November 2023 Midwest Real Estate News

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NOVEMBER 2023 VOLUME35 ISSUE6 CRE MARKETPLACE PAGE 42: ASSET/PROPERTY MANAGEMENT FIRMS

CONSTRUCTION COMPANIES/GENERAL CONTRACTORS MULTIFAMILY FINANCE FIRMS

So many challenges to overcome: Construction companies navigating a tough economic environment

By Dan Rafter, Editor

Stahl Construction recently completed construction work on Valerius Elementary for Urbandale Community Schools, in Urbandale, Iowa

T

he story isn’t shocking to anyone who’s followed commercial construction: High interest rates and the rising costs of materials and labor are making it more expensive to build commercial real estate developments.

And the stark reality? These challenges aren’t going away. Even if the Federal Reserve Board no longer raises its benchmark interest rate, rates aren’t going back to the 3% range anytime soon. And even though the escalation of material cost increases has slowed, the price of switchgear, roofing components and steel aren’t dropping anytime soon.

On the positive side? The commercial construction companies navigating the Midwest are picking up plenty of public work to help offset the slowdown in private-sector construction. And they have gotten awfully good at mastering the art of scheduling so that projects aren’t delayed by long lead times for switchgears and other electrical components.

In fact, the commercial construction industry has shown

plenty of resilience in overcoming the challenges of today’s economic climate. And the professionals working in the midwest say that this resilience will help commercial construction companies weather this storm.

A new-construction slowdown fueled by higher interest rates Tom Schmall, vice president of project development for Minneapolis-based Mortenson, said that those commercial construction projects that are moving forward are ones designed for very specific users.

Spec construction, though, has come to a standstill, Schmall said, even in sectors such as multifamily were demand for space remains high.

“Some of it is a conundrum,” Schmall said. “You talk about housing. Apartment deals are happening, but not at the pace they once were. Still, there’s a huge demand for housing. With such a strong need, you’d think that

RETAIL The future of malls? It’s all about adapting to their surrounding communities

By Dan Rafter, Editor

Are indoor shopping malls dying? Not necessarily.

Yes, there are several sprawling indoor malls that are dotted with empty storefronts.

Construction crews have demolished several others. Still others have been converted to distribution centers or outdoor lifestyle centers.

But other indoor malls are thriving. And they’re largely doing this by providing what their surrounding communities want.

CONSTRUCTION (continued on page 12) MALLS (continued on page 19)

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FEATURES 8 The Midwest’s commercial real ­estate publication, providing useful, unbiased and accurate coverage of the industry and its professionals since 1985.

WWW.REJOURNALS.COM Publisher | Mark Menzies menzies@rejournals.com Editor | Dan Rafter drafter@rejournals.com ADVERTISING Vice President of Sales & MW Conference Series Manager | Ernest Abood eabood@rejournals.com Vice President of Sales | Frank E. Biondo frank.biondo@rejournals.com

1

Construction companies navigating

Healthy fundamentals, housing

The boom in built-to-rent single-

16 market challenges keep demand

28 family housing: One of the fastest-

The story isn’t shocking to anyone who’s

high for multifamily units in St. Louis

growing segments of the U.S. housing

followed commercial construction: High

market: Higher interest rates have slowed

market? According to recent research from

interest rates and the rising costs of

multifamily sales throughout the St. Louis

Berkadia, it’s built-to-rent single-family

materials and labor are making it more

region. That doesn’t mean, though, that the

homes, homes that look like traditional

expensive to build commercial real estate

demand from tenants for apartment space

single-family residences but are built to be

developments.

throughout this market has slowed, too. It’s

rented, not owned.

a tough economic environment:

Classified Director | Susan Mickey smickey@rejournals.com

Midwest Real Estate News brings real ­estate leaders together to explore the challenges and opportunities unique to their markets.

the opposite: Demand for apartment units in

1

The future of malls? It’s all about

the St. Louis market hasn’t lagged

adapting to their surrounding

communities: Are indoor shopping malls

Interest rates still killing deals,

“The plumbing is clogged.”

30 Industrial development, new construction faltering as interest rates

dying? Not necessarily. Yes, there are several

22 even in the steady multifamily

indoor malls that are dotted with empty

sector: Paul Russo sums it up succinctly:

the industrial sector is facing today in the

storefronts. But others are thriving. And

“Higher interest rates are killing deals.” And

Minneapolis-St. Paul market. The culprit?

they’re largely doing this by providing what

who could argue? Russo, senior director

High interest rates, of course.

their surrounding communities want.

of multifamily investment sales with West Bloomfield, Michigan-based Encore Real

8

remain high: Challenging times. That’s what

Worse than used-car salesmen?

Stubbornly resilient? That’s a good

Estate Investment Services, said that higher

32 Survey suggests voters have little

way to describe the Louisville

interest rates have put most multifamily

trust in developers: Do voters have a lower

sales in his market on hold.

opinion of real estate developers than they

industrial market: Solid. Steady. That’s how Stephan Gray describes the industrial sector in Louisville. And he should know: As

do used-car salesmen? A new poll suggests A development shutdown? Not

that for most U.S. residents, this might be

president and senior director with Louisville-

24 for Indianapolis’ The Garrett

based Cushman & Wakefield|Commercial

Companies: These are challenging times

Kentucky, Gray has been working this

for commercial developers, even those

market for decades.

specializing in sectors that had been hot

33 developers do when companies need

before interest rates began rising in 2022.

warehouse space in tight urban locations?

But that doesn’t mean developers have put

Why not build up?

Uncertainty gumming up

10 Indianapolis industrial market:

Going up (and up and up): What can

a halt on new projects.

Indianapolis has long been an industrial power in the Midwest. That hasn’t changed.

the case.

COLUMNS/DEPARTMENTS A bundling of challenges: The

But uncertainty over interest rates, the

26 healthcare real estate sector is far

6 Editor’s Letter

upcoming presidential election, the health

from immune to today’s economic and

34 Woodward Bound in Detroit

of the economy and geopolitical issues

staffing hurdles: Medical providers are

36 People on the Move

has slowed both sales and leasing in this

increasingly moving into traditional office

38 News Briefs

market’s industrial sector.

spaces today. As office vacancies continue

42 Directory Listings

to rise, landlords need to fill their empty spaces. They might be willing to offer lower rents as an enticement.

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FROM THE EDITOR

Midwest Real Estate News | November 2023 | www.rejournals.com

Solo renters on the rise, in Michigan and across the country

By Dan Rafter, Editor

S

olo renters are providing a boost to the multifamily market across the Midwest, according to the latest research from RentCafe.

According to a RentCafe report released in late September, a record 16.7 million Americans are renting an apartment in the United States by themselves, with no roommates.

This figure is on the rise, too. RentCafe reported that from 2016 through 2021, the number of renters living alone rose by about 1 million, an increase of 6.7%.

That’s the renter group that is rising the fastest during the last five years.

The number of tenants who rented with roommates only rose 5.9% from 2016 through 2021, while the number who rented with family members fell by 4.5% during the same time.

Michigan, or at least the Grand Rapids area, has played a role in the rise of solo

renters. RentCafe reported that the number of renters living alone in the Grand Rapids market rose to 39,802 in 2016. That was up from 35,188 solo renters in 2016, an increase of 13%.

That accounted for 18% of the total share of Grand Rapid’s renter population.

The U.S. city that saw the greatest five-year change in the number of solo renters was Salt Lake City, Utah, where the number of solo renters jumped 25% from 2016 through 2021.

In the Midwest, Memphis, Tennessee, saw its number of solo renters jump 15% during the same period, while the number of lone renters in Indianapolis increased by 12%.

Several Midwest cities did make RentCafe’s list of the most affordable cities for solo renters. That included Detroit, which ranked 20th on RentCafe’s list.

According to the report, 20% of De-

troit’s renters do so without a roommate, and the average age of tenants renting alone here is 58. RentCafe says that the average annual income of Detroit renters who live without a roommate was $36,856 in 2021. That’s higher than the average annual income during the same year of all renters, which came in at $30,489.

In other Midwest markets, solo renters in 2021 earned an average annual income of $30,520 in Akron, while the overall annual income for all renters here was $27,384. RentCafe ranked Akron as the most affordable big city for solo renters.

In Toledo, Ohio, solo renters earned an average of $32,015 a year while the area’s overall renter population earned an average of $27,278. Dayton, Ohio, had similar numbers, with solo renters earning an average of $34,153 a year while all renters overall earned an average of $29,397 a year.

In Omaha, solo renters earned an average of $37,562 a year in 2021 while all renters earned an average of $32,410.

In Cleveland, these numbers stood at $34,379 for solo renters and $29,280 for all renters.

What age group is doing the most solo renting? Not surprisingly, Baby Boomers lead the way, making up 32.4% of the renters living alone in 2021, or 5.3 million people. Millennials are second, representing 29.5% of all Americans renting by themselves. According to RentCafe, about 4.8 million Millennials opted for solo renting arrangements in 2021.

Next comes Gen X, which makes up 21.3% of the population of solo renters in the United States. According to RentCafe, Gen X has 3.5 million solo renters.

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LOUISVILLE

Midwest Real Estate News | November 2023 | www.rejournals.com

Stubbornly resilient? That’s a good way to describe the Louisville industrial market

By Dan Rafter, Editor

S

olid. Steady. That’s how Stephan Gray describes the industrial sector in Louisville.

And he should know: As president and senior director with Louisville-based Cushman & Wakefield|Commercial Kentucky, Gray has been working this market for decades.

Gray first joined Commercial Kentucky in 1985. He’s seen both up and down industrial markets. And while interest rates have slowed industrial sales, Gray said that the demand for industrial space throughout the Louisville market remains strong.

And once interest rates stabilize? That should provide another boost to Louisville’s industrial sector.

“Interest rates have affected developers and how they look at our market,” Gray said. “It’s difficult for developers today to get a finger on what their costs are going to be. Once they have a facility built and leased, it is obviously difficult to figure out what they might get for the property if they decide to sell. When you don’t know exactly where your costs are going to be during the construction process and you’re not sure what you are going to get out of the property, it really does affect development activity.”

Despite the challenges of higher interest rates, most of Louisville’s industrial numbers remain solid.

According to the third quarter industrial market beat report published by Cushman & Wakefield|Commercial Kentucky, the industrial vacancy rate in the Louisville market stood at a low 3.3% as of the end of the third quarter.

The report also shows that the Louisville market had absorbed 4.4 million square feet of industrial space as of the end of the third quarter.

Asking rents remain strong, too, with Cushman & Wakefield|Commercial Kentucky reporting that Louisville-area industrial properties are renting out for an average of $5.65 a square foot.

Gray said that he is particularly impressed by the Louisville market’s absorption numbers.

Stephan Gray

Gray said that during the last five years, the Louisville-area industrial market averaged 5.8 million square feet of absorption. With 4.4 million square feet already absorbed as of the end of the third quarter, Louisville looks set to again reach at least 5 million square feet of absorption.

“We are right there again this year, which is wonderful,” Gray said. “We have a Cushman industrial call every month, which gives us the benefit of hearing how other markets in the Midwest are performing. Not everyone is seeing the kind of leasing activity and net absorption that we are this year.”

Not all industrial types are performing equally well, though. Gray said that much of the Louisville market’s leasing activity is concentrated in industrial space of 100,000 to 300,00 square feet.

According to Cushman & Wakefield’s research, the overall net industrial absorption for the Louisville market totaled 1 million square feet in the third quarter. That marks the 33rd consecutive quarter that Louisville’s industrial market has seen positive net absorption.

The Southern Indiana submarket was a strong performer, seeing 1.2 million square feet of net absorption, largely thanks to Ryder Logistics moving into its newly completed 1-million-square-foot building.

Despite the challenges of higher interest rates, developers are still working the Louisville market. Cushman & Wakefield reported that the Louisville market saw 2.4 million square feet of new industrial construction during the third quarter. More than half of the new deliveries occurred in the Southern Indiana submarket, including a fully leased 1-million-square-foot distribution facility by Van Trust Real Estate and a 130,500-square-foot expansion for Genpak.

The Bullit County, West/Southwest and East submarkets also saw new deliveries in the third quarter of 711,975 square feet, 407,280 square feet and 26,610 square feet, respectively.

“I think the economy remains pretty strong despite what interest rates are doing and despite geopolitical activity,” Gray said. “Companies are making money and growing still. That undercurrent helps to prop up our market.

It helps our market immensely. UPS’ North American hub is here in Louisville.

That helps our market quite a bit. And we have the space for industrial users.

We have a good variety of spec buildings ranging from a couple hundred thousand square feet to more than 1 million square feet. We have something for everyone.”

End users are able to find industrial space today in Louisville, Gray said.

That should hold true in 2024, too, he said. The challenge? That could come in 2025. As Gray says, it’s uncertain how much new industrial space developers will add to the Louisville market in 2024.

“I don’t think that we’ll see the level of construction next year that we did this year,” Gray said. “If we fill up what we have built this year and we don’t get enough new construction next year, that could leave us in a bit of a lurch once 2025 gets here.”

LOUISVILLE 9

www.rejournals.com | November 2023 | Midwest Real Estate News Today, though, there are plenty of industrial facilities available for end users, Gray said. At the same time, spec space here is filling up steadily with tenants, he said.

Gray points to the steady growth of ecommerce activity as one of the main reasons for the long-term success that the industrial market has seen. People were shopping online long before the COVID pandemic hit. But since COVID, they’ve been even more willing to order just about anything, including groceries, online.

This has increased the need for companies to open distribution centers and warehouses across the country.

Louisville, with its central location, benefits from this trend.

“When COVID first hit in early 2020, no one knew what was going to happen,” Gray said. “By mid-year, though, it became clear: Consumers were still going to spend. Ecommerce carried the day.”

es. The overall industrial vacancy rate here remained low at 3.3%. But it did increase from 2.7% at the end of the second quarter.

