated that as a landlord expense. In yet another case, our client was billed the wrong pro rata share of the operating expenses and our review and identification of this resulted in a credit of more than $3,000.
We are not out to get landlords – but we like to make sure they aren’t out to get our clients even if it isn’t on purpose!
#3. The details and the fine print matter
Most often, businesses can avoid extra fees included in a lease by being diligent and on time. In a lease with more than a hundred pages, most people pay attention to only five or six clauses. It’s the other 99 pages that we review.
In a recent situation, a client leased space in a building where the landlord was nearing default, so the lender was making the decisions. Once the tenant
signed the lease, it became apparent that the common areas and amenities that attracted the business would not be available upon move-in. We identified the clause that required the landlord to operate those amenities and advised our client to cancel their lease and find a different property that better fit their needs.
I’m on a mission to educate businesses to understand their total lease obligation. By understanding the real cost of their space – including the operating expenses, tenant maintenance require-
ments, and the renewal, termination, or other options – businesses can make better long-term decisions, save money, and avoid extra costs.
Our work can be seen as akin to law enforcement. If the laws are on the books but no one is there to enforce them, what good are they?
Claire Langland-Johnson is Portfolio Services Manager at Bloomington, Minnesota-based Forte Real Estate Partners.
Claire Langland-Johnson (Photo courtesy of Forte Real Estate Partners.)
3 key factors for Midwest property owners considering alternative insurance
By Austin Smith and Grant Allen, HUB International
Disasters are becoming more frequent and intense, leading to increased claims expenses and property valuations that can leave Midwest real estate owners, builders and developers with insufficient insurance coverage.
Consider the growing frequency of these severe storms. Over the past five years, insured losses due to natural disasters in the United States have averaged $101 billion annually, up from an average of $70 billion in previous periods. One of the most expensive weather-related events of 2023 was the Southern/Midwestern
drought and heat wave at $14.5 billion. As a result, extreme weather is making traditional insurance increasingly costly and harder to obtain.
Insurance rates rose by 4.56% in 2023, continuing a trend of rate hikes for commercial properties. Property owners in the Midwest are experiencing higher deductibles, lower coverage limits and, in some cases, insurers are withdrawing from markets deemed too risky. In states like Ohio, Indiana and Illinois, commercial property insurance premiums are expected to surge 5% to 25% in 2024 alone.
With the increasing frequency of named storms and other disasters, property owners need to prepare for potential risks and disruptions. One way to achieve this is by exploring alternative insurance options like captivesand self-insurance. These alternatives can offer greater control and stability over coverage and potentially lower long-term premium costs.
However, alternative insurance programs aren’t suitable for every organization. Here are three key details for Midwest builders, developers and owners to ponder before deciding if an alternative insurance program is the correct option:
1. Explore your options. Property insurance pricing for real estate accounts has reached a point where certain sophisticated insureds, either with strong balance sheets or unencumbered assets, are exploring various strategies to manage rising insurance costs. Owners can utilize higher retentions, aggregate deductible programs, and captive insurance to offset increasing insurance costs. These strategies involve assuming a larger portion of the initial risk, which can result in lower premium costs over time.
Owners can utilize higher retentions and aggregate deductible programs to
Image by sethink from Pixabay.
“The evolving insurance landscape in the Midwest necessitates careful consideration of alternative options and understanding financial capacities. By taking their time, Midwest property owners and operators can make informed decisions about whether an alternative insurance program aligns with their risk management goals and financial objectives.”
offset increasing insurance costs. By accepting higher retentions, property owners take on a larger portion of the risk before insurance coverage kicks in, which can lead to significant premium reductions. Aggregate deductible programs, where a single deductible applies to multiple claims within a policy period, can also offer cost savings. These strategies require a thorough evaluation of the owner’s risk tolerance and financial capability to absorb potential losses.
Additionally, some property owners, particularly those without restrictions from lenders, are moving to sublimits or exclusions for specific perils such as named storms, wildfires, and wind/ hail. These approaches reduce the overall premium costs but require owners to carefully assess their risk tolerance and financial capacity to handle potential losses. Opting for sublimits on these perils means that coverage is limited to a specified amount for these events, which lowers premiums but increases the financial risk if a major event occurs. Excluding coverage for these specific perils can further reduce costs but leaves the owner entirely responsible for any damages resulting from these events.
Captive insurance is another viable option that allows property owners to form their own insurance company to cover specific risks. This method provides greater control over insurance costs and coverage terms. Captives can be tailored to address unique risk exposures, and while setting up a captive may initially be more expensive than traditional insurance programs,
a well-managed captive can become profitable within a few years. This profitability can help reduce market uncertainties and offer long-term financial benefits. Captive insurance not only stabilizes costs but also allows for the potential accumulation of underwriting profits and investment income, further enhancing its appeal as a long-term strategy.