This doesn’t mean that Louisville’s industrial market doesn’t face challeng-

Certain submarkets had especially low vacancy rates. The Shelby County sub-

market ended the third quarter with an industrial vacancy rate of 1.1%, while in the South County submarket the vacancy rate stood at 2.2%. It was also a low 1% in the East submarket.

happening, with more companies bringing manufacturing back to the United States,” Gray said. “The American industrial base is on the rise. That bodes well for the future of the industrial sector.”

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INDIANAPOLIS

Midwest Real Estate News | November 2023 | www.rejournals.com

Uncertainty, interest rates gumming up Indianapolis industrial market

By Dan Rafter, Editor

I

ndianapolis has long been an industrial power in the Midwest.

That hasn’t changed. But uncertainty over interest rates, the upcoming presidential election, the health of the economy and geopolitical issues has slowed both sales and leasing in this market’s industrial sector.

The good news? The fundamentals of Indianapolis’ industrial market remain strong. There is still demand for warehouse, distribution and other industrial space here. The market, like so many others across the country, is waiting for a dash of certainty.

We spoke to Alex Davenport, senior vice president of the Midwest Capital Markets team of Colliers, about the state of his market’s industrial sector.

He’s a solid choice for this interview: Since joining Colliers in 2016, Davenport has been involved in more than $2 billion in transaction volume encompassing more than 23 million square feet of industrial, office and retail product across the Midwest.

Here is what he said about both the challenges facing the Indianapolis industrial market and the hope for a better future for this sector.

“The long-term view of the Indianapolis industrial market is extremely positive. We

A slowdown in sales: Year-to-date in industrial, the square footage of what we’ve sold in the Indianapolis market is about a third of where we were in 2022. And it’s about a sixth of what we did in 2021, square-footage-wise.

are seeing more reshoring of manufacturing.

When COVID hit and we for all intents and purposes shut down the whole economy, we wanted to put some gas on the fire to encourage some spending and economic activity. For two years, the Federal Reserve Board set its federal funds rate at 0%. That resulted in a ton of expansion of the economy.

People were buying new homes and new cars. Developers were pursuing new development.

funding for the research and manufacture of

We had the ecommerce boom during COVID, too. Spec industrial space was a big deal in Indianapolis based on where we sit. You can reach a large majority

The CHIPS and Science Act is providing new semiconductors.” of the United States in a day’s drive. Us being the crossroads of America, we had a ton of third-party logistics and warehousing demand.

We built so much new product. We weren’t unique. This happened across the country. And when interest rates

started to run up in the early summer of 2022, that really slowed sales activity. Now there is limited liquidity across the board, and bid sheets have notably shrunk. Lenders are pulling back on leverage. Rates are going up. It’s all led to sellers holding on for better days.

Leasing challenges, too: The leasing side has slowed, too. Tenant demand is the real story here. As interest rates went up it was harder to close industrial sales. But tenant demand was still strong. That is now changing.

In the third quarter, we did 2.7 million square feet of new industrial leasing.

INDIANAPOLIS 11

www.rejournals.com | November 2023 | Midwest Real Estate News Our five-year average per quarter is 5.1 million square feet. We were at about half of that average in the third quarter.

This third quarter was our slowest since the beginning of 2017.

People say that we are near pre-pandemic levels of leasing activity in our industrial market. But it is slower than that. This is all driven by a lot of uncertainty. It’s not just interest rates. It’s not just debt. There are consumer credit concerns. There are geopolitical issues.

Everyone is just on the sidelines now: the manufacturer that is trying to expand to that next facility, the developer who is trying to decide whether to build that new building and the lender who will lend on that next deal. There is a lot of decision-making that is stalling today.

We are at a point in time in which we have virtually no new industrial development announcements. There are still new industrial developments being delivered today. But those decisions were made a while ago. There are very limited new announcements, not for the foreseeable future. We are right sizing the ship on supply.

The leasing activity in all the markets we track is down in the third quarter relative to the last couple of years.

It’s this point in time when no one has any conviction on what is going to happen. We are coming into an election year. There are these terrible events happening across the globe.

There is expiring debt that is causing some concerns. We are in this kind of locked-up position.

But the long-term picture is more positive: The long-term view of the Indianapolis industrial market, though, is extremely positive. We are seeing more reshoring of manufacturing. The CHIPS and Science Act is providing new funding for the research and manufacture of semiconductors. Consumer habits have changed in a way that make it important for companies to operate more warehouse and distribution facilities. The Indianapolis industrial

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market is still well-positioned to take advantage of all this.

Alex Davenport

But I think that the new year is going to bring a renewed thirst for expansion and growth. Lenders will be able to reallocate for the year and be more aggressive. But until we close out the year, it will remain sleepy.

An historically strong market: Indianapolis has always been a strong industrial market, and I believe that industrial will remain the darling of the commercial sectors here for a long time.

Rick Daly President

We certainly have a great location.

We have more interstates flowing through our state. Companies that locate here can reach a great portion of the United States is one day’s drive.

The cost of doing business in Indiana is favorable, too. Our labor market has remained very strong.

The other element is the support our business community gets from municipalities. Municipalities provide a lot of financial incentives to encourage companies to do business. The surrounding communities around Marion County work together to create an environment of new growth.

But the most important reason for our industrial market’s strength remains our central location. That is important to any company’s supply chain. And that is not going to change. That is why I believe that our industrial market will survive this slow period and will emerge strong. Like I’ve said, the long-term future of industrial here remains bright. The long-term picture is a positive one.

Midwest Real Estate News | November 2023 | www.rejournals.com

12

Stahl Construction is also working on the construction of the St. Francis City Hall and Fire Station in St. Francis, Minnesota.

CONSTRUCTION (continued from page 1)

at some point the fever has to break.

We need more housing. But the higher rates are keeping projects on the backburner.”

Troy Blizzard, vice president and general manager with Mortenson, said that everyone in the commercial real estate business is talking about interest rates today. He said that he himself has never talked about the Federal Reserve Board so much in his life.

Blizzard compared it to the supply chain issues that commercial construction companies faced during the height of COVID: Everyone knew about those issues, too, and everyone was hyper-focused on them. The same is happening today with interest rates, with everyone in the real estate industry waiting to see when sales and development activity will rebound.

Blizzard, though, said that not all sectors have been equally hit by the higher rates. He pointed to high-tech or industrial manufacturing. Activity remains strong in this area, even when it comes to sales and new construction, he said.

“The high-tech businesses are still humming. That business can overcome the interest-rate discussions,” Blizzard said. “There is no slowdown in people

wanting data centers even with the higher rates. But other markets like hospitality and residential are seeing a slowdown because of higher rates. The impact of interest rates is broad, and everyone knows it.”

Cathy Schmidt, president and chief executive officer of Minneapolis-based Stahl Construction, said that higher interest rates have had a significant impact on the multifamily sector, with the higher rates slowing the development of much-needed new apartment units.

“There appears to be some level of stoppage in terms of new development or projects that were in the process,” Schmidt said. “Today, developers are waiting to see when interest rates will stabilize or go down. The higher rates are making the numbers harder to pull together to make a deal work.”

Schmidt said that she has spoken with a handful of developers who are pausing their new multifamily projects until they get more certainty regarding interest rates and any future moves by the Fed. And if rates do stabilize? Multifamily developments might start moving forward again. The problem? New construction won’t start immediately.

“Nothing happens quickly in commercial real estate,” Schmidt said. “Even if rates stabilize or tick down a bit, it will still take time for those processes to

be revved up again. There are so many steps before you get to the start of new construction.”

Schmidt said that those multifamily projects that are already under construction or close to starting won’ stop.

That’s because of the huge demand for multifamily units across the country.

But a bigger slowdown in multifamily construction might come a year from now, Schmidt said. That’s when the current slate of apartment projects will wrap construction. And because of higher interest rates, there might not be many new apartment projects following.

“The Twin Cities market needs new apartment units,” Schmidt said. “We have a long way to go before we build enough to meet the demand. Then there’s the fact that we are building a lot of new luxury units when what we really need are affordable units. It’s not easy for developers to make the numbers work when it comes to affordable housing.”

Developers typically rely on tax and other financial incentives from governments to make affordable housing projects work. That won’t change in the future, Schmidt said.

“You have to put all the right pieces together,” Schmidt said.

The Inflation Reduction Act helps Schmall said that the Inflation Reduction Act of 2022 has helped Mortenson find new business. Mortenson does a significant amount of work in the renewable energy business. Thanks to the Inflation Reduction Act, companies have brought manufacturing back to the United States, including manufacturing for the renewables industry.

As Schmall says, these are big jobs, big enough to keep commercial construction firms such as Mortenson busy.

“We are seeing some reshoring today,” Schmall said. “It’s especially true in the solar business. A lot of companies are bringing manufacturing in solar here.”

And while Blizzard said that reshoring hasn’t had a huge impact in the Twin Cities market, some markets, especially those that have embraced the CHIPS and Science Act that provides new funding to boost domestic manufacturing of semiconductors, are seeing plenty of high-tech manufacturing locate in their states.

“There are some states that are going all in on the CHIPS act,” Blizzard said.

“They are committing big dollars to get these projects. Minnesota is talking about this, but there is competition for CONSTRUCTION (continued on page 14)

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CONSTRUCTION CONSTRUCTION (continued from page 12)

Midwest Real Estate News | November 2023 | www.rejournals.com

Troy Blizzard

Tom Schmall

Cathy Schmidt

CHIPS act work all over the country.

We have not seen the huge impact here yet.”

Public-sector work has been a boon to Mortenson, too, filling in the gaps from the downturn in private-sector construction jobs.

Blizzard pointed to the impressive amount of K-12 education projects, both new construction and renovations, that Mortenson has taken on as an example of how public-sector work has been a lucrative alternative even as interest rates remain high.

“Even if private development slows down, public development won’t,” Schmidt said. “We are very busy with public work right now. There are a lot of pent-up dollars from the pandemic.

In Minnesota, the bonding bill was delayed by a year, but a large bill passed in the spring. There is a steady stream of public projects thanks to that. We are still early on in that cycle.”

Schmidt said that Stahl has a long history of supplementing its private work with public projects. That helps the company stay steady even when economic challenges slow the flow of private-sector work.

“It is nice to be in both worlds,” she said. “When one world is a bit slow, the other tends to be busy. It’s important to be able to pursue and have experience in both areas.”

Schmidt said that Stahl has been busy with school construction and renovation projects. That’s thanks largely to the number of communities dotting Stahl’s coverage area that continue to grow and need new public-school buildings.

Stahl is also taking on a significant amount of municipal work, including the construction of city hall, fire station and public works buildings.

Waiting for stability It’s unlikely that interest rates will ever dip back to the lows the country saw in 2020 through 2022. But Schmall said that what the commercial real estate industry needs is stability when it comes to interest rates.

This means that construction firms are

“What the market hates is uncertainty. If it gets to the point where the Fed says that this is enough, that will bring comfort. It’s kind of a fool’s errand now, though, to try to predict whether we’ll see another interest rate hike.” waiting for the Fed to put an end to the tweaking of its benchmark interest rate, Schmall said.

“What the market hates is uncertainty,” Schmall said. “If it gets to the point where the Fed says that this is enough, that will bring comfort. It’s kind of a fool’s errand now, though, to try to predict whether we’ll see another interest rate hike.”

Blizzard said that the developers in the Twin Cities have already shown that they are ready to jump at new work once interest rates stabilize. He pointed to developers embracing any project that has certainty attached to it, typically public-sector work.

“There is cautious optimism out there,” Blizzard said. “This is a moment in time that we are all monitoring very carefully. The Twin Cities market has always rebounded after slowdowns in the past. It’s more a question of how fast it will rebound, not so much if it will rebound.”

The Twin Cities has long benefited from its more conservative approach to development. Unlike other major markets, the Minneapolis-St. Paul market is not overbuilt in any sector, whether that be multifamily, industrial or retail.

This lack of excess inventory will help the market recover quickly once interest rates stabilize, Schmall said.

The unknown factor, though, is what the office sector will look like in the future. No one knows yet what the workplace of the future will look like and when, or if, most employees will return to the office on a full-time basis.

That variable is something that the commercial development and construction businesses have not had to deal with in the past.

CBD that are lightly occupied. What is that going to do? Fortunately, we have not been uber aggressive or risky when it comes to new development. We don’t get too far over our skis.”

Some office buildings with high vacancy rates will probably be repositioned, turned into other uses such as multifamily. But as Blizzard said, not every struggling office property can be turned into an apartment. Such conversions are expensive and don’t make sense for every building.

“We can’t leave buildings empty forever,” Blizzard said. “But we are all in the middle of figuring out which buildings work and how to repurpose them.

Repositioning old office buildings, though, can be part of what gets the market bouncing again.”

Not all asset types created equal

“We talk about this quite a bit,” Schmall said. “That is one element of the market that is different this time around.

There are quite a few buildings in the

Today’s interest-rate environment hasn’t hit all asset types as hard. As Schmall says, housing and industrial

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www.rejournals.com | November 2023 | Midwest Real Estate News

“Healthcare took a dip during the pandemic, but now it is getting stronger again. We are now seeing healthcare organizations with pent-up demand to do things. They are moving forward with their projects. Healthcare has been pretty strong for us in Minneapolis.” remain active, especially on the leasing side where demand for these property types is still high.

The demand for new advanced manufacturing facilities continues to rise, too. Companies seemingly have an insatiable appetite for data center space.

Then there is the healthcare sector, which Schmall says has rebounded solidly since the days of the COVID pandemic.

“Healthcare took a dip during the pandemic, but now it is getting stronger again,” Schmall said. “We are now seeing healthcare organizations with pent-up demand to do things. They are moving forward with their projects.

Healthcare has been pretty strong for us in Minneapolis.”

Stahl had built plenty of hotel properties in the past, Schmidt said. But new construction in hospitality has slowed, especially in the Midwest.

This slowdown can be traced to a lack of business travel. Leisure travelers have returned and are filling up hotel rooms. But conferences, cross-country meetings and other forms of business travel remain down, slowing the demand for new hotel construction.

“We are starting to see a few more hotel renovation projects pop up, but we are still not seeing many new construction projects in this sector,” Schmidt said. “The business travel is going to remain depressed for the near

future. The future of hotels, then, is largely dependent on vacation travelers. If that keeps ticking up, we will start to see new construction rebound in the hospitality sector.”

teams to choose their systems very early on in the process,” Schmidt said.

“That way, these materials can be pre-ordered. You have to fund those systems early on.”

The challenge of higher construction costs

Schmidt said that switchgears and

Interest rates aren’t the only challenge that construction pros face today. The industry is still dealing with higher materials costs, which makes completing new construction projects more expensive.

Schmidt said that this will be a longterm challenge: She doesn’t see construction costs falling by much.

“Once materials costs have gone up, they might go down a little, but they won’t go back to where they were,” Schmidt said. “And labor costs are not going to go back down. We also have a labor shortage. Labor is still in the driver’s seat in terms of demanding what they want to work. If people are waiting for construction costs to go down significantly, that probably won’t happen.”

electrical equipment still have long lead times, largely because there are fewer suppliers of these items.

“You have to get in line when you need these items,” Schmidt said.

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Like other commercial construction companies, Stahl is also dealing with materials delays. It still takes longer to get certain materials to the job site.

involved early in the process

This means that construction companies need to plan their jobs carefully, mapping out every step of the building process, Schmidt said.

outcomes. And better outcomes

“This has required owners and design

to provide you continuous input throughout the project lifecycle.

Starting earlier leads to better lead to better relationships.

The Expo at Forest Park is a new apartment development added to the St. Louis market in early 2023.

Midwest Real Estate News | November 2023 | www.rejournals.com

16

Healthy fundamentals, housing market challenges keep demand high for multifamily units in St. Louis market

By Dan Rafter, Editor

H

igher interest rates have slowed multifamily sales throughout the St. Louis region. That doesn’t mean, though, that the demand from tenants for apartment space throughout this market has slowed, too. It’s the opposite: Demand for apartment units in the St. Louis market hasn’t lagged even with the economic challenges facing the country.

Andrea Kendrick, managing director of investment sales at the St. Louis office of Berkadia, says that the fundamentals of the local multifamily market remain strong. Higher interest rates haven’t changed that.

We recently spoke with Kendrick, who has closed on more than $1 billion in sales volume during her commercial real estate career, about the resiliency of the St. Louis multifamily market.

Here is some of what she had to say.

decline in transaction volume.

Can we start by talking a bit about higher interest rates? How have they impacted multifamily sales in the St. Louis market?

What about leasing activity? That has remained strong in the multifamily sector despite higher rates, right?

Andrea Kendrick: The higher rates have certainly impacted multifamily transactions. In recent months, there has been a lack of pricing discovery because the overall transaction volume is roughly 65% to 70% lower than it was last year. St. Louis is no different than the rest of the nation when it comes to this. There seems to be a lot of capital waiting on the sidelines.

Buyers are beginning to look for more of the distressed deals. They want the value to reflect a certain level of distress. We haven’t seen too many sellers who have been willing to meet the market. That leads to a pretty big

Kendrick: Multifamily fundamentals in general have been healthy. Occupancy levels are in the 94% to 95% range throughout the market. Everyone needs a place to live. Post pandemic, we have seen people renting for longer periods of time.

It’s very expensive to buy a home today. That will continue to have a positive impact on multifamily leasing activity. Homeowners are not moving because they want to keep their lower interest rates. That is benefiting multifamily occupancy rates: There aren’t as many homes available for people to buy, so they are renting longer. I checked with our research department, and they are estimating

that demand for apartments in the St. Louis market will reach its highest level since 2021.

What impact have higher rates had on the new development of apartment projects in your market?

Kendrick: In this post-pandemic cycle, renter demand has accelerated throughout the St. Louis MSA. That has led to an influx of new construction. Historically, we have seen about 2,000 new apartment units per year added to the market. Currently, there are close to 4,000 multifamily units under construction, almost double the historic average.

But high interest rates, high construction costs and moderating rent growth is leading to slower development now.

ST. LOUIS (continued on page 16)

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The Ballpark Village Apartments provide views of St. Louis’ Busch Stadium, home of the MLB Cardinals.

That should continue during the next couple of years.

Then there are some other important amenities, like in-unit washers and dryers and convenient parking. These amenities can help landlords keep their tenants for a longer time.

Resident retention is critical today. Operators are facing added pressure to keep their tenants renting for a longer time.

Are you seeing any new trends when it comes to demand for suburban vs. urban properties? Are there strong markets for both multifamily types?

What helps landlords retain their tenants?

Kendrick: Post COVID, we have seen people moving into apartments rather than back home with their parents. This trend has supercharged demand for multifamily, especially in the suburbs.

You are typically going to find larger units, more green space and more amenities in the suburban multifamily developments.

ST. LOUIS (continued from page 16)

Kendrick: The amenities they offer are key. I think of amenities in different tiers. The top tier includes affordability and security. Also in that top tier, I’d place proximity to employment, especially for tenants who are not working remotely.

The next tier is about technology and connectivity, not just in units but throughout the common areas. Some of the developers are adding small workplaces to their common areas.

That’s attractive to tenants who want to be able to work from anywhere these days. Even outdoors by the pool, connectivity is important.

In the St. Louis MSA there are a handful of submarkets that are seeing especially strong demand for multifamily space. St. Charles County leads the region in deliveries and absorption.

That’s interesting because St. Charles County is one of our farthest west suburban submarkets.

But I’d say that the St. Louis city is still

a desirable place to live. It offers close proximity to employment. Some of the more popular neighborhoods in and around downtown are seeing a higher amount of new development activity.

Those neighborhoods are closer to the employment drivers in our arera, places like Washington University School of Medicine, St. Louis University, the Cortex Innovation Community and the National Geospatial Intelligence Agency.

The suburbs will always be desirable.

They offer safe schools and more green space. But there are good pockets of activity in the city, too. Both parts of our market are attractive to renters.

How important is the walkability factor? Do renters want to be able to walk to restaurants, public transportation and entertainment?

Kendrick: Walkability is important for some developments. But St. Louis is a bit more spread out. Many people here rely on their cars to get around. I think if residents are renting in an area like Central West End, they are looking for the walkability factor. There are several

restaurants, shops and job opportunities they can walk to there. Overall, in the St. Louis market, though, I think walkability might be less of a factor depending on where renters want to live.

Why do you think the demand for multifamily space on the part of renters has been so strong for so long?

Kendrick: Right now, the demand for multifamily space is very strong. Everyone needs a place to live. It is more expensive to own today than it is to rent. There is a single-family housing shortage. The fundamentals in general are strong.

We think that demand will remain strong in 2024. There are some uncertainties going into next year, but these are more on a global scale, such as the wars in Israel and the Ukraine. There are uncertainties with 2024 being a presidential election year. There is uncertainty about how long interest rates will remain elevated. But as prices start to recalibrate around those higher interest rates, the market will stabilize.

Demand will remain strong.

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Crocker Park in the Cleveland suburb of Westlake remains one of the most successful mall destinations in the Midwest.

MALLS (continued from page 1)

This might mean bringing in high-tech bowling alleys, pickleball courts and indoor miniature golf centers. Or it might mean luring local and regional restaurant chains to boost their food court offerings. It might even mean bringing in Tesla and other luxury car dealerships that let shoppers testdrive vehicles that they have long dreamt of buying.

“Malls are being forced to compete with some of the mixed-use developments that are offering a mix of restaurants, entertainment and shops.”

Jeremy Bates, senior vice president for commercial real estate advisory and transactions at Coldwell Banker Commercial, said that the key is for mall owners to understand what the shoppers surrounding their retail spaces want, and then adapt to provide these services, amenities and shops to them.

have taken, citing some of the more interesting results from the most recent The Trend Report released earlier this year by Coldwell Banker Commercial.

food courts, a way to attract foodies to their spaces. Others are focusing on entertainment, with some malls even offering aquariums.

centers, spaces that allow consumers to pretend that they are flying through space, riding rollercoasters or hang-gliding over the country.

“Each mall has to adapt in its own special way, according to the community,” Bates said. “There is no one-size-fitsall approach here.”

This report studied the latest trends impacting shopping malls and identified the strategies that many mall owners are taking to compete today.

Still others are focusing on fitness, bringing in brand-name fitness centers or offering yoga classes to attract more foot traffic to their malls, Bates said.

“Malls are being forced to compete with some of the mixed-use developments that are offering a mix of restaurants, entertainment and shops,” Bates said. “They need to offer more of the

Bates understands the challenges that malls face today. And he knows the steps that the most successful malls

Bates said that mall owners are becoming increasingly creative today, with many focusing on enhancing their

Shoppers might notice, too, an influx of virtual-reality entertainment

MALLS (continued on page 20)

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The SEA LIFE Aquarium in Bloomington, Minnesota’s Mall of America, is an example of the experiential nature of today’s most successful malls.

MALLS (continued from page 19)

same if they are going to bring in more foot traffic.”

Adding residential?

Some mall owners are bringing residential to their mall properties, too. This often happens when a large section of a mall, perhaps an anchor tenant, becomes vacant. Mall owners might then demolish an older structure and build new multifamily units on the site.

This can help boost the foot traffic at the remaining portions of the mall. If the mall offers interesting food choices, bars or entertainment centers, the residents of the new apartment buildings might be tempted to walk to the mall, perhaps stopping in at the shopping center’s other retailers when they are done eating, drinking or bowling.

“If there is a large vacant area, there is no reason why a developer or owner shouldn’t consider adding residential,” Bates said. “All it does is increase foot traffic. And at the end of the day, that is the goal of any mall owner. The more traffic drivers, the better for the tenants and the more successful the mall will be. If you bring residential, you have an added customer base that is right on site.”

Oakbrook Center mall in the Chicago suburb of Oak Brook, Illinois, remains busy even during the cold winter months

This doesn’t mean that residential is the right fit for all mall properties, Bates said. Some malls might already be located across the street from or nearby existing residential. The area, then, might not need more residential units.

In other areas, the residents near the mall might not want a new apartment building. By forcing multifamily into such a community, developers and

owners might breed resentment from potential shoppers.

ger change such as adding residential.”

The lure of the outdoor lifestyle center

“The key is to consider every opportunity,” Bates said. “I always say that it makes sense to exhaust every other opportunity first before you move to residential. That includes new dining options or experiential real estate. If you exhaust those other options first, then it might be time to consider a big-

Many shoppers today prefer outdoor centers that include shops, movie theaters, restaurants, bowling alleys, bocce ball courts, trampoline parks and whatever other additions developers can conjure.

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www.rejournals.com | November 2023 | Midwest Real Estate News And these outdoor centers are thriving even in cold-weather climes. In Chicago, for instance, there is the popular Oakbrook Center, a high-end and consistently busy outdoor shopping center in the suburb of Oak Brook, Illinois.

Jeremy Bates

Bates points to the success of Crocker Park in Westlake, Ohio, in the Cleveland market as another example of a thriving outdoor shopping center.

Crocker Park includes retail stores, restaurants, office buildings, hotel space and residential. And, yes, the center remains busy even when the winter temperatures arrive.

“This is the perfect example of the live/work/play concept,” Bates said.

“And after COVID, people want to be outdoors more often. They really enjoy the benefits of spending more time outdoors. You get to look at the sky and see some sun.”

And in the winter? Many of these outdoor malls offer heated sidewalks.

They work hard to keep their pedestrian areas free of snow and ice. They

also make it easy for people to get from the parking lots to the shops and restaurants.

When to start over?

This doesn’t mean, though, that all malls are going to survive. Many are struggling so much that it makes more sense to demolish them and start over with a fresh concept.

demolition if they’ve lost most of their anchor tenants. A lack of anchors is a sure sign that a mall is barely hanging on.

“If there isn’t a tenant to backfill those empty anchor spaces, that’s when the demolitions start to take place,” Bates said.

If anchors leave, the other interior tenants of a mall typically have stipulations in their lease that they can pay lower rents. Retailers might also be able to terminate their leases early if a mall’s anchor tenants leave,.

But while some malls might become so obsolete that demolition is the best answer, many others are repurposing or rejuvenating themselves, becoming something akin to town centers.

“Retailers understand that their success in a mall is largely based on the anchor tenants,” Bates said. “Anchors generate foot traffic. When the anchors leave, that foot traffic dries up.

Interior mall tenants lose sales because the foot traffic is no longer part of the mall.”

Bates said that owners should look at alternatives when their anchors flee and they can’t replace them. That might mean scrapping the mall and building something new. It might mean transforming a mall into a warehouse center. Bates said that he’s even seen malls repurposed into schools.

Bates said that just eight years ago, he never would have predicted some of the changes that successful malls have undergone.

“I would not have expected to see fitness centers becoming key mall tenants,” Bates said. “I would not have expected residential or indoor trampoline centers. When COVID hit, it changed the uses we are seeing in malls. Now it is about creating an experience within a mall setting, something that you would not have seen just a few years ago.”

Bates said that owners might consider

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22

Interest rates still killing deals, even in the steady multifamily sector

By Dan Rafter, Editor

Paul Russo sums it up succinctly: “Higher interest rates are killing deals.”

interest rates in the 3% range are long gone.