2. Go slow and remain vigilant. Establishing an alternative insurance program, such as a captive, is not a quick process. Avoid attempting to set one up just before your next insurance renewal. It’s essential to assess your financial strength and ability to fund potential losses without traditional insurance. This involves understanding your risk tolerance and evaluating all insurance alternatives well before your coverage expires. Typically, it takes 90 days or more to establish an alternative insurance plan.
3. Engage in open communication with an expert. Given the complexity of alternative insurance options, with numerous choices, opportunities and potential pitfalls, partnering with a knowledgeable insurance advisor is crucial. An expert can provide insights and guidance tailored to your specific situation, considering the unique regulatory environment in the Midwest. A specialist in captive or self-insurance can help restructure your insurance policy to meet your long-term needs effectively.
The evolving insurance landscape in the Midwest necessitates careful consideration of alternative options and understanding financial capacities. By
taking their time, evaluating various insurance structures and collaborating with experts, Midwest property owners and operators can make informed decisions about whether an alternative insurance program aligns with their risk management goals and financial objectives.
Austin R. Smith, CLCS, CAWC is a Senior Vice President in Commercial Risk at Chicago-based international insurance brokerage Hub International. Grant Allen is a Senior Risk Consultant and Real Estate Practice Leader at Hub.
ASSET/PROPERTY MANAGEMENT FIRMS
ALVAREZ & MARSAL PROPERTY SOLUTIONS
205 W Wacker, Ste 516 Chicago, IL 60606
P: 312.606.0966
Website: ampsre.com
Key Contacts: Kevin Halm, Managing Director, khalm@ampsre.com; Pete Kontos: Managing Director, pkontos@ampsre.com
Services Provided: AM-PS provides property management, project management, and brokerage services to owners and occupiers of office, retail, and industrial real estate. Company Profile: AM-PS was born out of the desire to take the strategic mindset and processes of the renowned business restructuring firm Alvarez & Marsal and reframe them for the commercial real estate world. Our approach solves problems, improves performance, and unlocks value for our clients. Our work has positively impacted real estate and those who interact with our properties nationwide.
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: Office, Retail & Industrial Landlord and Tenant Representation; Multifamily Brokerage; Property Management; Project Management; Investment; Research Analytics and Consulting.
Company Profile: AREA Real Estate Advisors is a full-suite commercial real estate firm in Kansas City. AREA is the hometown team that plays in the big leagues. Our size and scope allow us to be nimble and apply a team-driven approach while providing best-in-class service. At AREA, we deal in real estate, but our business is relationships. We are committed to meaningful partnerships with our clients to ensure that their goals are achieved. Our goal is to exceed our clients’ expectations.
Notable Transactions: Ocean Prime / Prime Social, Visiting Nurse Association, American Trailer & Storage, Ryan Lawn & Tree, Five Below, Strang Chef Collective, Professional Engineering Consultants, Vytelle, Inspired Homes, CentiMark, Clairvaux, Santa Fe Village Apartments, Arvest Bank, Arborwalk, Higher Ground Education.
MID-AMERICA
One Parkview Plaza, 9th Floor Oakbrook Terrace, Illinois 60181
Key Contacts: Dan Hanson-Illinois, dhanson@midamericagrp.com
Brad Lefkowitz-Michigan, blefkowitz@midamericagrp.com
Brandon O’ Connell-Minnesota, boconnell@midamericagrp.com Jim Vaillancourt-Wisconsin, jvaillancourt@midamericagrp.com
Services Provided: Mid-America provides strategic consulting services that maximize net operating income, net cash flow, and accelerate property appreciation. We provide property and construction management, leasing, due diligence, and market analysis. Additionally, we offer MA Building Services, a self-performing porter and maintenance company offering our clients cost savings and improved accountability for related services.
Company Profile: Mid-America Real Estate is #1 in retail real estate services in the Midwest, with full service offices in Illinois, Michigan, Minnesota, and Wisconsin. Our exclusive focus on retail property, combined with cutting-edge technology and unsurpassed service, distinguishes Mid-America within the industry and provides clients with a competitive edge. The total consideration value of leasing and investment sales transactions facilitated in 2023 was $1.2 billion. Mid-America leases and manages more than 60 million square feet of retail space, and represents over 270 retailers and other tenants. For more information, visit www.midamericagrp.com
OUTLOOK MANAGEMENT GROUP, LLC AMO
S74 W16853 Janesville Road
Muskego, WI 53150
P: 414.369.3511 | F: 414.435.0251
Website: outlookmgmt.com
Key Contact: Ray Balfanz, President/Partner, ray@ outlookmgmt.com
Services Provided: Full service property and asset management services, financial analysis and reporting; budget preparation and expense reconciliations; lease administration; construction management; preventative maintenance and consulting services.