And who could argue? Russo, senior director of multifamily investment sales with West Bloomfield, Michigan-based Encore Real Estate Investment Services, said that higher interest rates have put most multifamily sales in his market on hold.

A rise in seller financing?

The big problem? There is still a disconnect between sellers and buyers when it comes to pricing, with buyers wanting lower sales prices to make up for the higher rates attached to loans today.

“The high rates are scaring a lot of buyers out of the buying pool,” Russo said. “They are sitting on the sidelines waiting for a rate drop.”

And relief? It’s not coming anytime soon, as Russo says that the days of

Paul Russo

Russo did say that he is seeing an increase in sellers offering to finance multifamily deals today. There’s a problem, though: Even sellers are charging interest rates at or slightly above 8%. That makes seller financing not much different from what buyers could get from regional or national lenders, Russo said.

“Everybody thinks that a seller will finance the deal for them at 6% or 5.5%,” Russo said. “That is not the case. Sellers know where interest rates are at. They are adjusting their seller financing rates in accordance with where interest rates are in today’s market.”

Russo points to a potential multifamily

sale he worked on in Lansing, Michigan. The owner was entertaining seller financing offers. But he also wants to charge an interest rate near 8% and won’t budge.

Because of this, he’s held onto his multifamily asset.

“He doesn’t need to sell. He wants to sell and retire,” Russo said. “But he doesn’t want to give away the properties. And he doesn’t want to provide an interest rate of 5% or 6% when the going interest rates are higher. He’s willing to wait it out. For the buyer, though, it no longer makes sense to continue to seek seller financing. The buyer can get money from a traditional lender at that interest rate.”

Thanks to higher rates, when multifamily properties do sell, they do so after sitting on the market for longer. Russo said that in 2021 and early 2022, many apartment properties sold within three months. Now Encore needs six months at a minimum to sell most multifamily properties, he said.

“The buyer pool has shrunk because of higher rates,” Russo said. “Because of that, deals are sitting on the market longer.”

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“Younger buyers are also dealing with student-loan debt.

They can’t afford a housing payment. They can’t afford a mortgage payment that is $2,000 a month or higher.

Because of that, they have to find somewhere to rent.”

The financing struggle Russo said that many buyers are also struggling to find banks willing to lend in today’s economic environment.

He cited one local bank in Michigan that stopped commercial real estate lending completely in 2022. That bank reentered the market this year, he said, but the criteria that the lender expects borrowers to meet are so strict – more money down, focusing mostly on avoiding risk – that it’s still nearly impossible for potential buyers to pry commercial real estate financing from it.

“Some banks do not want to put new debt on their books right now,” Russo said. “They don’t want to refinance deals, either. Again, they want debt off their books.”

Those deals that do make it across the finish line? Russo said that many of them are lower-priced transactions, in the $1 million to $2 million range. And while deals in the $5 million to $10 million range are getting done, Russo says that they are staying on the market longer, waiting for institutional buyers that have more cash available to make these transactions work.

Leasing activity remains strong In better news, leasing activity remains strong in the multifamily sector in Michigan, Russo said.

Part of this is because of the challenges buyers are facing in the single-family housing market. Housing prices are high. So are mortgage interest rates.

These financial hurdles are keeping many would-be homebuyers out of the housing market.

“First-time homebuyers are getting a straight-up shock value when they look at homes,” Russo said. “The housing market is still overpriced, in my opinion. Then buyers are getting slapped with the interest rates.

Younger buyers are also dealing with student-loan debt. They can’t afford a housing payment. They can’t afford a mortgage payment that is $2,000 a month or higher. Because of that, they have to find somewhere to rent.”

new income stream during challenging economic times.

mains one of the strongest commercial asset classes.

“The only way to get deals done today is to think outside the box,” Russo said.

“That’s how you get deals across the finish line today.”

“I still think that multifamily is one of the best places for investors to park their money right now,” Russo said. “At the end of the day, there always needs to be housing for someone. That is why I think that apartments are almost bullet-proof for investors.”

And those owners who are willing to get creative? They can still survive in today’s multifamily market, Russo said.

That’s because the multifamily sector, despite the challenges it faces, re-

Because of the housing market challenges, the demand for apartment units throughout Michigan remains high.

Russo said that demand for apartment units is even higher today than it was in 2021. This makes sense if you look at interest rates. In 2021, homebuyers could qualify for a mortgage loan at an interest rate of 3.5%. There was more incentive to buy because mortgage dollars came cheaper.

Those days are gone. And as Russo says, those 3.5% mortgage interest rates – or lower – probably aren’t coming back.

“I think the correction in interest rates has happened,” Russo said. “I didn’t think we’d see rates near 8%. But I think things are going to normalize. I think rates will eventually come down.

I don’t have a crystal ball, but I do think we will see some improvement. I just don’t think we’ll see rates as low as they were in 2021 again.”

Russo says that creativity is the key for getting deals done today. For instance, multifamily owners might have carports on their property. They might consider charging renters for using them each month, a way to create a

TRUST IS THE FOUNDATION OF EVERY DEVELOPMENT www.conor.com

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A development shutdown? Not for Indianapolis’ The Garrett Companies

By Dan Rafter, Editor

The Hangar, a multifamily community in Greenwood, Indiana, developed by The Garrett Companies.

T

hese are challenging times for commercial developers, even those specializing in sectors that had been hot before interest rates began rising in 2022. But that doesn’t mean that all developers have put a halt on new projects.

Consider The Garrett Companies, a real estate company based in the Indianapolis suburb of Greenwood, Indiana, that specializes in multifamily investments, development, construction and asset management. The Garrett Companies announced a 167% increase in completed developments in 2023 when compared to 2022.

So far this year, The Garrett Companies completed eight projects across five states and has 27 active construction projects currently in operation across the country.

We spoke with Eric Garrett, chief executive officer of The Garrett Companies, about his company’s busy year and the steps developers need to take to navi-

gate the challenging commercial real estate landscape.

Here’s what he had to say.

It seems like The Garrett Companies has had a busy year so far even with today’s high interest rates when it comes to completed developments and new projects.

Eric Garrett: Some of it has to do with timing. Some of those deals should have been closed last year, but delays bumped them into 2023. But still, the activity has been strong for us. We’re excited about next year, too. We have a backlog of good projects that we will start closing on in the first quarter of next year. Next year, we are on pace to duplicate what we did this year or even surpass it by a few projects.

projects have mixed-use components, too. They are spread out throughout the country. We have several projects in Colorado and Phoenix. We have projects in Florida, North Carolina and Tennessee. Our projects are spread out geographically.

Have higher interest rates made developing multifamily projects more difficult?

What kind of projects has your company completed this year?

Garrett: It is more challenging. It increases the budget of a project significantly when you are looking at 8% interest rates. On the back end, a lot of people are trying to figure out whether interest rates will be in the same spot or higher 24 months to 30 months from now. Then you have what is happening with the banks. A lot of them aren’t lending. This is causing a lot of back-ups in development. At the same time, construction costs haven’t changed or have gone up, it’s a double whammy.

Garrett: We are talking multifamily projects with 200 units or more, ground-up development projects. Several of our

The difference, though, between what we are doing and what others are doing hinges on our ability to build these

projects at significantly lower costs with the same finishes and amenities that our competitors offer. The captive construction company that we have and the related companies that we have built relationships with help us keep our costs in check. That gives us an advantage in today’s market.

Do your relationships with other companies help you get materials for lower costs?

Garrett: A lot of companies have been diving into multifamily over the last few years because it is such a hot sector. But these companies are not quite as tenured in this sector. They don’t have the same vertical integration that we do. A lot of these companies are very good at finding sites on which to develop.

They understand the fundamentals of multifamily. But they are not real construction guys. If you don’t know how the sticks and bricks come together, it is difficult to add value on the construction side. They are often held captive by third-party construction companies or designers that overdesign buildings

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www.rejournals.com | November 2023 | Midwest Real Estate News or do things that aren’t necessary. That adds quite a bit of cost to a project.

A model unit at The Garret Companies’ Livery Modern Apartments in Lakeville, Minnesota.

Just as importantly is our ability to get materials from companies that buy direct from manufacturers across the world. We buy every material that goes into our projects, from the slab up. At the end of the day, we have essentially created an assembly line, controlling the means of production, buying the materials and building projects at a better cost.

Our average returns are often double those of our competitors. You go into the banks with that, that changes the debt deal and the amount of money that the banks will give you. That changes the profile of the deal and allows us to keep doing new projects.

When you talk about certain designers overdesigning buildings, what do you mean? What are some of the overdesigning issues that Garrett Companies might avoid?

Garrett: There are visible and invisible items. If you develop a building with multiple roof sizes or truss sizes, that is a cost factor. You have to strike a balance. You don’t want to build a plain box. You want something aesthetically pleasing. But you are not building a single-family home, either. Trying to put several hundred roof truss sizes in a multifamily building is overkill. By standardizing some of those different sizes, you can produce a run of trusses. That cuts down on costs and time. There are ways to add value to a project without taking away its aesthetic appeal.

What amenities are must-haves when you are developing a new apartment project?

Garrett: You have the items that everyone wants, like luxury pools, spas and cabanas. It seems like we are analyzing a new fitness center concept every month. One of the things we do differently, though, is that we are still building individual units that push over 1,000 square feet of living space. We can build efficiently, so we can keep that square footage. That allows people who work from home to be more comfortable.

They get more space to move about during the day. They are not cramped into a smaller unit.

Demand for apartment units has been strong for a long time. What are some of the factors behind this?

Garrett: The year 2008 was such a traumatic change to the housing market. They took a whole group of good renters and turned them into poor homeowners who didn’t understand mortgages. Then, because of the problems with all these mortgages, they turned those new homeowners back into renters. Since then, the mindset around the housing market has been different.

There are many people who have postponed buying their first homes. They realized that housing might not be the best investment for them. Then factor in COVID. People want flexibility. They don’t want to be tied to a home, say, in Indianapolis. They know that they can work remotely, so they might want to live in Scottsdale instead. They might want to live there for a couple of years before moving to Orlando. There are a lot of reasons why the thought process has shifted in terms of homeownership.

You must factor in interest rates, too.

The cost of renting is now lower than the cost of owning. Mortgage interest rates are so high, that people can’t afford to buy a house. Assuming that interest rates stay elevated through 2024 and into 2025, I think we will continue to see strong demand for apartments. I think we will see continued rent growth, too.

Today, many developers are struggling to bring multifamily product to the market. A lot of deals have been put on hold. That is bringing down the supply even though demand is increasing. New households are formed every day. They have to go somewhere.

Because of these factors, the demand for multifamily units is only going to increase.

Are there any new apartment projects that your company is working on that you are particularly excited about?

Garrett: I love all my children the same.

The thing I like the most, though, is the flexibility that we have. Because of how and where we build our projects, if we want to sell one, we can sell it. If we want to hold it, we can hold it. If we take all 28 or 29 projects that we are working on and keep them all for 15 years, I’d be happy with all of them.

26

HEALTHCARE

Midwest Real Estate News | November 2023 | www.rejournals.com

A bundling of challenges: The healthcare real estate sector is far from immune to today’s economic and staffing hurdles

By Dan Rafter, Editor

Skin Rejuvenation Clinic moved from its 7,567-square-foot space in the Southdale Medical center to a new 10,000-square-foot location on the ground floor of France Place at 3601 Minnesota Drive in Edina, Minnesota.

M

edical providers are increasingly moving into traditional office spaces today. That’s not surprising. As office vacancies continue to rise, landlords need to fill their empty spaces.

They might be willing to offer lower rents as an enticement.

And those lower monthly rents are just as attractive to healthcare providers as they are to any tenant.

This is just one trend that Steve Brown, founder of Forte Real Estate Partners

in Bloomington, Minnesota, has seen in the healthcare real estate market in which he has worked for more than 30 years. Brown says that this commercial sector is in the middle of several key changes.

And it’s up to the commercial real estate professionals working in this sector to not only understand the changes hitting the healthcare industry but adapt to them. It’s the only way for CRE pros to serve their healthcare providers.

A changing healthcare market Forte Real Estate Partners focuses on three primary commercial asset types, office, industrial and healthcare.

Brown said that healthcare real estate work is keeping Forte busy today. But this work is less of the straightforward transactional work that Forte took on 10 years ago. Today, Forte is handling more non-traditional work for its healthcare clients.

This means that Forte is spending more time on strategic facility planning for

its clients. That’s especially true today as healthcare providers juggle the challenges of higher interest rates with the need to open new medical office buildings, ambulatory care centers and free-standing medical clinics to better serve their patients.

“We have been very busy from the standpoint of helping our clients understand today’s market,” Brown said.

“Historically, when we had issues that impacted the healthcare segment, it was usually one issue. Back in 2008, our clients faced one major economic issue. In our world right now, though,

HEALTHCARE 27

www.rejournals.com | November 2023 | Midwest Real Estate News there are several factors that are impacting the healthcare field.”

Steve Brown

Rising interest rates have had a major impact, Brown said. The higher costs of borrowing money are making it more difficult for healthcare providers to take on needed expansions.

Then there are supply chain issues. It is still difficult for contractors to get all the materials needed to build new healthcare facilities. This means it takes longer to build new clinics and medical office buildings.

“If you are doing new construction and you need switchgear, it might take two years to get that equipment,” Brown said. “That throws a major crimp in your schedule. It is challenging trying to get physicians groups to focus on the long-range planning it takes today to build a new facility.”

Then there are the staffing issues that medical providers face. Following the COVID pandemic, a high number of nurses and doctors have left the medical field. That makes it difficult for medical providers to staff all their facilities and might cause some to put expansion plans on hold.

Some healthcare providers have hired traveling nurses to fill the gaps in their staffing. That is a solution, but it’s not an inexpensive one, with traveling nurses commanding high salaries.

This, too, can eat into the budgets of medical providers.

Brown says that healthcare real estate is now a food group by itself, joining the traditional asset classes of office, retail, industrial and multifamily. REITs today, then, are focusing more on healthcare real estate, and the investors that make up these REITs want higher profits. This puts additional financial pressure on healthcare providers.

“All these issues are bundling up on each other,” Brown said. “It’s an ‘aha!’ moment: It’s not just one issue that we are facing in healthcare real estate, it is multiple ones.”

Healthcare providers moving into traditional office space Brown said that many healthcare providers in the Twin Cities area are moving into more traditional office spaces, space that wasn’t initially designed for medical users.

Brown points to a surgery center that Forte recently helped move into a traditional office building. The center featured plenty of parking, a plus. The visibility, though, was not as good as what medical providers usually enjoy. But back on the positive side, the move was, as Brown says, an economic homerun for the office building’s owner and a good value for the tenant.

In this case, the positives outweighed the negatives for the medical client, Brown said.

Part of the reason for this? The costs of building new facilities have risen so quickly that healthcare providers are looking to save dollars by moving into existing office space. And with vacancy rates so high in the office market today, healthcare providers are often finding lower rents by moving into space that has never housed medical uses before.

Brown said that Forte Real Estate Partners recently worked with five healthcare clients that moved into traditional office space. These tenants paid what Brown said were good rates for landlords used to traditional office rents but were a discount for the rents that medical users typically pay.

The challenge, though, is that not every traditional office space works for medical users. There needs to be enough parking for patients. Medical users also need easy access for their patients, meaning that their offices and clinics must be easy for patients to find. It helps, too, if these spaces are located directly off major highways or thoroughfares.

“This is something that was tried in the past, back in the ‘80s and early ‘90s,” Brown said. “Some of these moves are more successful than others. There has to be a strategy in place. Does the whole building have to be medical uses or is it OK if there are multiple types of users in a space? Does the building have adequate parking? You can’t go into a move to traditional office space blind.”

And that’s where Forte comes in. Forte works closely with its medical clients to make sure that they are moving into a space that will work for their practices, whether that space is a traditional medical office building or a space that has never been home to medical uses.

The biggest issues that medical providers face when moving to traditional office space are parking, infrastructure and the need for a high capacity for HVAC and plumbing, Brown said.

If a traditional office building overcomes those challenges? Then the space might be a good fit for a medical user, he said.

“Those are the big issues,” Brown said.

“If you go into a deal without knowing that or understanding these challenges, it could cost you a lot of money.”

Another good example of a medical provider successfully moving into traditional office space? Forte helped Skin Rejuvenation Clinic move from its 7,567-square-foot space in the Southdale Medical center to a new 10,000-square-foot location on the ground floor of France Place at 3601 Minnesota Drive in Edina, Minnesota.

Brown said that the new space boasted plenty of positives for the clinic.

The building offered a first-floor location. Skin Rejuvenation Clinic has its own entrance at the property, and the clinic gets its own sign above the door.

The building is also in a location that is easy to find and access.

As Brown says, it was a wonderful fit and a good example of a successful medical provider move to traditional office space.

Staying put brings its own challenges Because of the higher costs to build today, many healthcare providers that might have moved are opting to say put and remodel their existing space to better serve their patients.

This, though, comes with its own set of challenges.

It’s expensive to build new. But the ris-

ing costs of both labor and materials mean that it is expensive to remodel, too. Remodeling also puts strain on staffers and patients if a clinic or office is trying to remain open during renovation work.

Brown said that the key to a successful remodel is for healthcare providers to hire talented architects and contractors. These professionals can then break down the project for a medical provider, outlining when each phase of construction should occur to generate the least amount of disruption.

“Even though the cost of renovating a space has increased, this is still a far more affordable option than building new space,” Brown said. “Renovating or building new space is a delicate balance. You want space that is professional and clean but not space that is ostentatious or overboard. You want to have an architect that understands that and can design a space that looks nice but is not overdone.”

A recovery from the pandemic?

Healthcare providers suffered during the pandemic, often cancelling elective or non-essential procedures.

Today, patients have returned. But that doesn’t mean that healthcare providers aren’t still suffering from the pandemic’s impact, Brown said.

He pointed to the staffing challenges that healthcare providers face. There simply aren’t enough nurses and physicians to meet the demand for medical services today.

“Where did all the people who were working go?” Brown asked. “It’s not just nurses, either. Staffing in general is hard.”

At the same time, medical providers that lost money during the pandemic years are now scrambling to boost their bottom lines. That means many are operating on razor-thin margins.

Many of these healthcare providers are also operating in older buildings that need upgrades.

With the financial challenges these providers face, will they move to new space, renovate existing space or remain in outdated facilities to save money? Brown said that the healthcare real estate industry is waiting to see how it all plays out.

28

BUILT-TO-RENT

Midwest Real Estate News | November 2023 | www.rejournals.com

The boom in built-to-rent single-family housing: What’s behind the growth in this housing type?

By Dan Rafter, Editor

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ne of the fastest-growing segments of the U.S. housing market?

According to recent research from Berkadia, it’s built-to-rent single-family homes, homes that look like traditional single-family residences but are built to be rented, not owned.

A new report from Berkadia, Single-Family Rental & Build-to-Rent: The Emergence of a Leading Class, finds that developers are boosting the supply of single-family housing in the United States that is built for renters, not owners.

And Berkadia’s researchers only expect more built-to-rent single-family homes to pop up across the country in the coming years.

What’s behind the growth in built-torent single-family housing and why are so many renters choosing these properties instead of traditional multifamily properties? We spoke with Jeff Coles, vice president of client services at Berkadia, about the growth in the build-to-rent market and why this real estate model is gaining in popularity.

Why has built-to-rent housing become so attractive today?

Jeff Coles: It really starts as a response to the changing lifestyle needs of Millennials, Gen Zers and even Baby Boomers.

Millennials are reaching major life milestones. They have needs that require housing products. But they are hampered by a lack of savings.

Single-family homeownership might not be attainable to them. It can be difficult for Millennials to save for a home. Home prices are high. Mortgage interest rates are high. It’s hard to achieve the goal of homeownership, so many younger buyers are turning to single-family rentals.

At the same time, Millennials and Gen Z are renters by choice. They are transient in nature. They are the generation of commitment-free consumers.

They like the flexibility of renting.

Jeff Coles

Coles: As interest rates rise, mortgage interest rates typically do, too. Those higher mortgage rates push prospective buyers into the rental market. As borrowing becomes more expensive, that leaves less money for housing.

The overall cost of living goes up and that leaves less money for families for housing.

Baby Boomers are interested in single-family rentals, too. They like the financial flexibility that renting a home gives them. They like that additional liquidity that they normally wouldn’t have because it’s usually tied up in a home that they own. They like certain product types of built-to-rent properties, the horizontal, one-floor, ranchstyle properties. They don’t have to deal with stairs.

It’s added up to rising demand for builtto-rent housing.

Why are these renters choosing single-family homes instead of traditional multifamily properties?

Coles: Renters really like and expect a home-like feel and the finishes that single-family residences provide.

Built-to-rent single-family homes are built just like traditional for-sale single-family homes. They have the additional storage space that you don’t always get in apartment units. They

Are today’s higher interest rates boosting the demand for single-family rentals?

often have garages. They feel more like homeownership.

Then there are the amenities. Many of these built-to-rent homes are built in communities. They come with clubhouses, dog parks and that community feel. They have professional property management in place. The people who rent in these built-to-rent communities don’t have to worry about the property upkeep and expenses that come with homeownership, but they get many of the amenities and extra indoor and outdoor space that come with a single-family home.

Built-to-rent housing provides families with the opportunity to live in a higher-priced neighborhood with better schools. They might not be able to afford that neighborhood if they are instead buying a home.

In what parts of the country are you seeing more built-to-rent single-family housing?

Coles: That’s a tricky question. It comes down to the cost of land. Does the land cost provide the opportunity to build an affordable product that will meet the return requirements for investors?

Areas with higher housing prices have higher land costs that make it prohibitive for built-to-rent product.

BUILT-TO-RENT 29

www.rejournals.com | November 2023 | Midwest Real Estate News There has been a migration to the Sunbelt states because of employment growth. Costs are lower there, too. That sets the stage for the growth in built-to-rent housing. There is a demand for exurb living, too, in areas like Phoenix, Dallas, Southeast Florida and Charlotte. Those markets have all been successful ones for built-to-rent housing.

The Midwest is one of the larger areas where we are seeing a growth in builtto-rent single-family housing. This product works well in the Midwest.

Do you think the growth we’re seeing in this sector will continue?

Coles: I think so. It is a change in mindset and demands. There is the growth of this commitment-free consumer lifestyle that has permeated the Millennials and Gen Zers. Hybrid workfrom-home policies are here to stay, too. Families and households require workspace in their homes. That won’t change. Bult-to-rent single-family homes provide that extra space for workspaces.

As we continue to see a shortage in the supply of housing and a need for additional living space, a demand for this product type will remain.

Investors like this product type, too, right?

Coles: They do. The rent growth is higher than what we see in traditional apartments. There are higher occupancy rates for these properties and higher retention rates. Operating expenses are lower. All of this will continue to fuel investor demand.

Right now, built-to-rent homes are providing better returns and yields than probably any other asset class out there. There is also the potential to convert this type of housing into traditional for-sale housing in the future.

Say interest rates lower. There might be more demand for for-sale housing.

Owners then have the potential to convert this type of housing from rental to for-sale if that’s what the market demands.

What amenities are people who buy into built-for-rent homes looking for?

Coles: They want the look and feel of a home and neighborhood. That is first and foremost. They don’t want to come home to something that feels like a traditional rental product. They like walkability and a neighborhood feel.

They also like the extra space. If you give someone a garage, not only can that person park a car, he or she can store a lot of stuff. And when people store a lot of stuff? They’re not going anywhere else anytime soon. They are not going to move out in a year. They’ll typically stay two, three years or more.

A fenced backyard is even more important to them. If you give people a community feel with housing built like traditional homes with the type of modern fit and finishes that come with traditional single-family homes? That’s attractive to a renter.

Are built-to-rent single-family homes usually located in walkable areas close to shops and restaurants?

Coles: They often are built in communities that have the feel of an urban

neighborhood but in a suburban setting. It’s not like the traditional suburb where there are no amenities within walking distance. With these, there are usually mixed-use centers that are close by. That’s not the case everywhere, of course. Some are in suburbs that lack walkability. But a lot of these built-to-rent communities are developed within walkable neighborhoods.

Is new construction still taking place in this sector, even with higher interest rates?

Coles: They are still building. It comes down to the ability to access debt. That has absolutely become more difficult to do. The people who are going to be successful in this space are the ones who have projects that can come out of the ground in 2024 and 2025, the people who have been able to capitalize these projects despite the restrictions to construction lending. There is a need and demand for this type of housing. There is a lack of supply in this space. Those who can develop new products now will reap the benefits.

30

INDUSTRIAL

Midwest Real Estate News | November 2023 | www.rejournals.com

“The plumbing is clogged.” Industrial development, new construction faltering as interest rates remain high

By Dan Rafter, Editor

Hyde Development’s Northern Stacks Project in Fridley, Minnesota.

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hallenging times. That’s what the industrial sector is facing today in the Minneapolis-St. Paul market.

The culprit? High interest rates, of course.

This doesn’t mean that the Twin Cities-area industrial market is at a standstill. There’s still great demand from end users looking for industrial space throughout the region. That isn’t changing. What is slowing are industrial sales and new development, again thanks to high interest rates.

We spoke with Paul Hyde, co-founder of Minneapolis’ Hyde Development, about the challenges that developers face in today’s high-interest-rate en-

vironment. Here is what he had to say.

I’ll start with a broad question: How have high interest rates impacted the development of new industrial projects throughout the Twin Cities market?

Paul Hyde: Quite frankly, it’s been terrible. Typically, whether you are talking about an acquisition or new construction, developers take on 60% to 70% debt on a project. When so much of a project’s development is financed by loans, when interest rates move it has a significant effect on whether you can get that project done. A year ago, the rates were dramatically lower. And 18 months ago, they were even lower.

The higher interest rates have had a

cascading effect on industrial development.

Higher interest rates also drive depositors to take their money out of banks and invest it in something like a U.S. Treasury bond, which might be the safest investment in the world. They are almost paying 10% on the 10-year bond. If the banks, then, don’t have the deposits they can’t lend the money.

As a result, people aren’t starting new buildings because they can’t get loans.

They aren’t buying buildings because they can’t get loans.

We have counted on the superregional and regional banks to provide financing for real estate projects, whether new construction or acquisition. Now

that banks have no money and aren’t lending, there is no money available for developers to start new projects or for investors to buy existing projects.

Then the loans on the banks’ books aren’t getting turned over. The loan they made two years ago on a project isn’t getting sold or refinanced. This basically means that the primary entity that finances commercial real estate, the regional and superregional banks, are on the sidelines. In the capital markets piece, the plumbing is clogged, someone said. That’s a great explanation.

Are you hopeful that the Fed might be done with its rate hikes, or nearly done?

INDUSTRIAL 31

www.rejournals.com | November 2023 | Midwest Real Estate News Hyde: Whenever we get a little window of activity – we had a couple, one in January and another in early summer – and we think things are getting better, another jobs report comes out or a war starts in Gaza. If there was a deal you were working on and rates move violently again it blows those deals up.

For us, we are not starting any new projects. It’s not for a lack of leasing activity.

It’s just hard to finance a project when interest rates are in the 6% or 7% range when two years ago they were at 3%.

And when we do go after acquisitions and we make a bid, the rates keep rising.