Company Profile: Outlook Management Group, LLC AMO provides comprehensive property and asset management services for all asset classes in multiple states and markets.
Notable Properties Managed: Washington Corners, Naperville, IL; Ironwood Office Park, Glendale, WI; Wood River Condominiums, West Bend, WI; Seven 10 West Luxury Apartments, Chicago, IL; MDJD Aesthetic MOB, Rockford, IL, Ascension Health MOB Milwaukee, WI; Henry Ford Health Systems Pharmacy
Services Building in Rochester Hills, MI; Henry Ford Medical Center in West Bloomfield, MI; Baptist Medical Center South, Montgomery, AL; and Lee Memorial Health Systems Building in Fort Myers, FL.
BROKERAGE FIRMS
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 12 million square feet of retail properties for lease and development.
SHAWVER GROUP COMMERCIAL REAL ESTATE
1440 Erie Street, Suite B North Kansas City, MO 64116
P: 816.213.9578
Website: shawvergroup.com
Key Contacts: Joanna Shawver, Principal and Founder, joanna@shawvergroup.com; Erin Green, Marketing and Operations Director, erin@shawvergroup.com
Services Provided: Shawver Group provides a variety of commercial real estate services for our clients and customers. Tenant representation, landlord representation, development leasing, investment sales, new store site selection, lease renewals and consulting services. We deliver for both new businesses searching for a space and national brands entering the Midwest market.
Company Profile: Shawver Group is a Kansas City-based commercial real estate brokerage firm delivering strategic solutions and successful client results across the Midwest in commercial leasing and sales transactions. Our industry connections, experience and lasting relationships create opportunities for our customers, clients, property owners, investors and developers.
CONSTRUCTION COMPANIES/GENERAL CONTRACTORS
MERIDIAN DESIGN BUILD
9550 W. Higgins Road, Suite 400
Rosemont, IL 60018
P: 847.374.9200 • F: 847.374.9222
Website: meridiandb.com
Key Contact: Paul Chuma, President; Howard Green, Executive Vice President
Services Provided: Meridian Design Build provides construction and design/build construction services on a national basis with a primary focus on industrial, office, medical office, retail and food and beverage work.
Company Description: With a team of in-house professional project managers, Meridian has extensive experience coordinating the design and construction of new buildings, tenant improvements, and additions/renovations from 15,000 square feet to 1,000,000+ square feet. Meridian Design Build has been a Member of the U.S. Green Building Council since 2007. Notable/Recent Projects: Venture Park 47, Huntley, IL - 729,800 sf speculative industrial facility for Venture One Real Estate. Lion Electric, Joliet, IL - 928,500 sf electric bus / medium duty truck assembly plant for Clarius Partners. Greenwood Truck Terminal, Greenwood, IN125 door truck terminal on 43 acres for Scannell Properties.
PRINCIPLE CONSTRUCTION CORP.
9450 West Bryn Mawr Ave., Suite 120 Rosemont, IL 60018
P: 847.615.1515 | F: 847.615.1598
Website: pccdb.com
Key Contacts: Mark L Augustyn, COO, maugustyn@pccdb.com, James A.. Brucato, President, jbrucato@pccdb.com
Services Provided: Principle specializes in commercial and industrial property and is committed to providing clients with the highest level of design/build construction services with an absolute dedication to each project.
Company Profile: Design/Build General Contractor established in 1999 specializing in the design and construction of Build-to-Suit, Speculative, Retail, Food Processing, Expansions/ Additions, Tenant Improvements, & Specialty Facilities. Principle also has extensive experience in interior improvements, site evaluation, due diligence, and value engineering. Recently Completed Projects include:
• 282,588 SF dry-cleaning facility for Tailored Brands, at 2000 Deerpath Rd. in Aurora, IL.
• 31,200 SF facility for Alvil Trucking, at 2570 Millenium Dr. in Elk Grove Village, IL
• 6,200 SF Warehouse for Superfast Trucking, at 1001 Raddant Rd. in Batavia, IL
VICTOR CONSTRUCTION
2000 Center Dr., Suite East C219 Hoffman Estates, IL 60192
P: 847.392.6900
Website: victorconstruction.com
Key Contact: Zak Schuttler, President, ZakS@victorconstruction.com
Services Provided: Victor Construction Co., Inc. manages projects from ground-up site developments to interior buildouts, specializing in retail, industrial, and commercial markets. Company Profile: Established in 1954, Victor Construction Co., Inc. is a third-generation general contractor that specializes in commercial, industrial, and retail construction. Victor Construction is known as one of the most efficient and dependable general contractors in the Chicago metropolitan area and has earned the reputation due to meticulous project management, cost-effectiveness, budget awareness, and prime first-rate workmanship. Commitment to the clients’ goals is what keeps satisfied customers returning to Victor Construction for all their construction needs-- We Build for Your Success!
ECONOMIC DEVELOPMENT CORPORATIONS
ECONOMIC DEVELOPMENT
CORPORATION OF MICHIGAN CITY
Two Cadence Park Plaza
Michigan City, IN 46360
P: 219.873.1211
Website: www.edcmc.com
Key Contacts: Clarence Hulse, Executive Director, chulse@edcmc.com
Karaline Cartagena Edwards, Economic Development Manager, kcedwards@edcmc.com
Services/Demographic Info: Up-to-date inventory of commercial buildings, site selection and orientation tours
Incentives: Tax-Increment Financing, Façade Improvement Grants, Property Tax Abatements, Enterprise Zones, Job Training Programs
Recent CRE Activity: Double Track Northwest Indiana: $1.6 Billion development reducing train travel to Chicago to 60 minutes; The Franklin at 11th St. Station: $100 Million Development with Residential & Retail Space; “You are Beautiful”/SoLa: $311 Million MixedUse Multi-Family Development with 235 boutique hotel rooms & 174 Luxury Condos; Burn ‘Em Brewing: $3 Million Expansion project with 30 new jobs.
VILLAGE OF HUNTLEY
10987 Main Street
Huntley, IL 60142
P: 847-515-5268
Website: huntleyfirst.com, huntley.il.us
Key Contact: Melissa Stocker, Development Manager, mstocker@huntley.il.us
Services/Demographic Info: Huntley, a northwest suburban Illinois community of greater than 29,000 residents, is conveniently located at the crossroads of Interstate 90 and IL Route 47. Proximity to the interstate and to international and cargo airports in Chicago and Rockford make Huntley an ideal location for businesses looking to escape the congestion of more populated areas while reaping the benefits of a Chicago market location. Village of Huntley staff provides comprehensive services including site selection assistance and demographic resources, visit huntleyfirst.com to start the search for your new home for business. Residential construction continues with three subdivisions actively building. Huntley is home for your business, and home to the right employees for your business.
Population In Primary Trade Area: 97,283
Incentives: TIF District, Fast Track permitting and development approval process
CRE Activity: Huntley is home to leaders in business. Join Weber, Northwestern Medicine, Amazon and many others that chose Huntley as their home for business. Hampton Inn recently opened in Huntley. Amazon has begun operations in two Huntley facilities.
E-Logistics firm headquarters are underway. Speculative development is underway and available near the tollway. Multiple retail strip centers are in the planning and construction phases. With land available for custom-tailored facilities, businesses seeking sites recognize Huntley as a prime location for operations.
REAL ESTATE LAW FIRMS
REINHART
BOERNER VAN DEUREN S.C.
1000 N Water Street, Suite 1700 Milwaukee, WI 53202
P: 414.298.1000
Website: reinhartlaw.com
Key Contact: Joseph Shumow, Shareholder, jshumow@reinhartlaw.com
Services Provided: Reinhart is a full-service, business-oriented law firm that delivers innovative, value-added solutions for today’s most important real estate needs, including land use and zoning; tax incremental financing; tax credits; leasing; construction; 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 to help you capitalize on opportunities no matter where you do business.
WORSEK & VIHON, LLP
180 North LaSalle Street, Suite 3010 Chicago, IL 60601 P: 312.917.2307 P: 312.917.2312 | F: 312.596.6412
Website: wvproptax.com
Key Contacts: Francis W. O’Malley, Managing Partner fomalley@wvproptax.com; Jessica L. MacLean, Partner jmaclean@wvproptax.com
Services Provided: Worsek & Vihon, LLP represents tax payers in Illinois by limiting their property tax liabilities through ad valorem appeals. We have over 40 years of experience and can handle basic to the most complex assessment issues while offering the dependable, personalized attention our clients deserve. We have experience representing owners of all property types. In addition to filing thousands of appeals with the Cook County Assessor, we have been involved in numerous proceedings before various Boards of Review, the Illinois Property Tax Appeal Board, and the Circuit Court of Illinois, and have appeared before the Illinois Appellate and Supreme Courts.
Company Profile: Worsek & Vihon LLP, is a team of experienced attorneys singularly focused on real estate tax law. The firm is dedicated to minimizing property tax liabilities through strategic tax portfolio management, well-researched, creative appeal preparation and aggressive advocacy.