As rates rise, our price goes down and the sellers pull the properties off the market because they are so frustrated with the low offers they are receiving.

They remember the prices they were getting a year or two ago.

Hyde Development’s Highpoint project in Denver.

Paul Hyde

Are there any indications that these challenges will lessen in the near future?

Hyde: That’s hard to say. On the building sales side we didn’t see much industrial product in the Twin Cities market during the first six months of the year. During the last two or three months, people have said that we might have seen the last rate increase from the Fed, things are starting to get better. We need to sell buildings and sell them now. Then the jobs report comes out and it’s not what people wanted to see, and rates keep going up. Buyers are saying that the prices they were offering in June or July are no longer possible because of that, so the owners don’t sell.

I do think rates will eventually go down.

We do hear from the experts who say that will happen next year. There is a presidential election coming up. There will be lots of political pressure to lower rates before the election. For us, we are trying to ride it out until 2025. That’s what we are thinking.

2025? That’s a long time away Hyde: It is a long time. We are fortunate because we have a business plan. We keep our buildings. We are still collecting rents and operating our buildings.

That side of the business is doing great.

We are just not developing anything new. Most development companies focus on building and selling buildings.

That model is strained in these times where there is no activity.

All that being said, this was needed and healthy. We were coming through a

“We have to focus on the future and the fundamentals while suffering through what is happening today.”

time in 2021 and 2022 when our costs to build a building went up 21% each year. The cost to build an industrial building went up 42% in those two years. I’d never seen that in my life. We couldn’t get switchgear, roof supplies, all the guts of a building. That, by and large, has been corrected. Cost escalations have flattened out. Lead times are better. That needed to happen. In that sense, these interest rate increases have helped.

The leasing activity is still strong. There will be more demand for industrial space with no new construction coming. That will lead to a much brighter market in 2025 and going forward. We have to focus on the future and the fundamentals while suffering through what is happening today.

Leasing activity is still strong throughout the industrial market?

Hyde: Yes. We have a project in Eagan called The Waters that we bought a year ago. We have been renewing some ten-

ants and leasing up some vacancy. That project is so active, it is hard to keep track of the tenants that are coming in to see the space. It is going well. We are fortunate that we bought this building at the right time and fortunate that our interest rate on that loan is a good one, that the fundamentals of the leasing market are still going well.

We are hopeful, based on the data we are seeing, that leasing activity will fill up whatever buildings are out there.

The amount of new industrial construction will go down dramatically. That will lead to an increase in rental rates and demand for new construction when the rates do start to come down.

The Twin Cities industrial market has been strong for a long time. What are some of the reasons for this?

Hyde: I have done this for 25 years. Historically, the diversity of our economy is what makes our market so strong. We aren’t captive to just one business or one industry. The diversity of the group

of businesses and industries here is what drives our leasing market. We have never been a market that overheats like you see on the coasts. We have a much healthier industrial market than other markets that threw up multiple million-square-foot distribution centers without any tenants based on a surge in ecommerce after COVID. That surge didn’t justify as much new industrial construction as some markets put up.

Historically, we have not had that overbuilding of spec space that you’ve seen in other markets. We were headed there, frankly, last fall. There was 10-million-plus square feet of spec construction planned or on the way.

With these interest rates, those projects have been put on hold, which was appropriate. There are still a couple of big spec projects that were designed poorly and not appropriate for the Twin Cities by out-of-town developers that need to get filled up. But they’ll fill up.

Our conservative approach to development will help us recover faster.

32

NIMBY

Midwest Real Estate News | November 2023 | www.rejournals.com

Worse than used-car salesmen? Survey suggests voters have little trust in developers

By Dan Rafter, Editor

D

o voters have a lower opinion of real estate developers than they do used-car salesmen? A new poll suggests that for most U.S. residents, this might be the case.

According to an October poll commissioned by the Academy of Citizen Engagement, 58% of voters in central Florida, where the poll was conducted, said that they distrusted real estate developers even more than they distrusted used-car salesmen.

The poll conducted in partnership with the National Survey Research Group, charted the responses from 400 reg-

istered voters in Lake County, Florida, considered a not-in-my-backyard, or NIMBY, hotspot in the greater Orlando area.

In more bad news for developers, 70% of survey respondents said that they agreed with the statement that “The stereotype of greedy developers is based on the perception of them maximizing profits at the expense of the people and the environment.”

“The reality is that developers have a huge trust problem with not only anti-growth opponents, but with the ‘silent majority’ that sees itself as progrowth,” said Patrick Slevin, founder of the Academy of Citizen Engagement.

A total of 64% of respondents said that the notice and hearing process favored developers at the expense of the community. The survey also found that 34% of respondents said that elected officials were too easily lobbied by developers while 32% said that developers didn’t care about their community.

The survey wasn’t all bad news, though.

The Academy of Citizen Engagement reported that nearly 77% of respondents said that they were more likely to trust developers that were transparent and engaged the community to find a win-win consensus. A total of 37% of respondents said that they would support a controversial project

opposed by a small group if it brought in new jobs and increased their property values.

“The research tells us that developers who decide to ‘fly under the radar’ can easily trigger negative perceptions and fan the flames of NIMBY opposition,” said Bill Lee, co-founder of the National Survey Research Group.

“There’s good news for smart developers who want to earn support from local stakeholders. The data clearly suggests a pre-emptive, purposeful citizen engagement initiative can earn the trust of stakeholders and make the difference in securing social support, while achieving political approvals for their projects.”

INDUSTRIAL 33

www.rejournals.com | November 2023 | Midwest Real Estate News

Going up (and up and up): JLL report details the rise of the urban multistory warehouse

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By Dan Rafter, Editor

hat can developers do when companies need warehouse space in tight urban locations? Why not

1237 W. Division will be Chicago’s first multistory warehouse when it opens in 2024.

build up?

In a recent report, JLL predicts that the United States will soon join locations such as Asia and India in “building up instead of out” to add more logistics space to crowded cities such as Chicago, New York and Miami.

And in news that’s important for the entirety of the Midwest, these multistory warehouses, which fall into the growing urban logistics space, might soon be popping up in smaller but still major cities across the country.

The reasons for this are clear: Ecommerce continues to grow. Customers are comfortable ordering everything from electronics and apparel to shoes, toys, fitness equipment and groceries online. And these same customers want their products delivered to them quickly.

Because of this, companies need warehouse space that is located close to these customers. That frequently means opening warehouses in urban environments, where space is limited.

Companies are increasingly turning to vertical construction to squeeze more warehouse space into smaller urban areas.

JLL’s latest urban logistics report, released Oct. 11, looks at both the history of multistory warehousing and its future. Not surprisingly, multistory warehouses are most common in Asia, where space in urban centers is limited.

JLL says that multistory warehouses have existed in Asia for at least two decades.

The tallest multistory warehouses are located in Hong Kong, where warehouses can stretch up to 22 stories.

Those are outliers, but, as JLL reports, it’s not unusual to see multistory warehouses in China, Singapore and Japan that stand at least five stories.

The main ingredient that sets these high-rise warehouse facilities apart is that there are loading docks on more than one level.

An example of this trend in the Midwest? Construction crews have broke ground on 1237 W. Division in Chicago.

Once complete next year, this warehouse will include 1.2 million square feet spread across two stories. The complex will include both rooftop parking and a five-story parking garage.

The center will include parking for 1,600 vehicles and offer 36-foot clear heights. JLL says that the facility will be located within a five-mile radius of a potential $2 billion in ecommerce sales.

Plenty of positives Why does JLL predict that these taller warehouse spaces will become more common throughout the United States?

They feature what JLL calls “agile architecture.” By building vertically, developers can maximize even smaller urban sites. Developers can also choose on which floors to have loading docks and whether to use buildings’ rooftops for parking or as an office space. Developers can get creative when they build up instead of out.

Then there is parking. By building vertically, developers can more easily add needed parking spaces to their warehouse facilities. JLL says that this is important even in urban areas.

Yes, big cities such as Chicago have public transportation. But even vertical warehouses will tend to cluster in the far corners of metropolitan areas, creating the need for workers to commute to the sites.

By placing parking on a top floor, developers can ensure that building employees have a place to stow their car even if the site on which the warehouse sits offers limited acres.

Delivery vehicles are changing, too.

While most deliveries are still made with large delivery trucks, deliveries from urban logistics buildings also rely on smaller, more nimble vehicles such as electric bicycles and scooters.

These smaller vehicles can travel down routes that are more challenging for larger cars or trucks to maneuver.

Multistory warehouses that rely on a range of delivery vehicle types, then, might become the norm in crowded urban areas.

But there are hurdles, too This doesn’t mean that developers won’t face challenges when trying to

add multistory urban warehouses to big cities.

Zoning laws are often outdated when it comes to warehouse space and major cities. Residents might not want warehouses in their neighborhoods, whether these spaces are vertical or horizontal. As JLL says, consumers want their packages delivered on the same day that they order them, but they don’t want the buildings that house their deliveries in their backyards.

Then there’s the question of land availability and prices. Even though developers don’t need as much land when building vertically, they still need to find sites appropriate for warehouse development. That can be challenging in urban areas. The availability for land for industrial assets continues to shrink across the United States.

Multistory warehouses also face competition from other commercial property types. As JLL reports, developers might propose building hotels, multifamily sites and retail assets for the same land that other developers have targeted for multistory warehouses. Neighbors might prefer a new Target or apartment building over a warehouse.

34

DETROIT

Midwest Real Estate News | November 2023 | www.rejournals.com

Woodward bound: An important and iconic Michigan motorway presents an intriguing and diverse range of retail opportunities

By Rick Ax, Farbman Group

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oodward Avenue is not just an important Michigan roadway, it is a historic and even iconic piece of Americana. The 27-mile-long artery running from Detroit to Pontiac was first paved road in America in 1909 and played host to the annual Woodward Dream Cruise, considered to be “the largest single-day automotive event in the world.”

Unsurprisingly, given its high profile and strategic location in the dynamic Southeast Michigan market, Woodward is also one of the most impactful and desirable retail corridors in the region. Woodward runs through some of the area’s most important Detroit suburbs and thriving neighborhoods, and understanding the unique dynamics of this fascinating roadway is essential for anyone looking for commercial real estate opportunities in the region.

On the road A popular location for a wide range of retail and restaurant tenants, space along the Woodward corridor is in high demand. Woodward doesn’t just run through some of the most dynamic communities in Oakland County but offers proximity and access to Midtown and Downtown Detroit.

In many ways, Woodward is the cultural axis of Metro Detroit, a coveted address that offers the prestige and visibility that many retailers desire.

That reputation as metro Detroit’s “Main Street” is arguably the greatest benefit for businesses: residents in the region immediately recognize a Woodward address.

Neighborhood nuance One of the distinguishing characteristics about Woodward is that it passes through or runs adjacent to so many different neighborhoods, from Ferndale and Royal Oak, to Claw-

For those retailers still wanting to take advantage of the coveted Woodward without the price, consider setting up shop on a secondary road. Hip important retailers have done very well with this strategy. One successful example is in downtown Ferndale where a retailer recently relocated a few blocks away from Woodward, gambling (correctly, as it turns out) that a loyal customer base would follow. The improved parking and lower rents at the new location were a better fit for the business.

Finding opportunities

son, Berkley and Birmingham. While these neighborhoods are more alike than different, and each has a strong sense of community, there are subtle neighborhood dynamics and nuances that retailers should understand when looking for a new location or expansion opportunity.

Retail businesses in Birmingham tend to be more upscale, in terms of their offerings and rental costs. Royal Oak is not too far behind, although a notch lower in terms of commercial rents. It’s a community with lots of downtown housing and many restaurants, along with a strong entertainment component.

Ferndale has a similar reputation as a blossoming community that traded the “up and coming” tag for “thriving” in recent years. Ferndale now boasts a growing selection of eclectic restaurants and retail options. The retail landscapes in Clawson and Berkley are more designed to appeal to residents.

While some retail and dining tenants in those communities have a regional draw, there is a noticeably more local character to those two neighborhoods.

Local factors All real estate is local, and the Wood-

ward commercial corridor is a great illustration of that. The character of the community and the retail ecosystem changes as you move along Woodward, not just from one town to the next, but from one block to the next.

There are lots of young families in neighborhoods like Huntington Woods, west of Royal Oak. Similarly, local street neighborhood parking ordinances have encouraged single-family housing in Berkley and subsequently attracted a high number of young families.

Retailers should also monitor significant construction projects along Woodward that could have an impact on the local market dynamics. One interesting update currently underway in downtown Ferndale is the Woodward Moves project: an initiative that includes road resurfacing, the reduction of travel lanes to create new bike lanes, improvements to curbs and shorter/safer pedestrian crossings.

Retailers looking for space on Woodward in downtown Ferndale, Royal Oak or Birmingham should expect to pay more per square foot than if they are located on a secondary road. That said, retailers need to be sure their business model is sustainable given that premium.

Parking availability varies considerably along Woodward, as does visibility for those located even one block from the main drag. Something as subtle as which side of the street you are on can make a difference for retailers.

Buildings along the northbound side of Woodward are lit up by the setting sun in the afternoon and evening, so businesses that cater to shoppers in those hours might benefit accordingly.

The same dynamic applies in reverse to the southbound side of Woodward, where coffee shops might be a better fit, for example. Because of those nuances, anyone looking for commercial real estate opportunities along Woodward would be wise to partner with a trusted real estate broker who knows the area. Not only do those brokers have the necessary relationships and regional networks, but Woodward is such a hyperlocal corridor that detailed neighborhood knowledge and insights play an outsized role in identifying and closing on promising opportunities.

Rick Ax is a retail broker with Michigan-based Farbman Group, a Midwest full-service commercial real estate firm. To reach Rick directly, email ax@farbman.com.

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The latest promotions, milestones and achievements in the world of commercial real estate

PEOPLE ON THE MOVE

Asset Preservation adds Missouri and Illinois division manager Greg Schowe has joined Asset Preservation, Inc. as the Missouri and Illinois division manager.

Schowe has over 15 years experience with IRC §1031 tax-deferred exchanges and every aspect of real estate transactions. He focuses on educating and servicGreg Schowe ing investors, attorneys, real estate brokers, agents, accountants and financial advisors throughout Missouri & Illinois .

Schowe’s exchange presentations are practical, thorough and feature many real-life exchange scenarios to illustrate a wide range of investment and tax strategies.

He has given continuing education through the St. Louis Association of REALTORS, Southwestern Illinois Board of REALTORS, Greater Springfield Board of REALTORS and many others. He thrives most when working closely with clients. He provides exceptional quality service, and his business and personal relationships cast a wide net across The Midwest and beyond.

Asset Preservation, a subsidiary of Stewart Title Company, is a leading national IRC §1031 qualified intermediary and is efficiently handling exchanges throughout the country. Combining a national title company as a partner has proven to be the approach of choice by astute investors. Asset Preservation is one of the most respected national qualified intermediaries in the United States and has successfully completed over 200,000 1031 exchanges throughout the nation.

Cushman & Wakefield names senior managing director in Nashville office Cushman & Wakefield has appointed Dave Sansom as senior managing director and leader of the property management group in Nashville, Tennessee, to assume the role of managing principal of the firm’s Nashville office as of Jan. 1, 2024.

Dave Sansom

As part of a strategic multi-year transition plan, Sansom will succeed Nashville’s current Managing Principal Doug Brandon who will shift to an Executive Director advisory role within the firm’s brokerage business and focus on overseeing

relationships with several large clients. Sansom and Brandon will work closely to ensure a smooth transition and build on the firm’s growth in Nashville.

Additionally, Senior Managing Director of Property Management Terri-Lynn Mitchell will support Sansom and the Nashville Property Management platform during this transition period. A successor for Sansom’s former role will be named and onboarded in 2024.

Sansom joined Cushman & Wakefield in 2021 to lead property management efforts in Nashville. His group is responsible for the oversight of maximizing value for commercial real estate portfolios at all stages of the asset lifecycle, including ground-up development, stabilization and lease-up, renovation and repositioning, refinancing and eventual disposition. He currently oversees a team of 160 professionals, across a portfolio of 36 million square feet.

Kansas City’s Newmark Zimmer bolsters brokerage team Matt McCauley has joined Kansas City, Missouri-based Newmark Zimmer as an associate on the retail team.

Matt McCauley

struction in the company’s Southeast region, where he has played an instrumental role in supporting the market’s aggressive growth strategy while also improving overall execution. Prior to joining Ryan, Stenman served as the CEO of a vertically integrated multi-family developer Scott Stenman where he had overall responsibility for construction operations, risk-management, profitability, schedule and quality.

Stenman is located in Ryan’s Tampa, Florida, office and is now a member of the company’s executive leadership team. He graduated from the University of Michigan College of Engineering with Bachelor of Science and Master of Science degrees focused on construction management. In addition, he earned a Master of Business Administration from the University of Michigan School of Business.

Founder of St. Louis’ KAI Enterprises earns inclusion honor

McCauley is from Overland Park, Kansas, and graduated from the University of Missouri-Columbia in May of 2021 with a bachelor’s degree in communication and a

minor in business.

McCauley is new to commercial real estate but has experience in the sales industry. McCauley recently worked with Pursuit Sales Solutions, a staffing and recruiting firm out of Dallas and Southern Glazer’s Wine and Spirits of America, the largest wine and spirits distributor in the United States.

Minneapolis’ Ryan Companies names chief construction officer Scott Stenman has been promoted to chief construction officer at Minneapolis-based Ryan Companies, a newly created position that will oversee all preconstruction and construction operations across the company’s 17 offices.

With a focus on continuous improvement, Stenman provides strategic leadership and oversight to ensure the company’s integrated project delivery system is successfully executed.

Stenman joined Ryan in 2020 as vice president of con-

Michael Kennedy, Sr. holding his award next to his son, KAI CEO Michael Kennedy, Jr.

Michael Kennedy, Sr., founder and chairman of St. Louis-based design-build firm KAI Enterprises, was honored Oct. 18 with a Lifetime Achievement Award during Construction Inclusion Week held Oct. 16-20 at Harris Stowe University in St. Louis.

Founded by McCarthy Building Companies in 2020, Construction Inclusion Week is an annual week-long, industry-wide effort to champion change and cultivate a more inclusive construction industry. Now in its third year, the event has grown exponentially with over 5,000 firms registered to participate nationwide.

The event’s Lifetime Achievement Award celebrates the exceptional standards of construction excellence, dedication and accomplishment in the St. Louis region over a sustained period of time. Surrounded by family, Kennedy and Karl Grice of Grice Group Architects were honored with the award on Oct. 18 at Harris Stowe

www.rejournals.com | November 2023 | Midwest Real Estate News | 37 University’s Emerson Performance Center in front of a crowd of minority AEC industry organizations and businesses.

Kennedy wanted to be an architect since age nine and became fascinated with construction watching homes being built in his Richmond Heights neighborhood designed by African American architect Charles Flemming.

Despite a high school guidance counselor advising him in 1963 that Washington University’s schools of architecture “only took the cream of the crop and no negroes,” the university reached out to Kennedy in 1969 as the Civil Rights movement gained recognition and invited him to enter the School of Architecture as a graduate student with a degree in another subject.

He then went on to study architecture at Washington University for an additional four years before finally became the first African American architect registered in the State of Missouri.

He founded KAI in 1980 from his home office and grew the business alongside his oldest son Michael Kennedy, Jr., CEO, into one of the largest minority-owned AEC firms in the country with a diverse workforce of over 150 employees at its St. Louis headquarters and offices in Kansas City, KS; Atlanta, GA; and Dallas-Fort Worth, TX. Over the course of his career, Kennedy and the KAI team have designed several notable St. Louis-area landmarks, including the St. Louis City Justice Center, St. Louis Metro Light Rail Stations, Clyde C. Miller Career Academy, Harris-Stowe’s William L. Clay Early Childhood Center, and the Downtown Gateway Transportation Center, among many others.

Grimsley managed Tarlton’s construction team on the Michael and Quirsis Riney Primate Canopy Trails exhibit at the Saint Louis Zoo, an award-winning, 35,000-square-foot expansion that brought lemurs, Old World monkeys and New World monkeys into eight new outdoor habitats. The exhibit allows guests to experience the primates from new vantage points, including a 200-foot-long winding steel boardwalk at treetop level. She also served as a guest panelist on “Creating Successful Exhibits,” an integrated, teambased exhibit development overview course hosted by the Association of Zoos and Aquariums.

An accomplished engineer with 31 years of construction industry experience, Grimsley joined Tarlton in 2012. She holds the LEED AP designation from the U.S. Green Building Council. Grimsley earned a Bachelor of Science degree in architectural engineering from the University of Kansas.

A staunch supporter of the construction industry and her local communities, Grimsley served as a board member on the St. Louis Chapter of the National Association of Women in Construction and chaired its strategic planning committee. She is a volunteer for the Missouri Gateway Green Building Council of the USGBC and plays a key role on Tarlton construction projects, providing educational lectures on industry-related topics.

Bradley Company adds broker to Indianapolis office Commercial real estate broker Matt Witsken earlier this year joined the Bradley Company’s Indianapolis office.

St. Louis’ Tarlton names project director Tarlton, St. Louis’ largest women-owned general contracting and construction management firm, has promoted Diane Grimsley to project director.

Grimsley has led Tarlton teams on a wide range of award-winning projects over multiple campuses Diane Grimsley for the firm’s institutional and healthcare clients, including Saint Louis Zoo, BJC HealthCare, SSM Health, Washington University School of Medicine and Washington University in St. Louis.

She is managing Tarlton’s work on the $30 million, 66,000-square-foot SSM Health Outpatient Center in O’Fallon, Missouri.

As a Tarlton senior project manager, Grimsley led the 4th floor inpatient bed fit-out for BJC HealthCare at Barnes-Jewish West County Hospital in Creve Coeur, Missouri. The team built out 27,000 square feet of shell space to create 32 acute care rooms, including seven intensive care units, two nurses’ stations, conference rooms, a family waiting room, supply rooms and other supporting spaces. Work also included upgrades to the mechanical, electrical and pneumatic tube systems.

Matt Witsken

Witsken brings an extensive sales background to his new position, with experience handling B@B, medical and residential real estate.

A former college athlete, Witsken relies on a tenacious attitude to excel in negotiations and overall brokering.

Milwaukee’s Irgens adds vice president to its roster Irgens has added Andrew Bainbridge as vice president – operations & continuity at the company’s headquarters on Innovation Campus in Milwaukee.

In his role, Bainbridge is responsible for guiding Irgens’ internal operations and ensuring Andrew Bainbridge quality results in a standardized, procedure-driven manner. This includes working closely with executive leadership to see that all operating departments, in all markets, are running efficiently and effectively while managing the resources needed for daily success.

His specific duties are focused on the areas of budgeting and planning, human resources, technology, risk management and office/personnel administration. He previously held similar operations roles at other professional services firms in the Milwaukee area.

Wisconsin’s The Boldt Company adds director of project development Mark Miller has joined Appleton, Wisconsin-based construction management firm The Boldt Company as its new director of project development for the firm’s National Power and Industrial group.

In this role, Miller will lead construction projMark Miller ects in clean energy sectors nationwide to encompass the solar, wind, hydroelectric, and biomass sectors.

Miller comes to the firm with a long career of leadership positions in the construction and engineering field. Most recently he was at Equix Infrastructure and Michels Corporation where he managed development and construction activities for renewable energy projects. Miller earned a degree in civil engineering/construction management from the University of Wisconsin—Platteville. He will be based out of the company’s Appleton office.

Columbus’ CREC Real Estate names VP of acquisitions Carson Hammer has joined Columbus, Ohiobased CREC Real Estate, LLC, as vice president of acquisitions to manage the firm’s acquisition efforts of multifamily properties in the Southeastern United States.

With over 10 years of multifamily experience Carson Hammer spanning acquisitions to operations, Hammer most recently served as Vice President of Investments for Salt Lake City-based real estate investment firm Sundance Bay, where he was responsible for $250 million in acquisitions.

Hammer held prior acquisitions roles at Phoenix-based commercial real estate agency Rincon Partners as Vice President of Acquisitions for the Southeast; and at multifamily investment firm, Passco Companies, based in Irvine, California. Gaining experience beyond the principal side, Hammer served on Greystar’s regional operations team, and Cushman and Wakefield’s multifamily sales team.

Hammer holds a Bachelor of Business Administration in Real Estate from Georgia State University.

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Midwest Real Estate News | November 2023 | www.rejournals.com

NEWS BRIEFS: The latest deals in the Midwest Newmark closes 447,000-square-foot lease renewal at U.S. Bancorp’s Minneapolis headquarters

Turney Town Plaza, a 168,062-squarefoot grocery-anchored community shopping center in Garfield Heights, Ohio, an east-side suburb of Cleveland.

Newmark has secured a 447,000-square-foot lease renewal on behalf of Piedmont Office Realty Trust, Inc. with U.S. Bancorp at its headquarters at 800 Nicollet Mall in Minneapolis.

With this, U.S. Bancorp reaffirms its commitment to its partnership with Piedmont and Minneapolis, the bank’s headquarters city for more than two decades.

Newmark Senior Managing Director Brent Erickson and Associate Director Callie Ronkowski, on behalf of Piedmont, serve as the exclusive leasing agents for the downtown Minneapolis office property. US Bank was represented by JLL. The parent company of U.S. Bank National Association, U.S. Bancorp signed a long-term lease renewal to maintain complete occupancy of its existing footprint. The Minneapolis-based financial holdings company and its workforce have occupied the tower bearing its name, U.S. Bancorp Center, since 2000, with Piedmont acquiring the building in 2003.

Craig Fuller, Erin E. Patton and Scott Wiles, senior managing directors in Marcus & Millichap’s Cleveland and Columbus offices, had the exclusive listing to market the property on behalf of the seller, a local private investor.

Patton | Wiles | Fuller of Marcus & Millichap sourced a private New York-based 1031-exchange buyer after a thorough marketing process that generated multiple offers. Favorable deal terms were negotiated on behalf of the Seller including a hard-money deposit at contract signing and compressed closing timeframe, providing surety of closing.

The buyer closed all-cash after a short 35-day escrow.

U.S. Bancorp

Garfield Heights

Turney Town Plaza is located at 4908 Turney Road in Garfield Heights, Ohio.

Anchored by Dave’s Markets, a 12unit local grocery chain, the Property was nearly fully percent occupied at the time of sale. The asset is located amongst very dense demographics along Garfield Heights primary northsouth arterial. Turney Town benefits from a variety of tenured daily-needs retailers, restaurants, and service-oriented tenants, including Sherwin-Williams, Advance Auto Parts, Huntington Bank, Domino’s Pizza, Rent-A-Center, H&R Block, and more.

Warren self storage

U.S. Bancorp Center is located at the epicenter of the Minneapolis CBD, situated at the main & main intersections of 8th Street and Nicolett Mall.

The TOBY International award-winning office tower, owned and managed by Piedmont, boasts a world-class tenant experience between its highly-amenitized work-play environment and unprecedented access to the robust offerings in Downtown Minneapolis.

Embodying the work-play office environment, tenants enjoy a robust amenity program including a 12,500-square-foot amenity space located on the top-floor with sweeping views overlooking Target Field and the Mississippi River, a modern fitness center with group exercise space, locker rooms and showers, state-of-the-art

Inland Private Capital Corporation delivers 807-unit self-storage property in Warren

conference rooms with technology available for reservations ranging from 2-100 guests; on-site Piedmont Office Management, 24-hour on-site security with controlled access to loading dock, bike storage and an underground parking garage. US Bancorp Center will soon welcome fine dining seafood restaurant – 801 Fish (opening this fall) and undergo a two-story lobby transformation to

include additional tenant collaboration lounges and an on-site coffee lounge to further create a hospitality-infused office environment.

Marcus & Millichap sells 168,062-square-foot community shopping center in Cleveland market Marcus & Millichap closed the sale of

Inland Private Capital Corporation and Devon Self Storage Holdings delivered an 807-unit self-storage property in Warren, Michigan, approximately 13 miles north of downtown Detroit.

The opening marks the eighth self-storage redevelopment delivery on behalf of an affiliate of IPC. Located off Interstate-696, the former 94,000-square-foot vacant manufac-

BRIEFS 39

www.rejournals.com | November 2023 | Midwest Real Estate News turing facility was converted into an 87,000-square-foot, state-of-the-art self-storage facility.

ings. Located in Milwaukee’s Brewer’s Hill neighborhood on the banks of the Milwaukee River, the property features a clubhouse with a fitness center, business center and clubroom, as well as garage parking and nearby access to shops, restaurants, breweries and cafes. As of the date of the sale, Trostel Square was 93 percent occupied.

Proscenium

Approximately 75 percent of the units offer climate-controlled space, with an interior drive through lane and management office. The parking area and unimproved land will be converted to exterior non climate-controlled space, which is expected to be delivered in late 2023.

In Brookfield, Norhardt Apartment Homes, at 1995-2145 Norhardt Drive, is a 72-unit property comprised of four two-story residential buildings and six detached garages. Nearby Norhardt Crossing, at 1930 Norhardt Drive, is a 139-unit property consisting of 10 residential buildings and one clubhouse featuring a fitness center, business center, community center and outdoor pool. As of the date of the sale, both properties were over 94 percent occupied.

CBRE sells 196-unit mixed-use development in Indianapolis market CBRE has arranged the sale of VER at Proscenium, a 196-unit, trophy mixeduse asset in the center of the affluent suburb of Carmel, Indiana, to the Sterling Group for an undisclosed amount.

No Cash Needed

CBRE’s Steve LaMotte, Jr., Dane Wilson and Ross Wettersten represented the undisclosed seller in the transaction.

VER at Proscenium is located at 1225 Veterans Way in Carmel and features studio, one- and two-bedroom floorplans. Amenities include a resort-style swimming pool, state-of-the-art fitness center, pet spa, virtual sports simulator, co-working space and the metro area’s only fob-activated resident beer tap. The community has two restaurants on-site: Wahlburgers and 101 Beer Kitchen, a third on the way, and the Indy metro’s prestigious salon and spa, Lux Lab Hair + Body.

Completed in 2021, VER at Proscenium is situated in the center of Carmel’s redevelopment and amenity zone with access to employment, shopping, restaurants, entertainment and the Monon Trail. It is located near the U.S. 31 corporate corridor, the second-highest concentration of office workers in Indiana with over 40 corporate headquarters. Carmel was recently voted the no. 1 small city in America

by WalletHub.

Trostel Square

JLL Capital Markets provides $57.27 million in financing for eight-building industrial portfolio in Minnesota JLL Capital Markets arranged the $57.27 million acquisition financing for an eight-building industrial portfolio totaling 941,564 square feet spread across Eagan, Brooklyn Center and Fridley, Minnesota.

Minnesota logistics portfolio

Bernard Financial Group closes $2.4 million loan for Missouri retail property

The lender, Symetra Life Insurance Company, is a correspondent of BFG. BFG will provide servicing for this loan.

Bernard Financial Group recently arranged a $2.425 million permanent life insurance company loan for a 9,820-square-foot retail property in Lake St. Louis, Missouri.

Inland Private Capital Corporation closes sale of three apartment communities in Wisconsin

The borrower is PS LSL LLC. The loan was originated by Dan Duggan with Bernard Financial Group.

Similar to many of IPC’s previous dispositions, this transaction provided liquidity to investors, while also providing investors with the option to utilize their sales proceeds to complete a subsequent tax-deferred exchange. In 2023, IPC has monetized approximately $193 million in real estate on behalf of its 1031 exchange platform.

Inland Private Capital Corporation recently brokered the sale of three multifamily communities in Milwaukee and Brookfield, Wisconsin.

IPC, through its subsidiaries that serve

JLL worked on behalf of the sponsors, a joint venture partnership between Capital Partners and Eagle Realty Group, to secure the five-year, 65% LTV, fixed-rate loan through a JLL correspondent life insurance company.

as asset managers, facilitated the sale of the properties on behalf of Milwaukee MSA Multifamily Portfolio DST, one of IPC’s 1031 investment programs.

The sale resulted in a total return to investors of 154.52%. Calculations are based on the aggregate amount of original capital invested in the properties.

Trostel Square Apartments, at 1818 N. Commerce St. in Milwaukee, consists of 99 units across two residential build-

The portfolio boasts an overall occupancy of 98.5%, with only 14,250 square feet of vacant space. The diverse property mix offers 16- to 30-foot clear heights and a 23-tenant multi-tenant roster. The Minneapolis/ St. Paul industrial market is comprised of 351 million square feet of rentable space and boasts an overall vacancy rate of 2.6%.

The JLL Capital Markets Debt Advisory team was led by Senior Director Bill Mork.

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Midwest Real Estate News | November 2023 | www.rejournals.com

Clayco relocates and expands St. Louis offices and operations center

chitecture and Design, a Minneapolis-based architecture firm, features design that is the perfect blend of bold and refined, energetic and warm, natural and colorful. The building includes more than 15,000 square feet of total amenity space focused on student well-being. The expansive facility will feature a wide array of modern amenities, including a coffee bar, club room, study rooms, fitness center, pet grooming area, pool, spa and dog run.

Clayco, a full-service, turnkey real estate development, architecture, engineering and construction firm, recently announced the relocation and expansion of its St. Louis offices and operations center.

The company, which currently has multiple offices in Overland, Kansas, and Clayton, Missouri, will move 580 St. Louis-based team members to a renovated facility at 8640 Evans Ave. in Berkeley, Missouri, next year.

Clayco new entry

Keystone Construction Company building 131,000-square-foot tubing manufacturing facility in St. Louis market

Subtext Purdue

The 230,000-square-foot office in NorthPark Development will accommodate space for over 1,000 employees as the company expects to add at least 400 additional team members in the next few years.

While Clayco’s corporate headquarters will remain in Chicago, the Berkeley office will serve as home for many of the company’s design-build construction functions, including operations, business unit leadership, architecture, process engineering, safety, IT, marketing, finance/accounting and talent management.

In addition, Concrete Strategies, Clayco Design & Engineering and Consolidated Distribution Company, all Clayco subsidiaries, will be headquartered in the new office. Other subsidiaries, such as Lamar Johnson Collaborative, CRG and Ventana, will have a meaningful presence in the new Berkeley office.

By centralizing its Missouri offices and committing to significant new job creation, Clayco is demonstrating its longterm commitment to the state and local community. The move signifies the company’s dedication to attracting and retaining top talent in the St. Louis area and building on the positive trajectory for the region. For example, the company’s Construction Career Development Initiative (CCDI) has supported over 150 St. Louis students to discover full-time employment in the trades and provided over $500,000 in scholarships to continue their academic pursuits.

Since its inception in 1984, Clayco has grown into a prominent figure across multiple disciplines as a fully integrated real estate and design-build construction firm. The company’s notable 13 recognitions in Engineering News-Re-

Keystone Construction Company has begun construction of the 131,000-square-foot headquarters and manufacturing facility for Tubular USA, a supplier of in-line galvanized pipe and tubing. The project is located within Phase Two of Spirit Valley Business Park in Chesterfield Valley in Chesterfield, Missouri.

The facility will replace Tubular’s two existing buildings in Weldon Spring, Missouri. It will feature offices, a steel fabrication manufacturing facility, warehouse space and room for future growth.

tubular

cord (ENR) attests to its industry leadership. At over $5 billion, last year’s impressive sales figure sets the stage for even greater accomplishments in 2023 as the company will approach $6 billion in sales. In addition to its Chicago headquarters and notable St. Louis area footprint, the company maintains offices in Phoenix, AZ: Greenville, SC; Culver City, CA — as well as a recently announced office in Birmingham, AL. The company also currently has projects in more than 45 communities and cities across North America.

Subtext breaks ground on 143-unit student housing development at Purdue Subtext has launched its second property at Purdue University, in West Lafayette, Indiana.

Subtext and Brinkmann Constructors, a national general contractor, hosted an official ground-breaking ceremony in mid-October for a 245,700-squarefoot student living project at 143 W.

Wood St. in downtown West Lafayette.

The project is slated to deliver in August 2025.

Located just outside the southeastern end of campus, the 143-unit, 449-bed new student housing development will offer a mix of studio, one-, two-, three- and four-bedroom units. The community sits on a 1.43-acre site with 156 parking spaces. Each of the fully furnished units includes private bedroom(s) and bathroom(s), high-speed internet, washer and dryer, controlled access, and designer finishes such as modern black accents, stainless steel appliances, and private terraces on select units.

As the demand for well-located, highly-amenitized student living continues to grow, the new complex will provide residents with quick and convenient access to both downtown West Lafayette and the greater campus community.

The building, designed by ESG Ar-

Tubular’s steel products are integrated into the architectural design to represent the brand. The architect is Gray Design Group. Engineering is being provided by Stock & Associates Consulting Engineers, Inc and Knapp Engineering. Construction is scheduled to be completed by June 2024.

Keystone built the infrastructure for the first phase of the 50-acre Spirit Valley Business Park in 2008 and has constructed 11 buildings within the business park. Work at Phase Two started earlier this month and includes mass grading, new streets and infrastructure for sewer, water, electric and gas. It will be completed in December.

Positioned across from the St. Louis Premium Outlets and next to the Spirit of St. Louis Airport, Spirit Valley Business Park provides convenient access to both St. Louis and St. Charles counties.

Currently, Keystone is completing a $6 million mixed-use building at 675 Spirit Valley West Drive within the Spirit Valley Business Park. The building features 40,000 square feet of flexible space, which can be divided between one to four tenants, and accommodates a

BRIEFS 41

www.rejournals.com | November 2023 | Midwest Real Estate News wide range of uses from warehouse, office, manufacturing, showroom and more. Keystone was the design-build contractor for the building core and shell and is now completing build-out of its own new headquarters. Keystone will relocate to the building by the end of this year. The architect was Dial Architects.

Current tenants of the first phase of Spirit Valley Business Park include robotic and engineering firms, contractors and healthcare suppliers, including Vermeer Midwest, Neff Power, Oaktree Products, Chesterfield Fence & Deck, Fresh Air Heating & Cooling and BELFOR Property Restoration, St. Louis Auto Detail and Thompson Price.

Morgan Properties buys 470-unit apartment development in Indianapolis Morgan Properties acquired Astoria Park Apartments, a 470-unit apartment community in Indianapolis.

With the addition of this community, Morgan Properties expands its Indianapolis portfolio to over 2,500 units.

The community is located within the fast-growing and high-income Hendricks County and is proximate to significant high-wage employers and universities. Situated on the west side of Indianapolis near the scenic Eagle Creek Park and Reservoir, Astoria Park Apartments is adjacent to various outdoor activity spaces for sports, cross-country skiing, hiking trails, and more.

Northville

The Darby at Briarcliff

P.A. Commercial closes corporate park sale in Michigan P.A. Commercial closed the sale of Northwood Corporate Park, a trophy office property outside of the CBD in Northville, Michigan.

The offering was 100% leased with a 6.4-year WALE (weighted average lease expiry) and recently closed for $5.65 million.

Located at 41700-41860 Six Mile Rd in Northville, this property consists of four single-story office buildings totaling 48,040 square feet in a tranquil, wooded area. Each building is approximately 12,010 square feet with a flexible design to accommodate single or multiple tenancies. Northwood’s long-term tenants include two law firms, an insurance agency, an engineering firm, medical arts, and other business services.

P.A. Commercial’s founding member, Peter Ventura represented the seller, Fausone Bohn, LLP, a long-time client who has owned the office park since 2012. Daniel Blugerman, Senior Associate, also from P.A. Commercial, brought the buyer, Manhattan Investment Properties.

Astoria Park

CBRE closes $88.5 million sale of Minnesota industrial portfolio Located at 1600 NW 38th St. in the Briarcliff West neighborhood, the community is minutes from the Waterwell Athletic Complex, E.H. Young Riverfront Park and the Village of Briarcliff for shopping and dining. Missouri River trails for walking and biking are just a five-minute walk away.

The Opus Group completes 255-unit multifamily development in Kansas City

Owned by Balboa Real Estate Partners, The Darby at Briarcliff includes two apartment buildings: a four-story building with 186 units and a three-story building with 69 units. The development includes 250 surface car parking spaces, 46 stand-alone garages and 78 carports, and several electric vehicle charging stations. There are also 120 covered bicycle storage spaces. Opus was the developer, design-builder, interior designer and architect and structural engineer of record for the project.

The Opus Group completed The Darby at Briarcliff, a luxury 255-unit multifamily development in Kansas City, Missouri.

Residents can choose from pet-friendly studio, one-bedroom, two-bedroom and three-bedroom apartment homes

The Buyer is a well-established office investor who asked for assistance in placing the proceeds from his 1031 Tax Deferred Exchange, which was the equity source for the purchase.

Situated besides lakes and lush landscaping, Astoria Park Apartments features community amenities such as an outdoor pool and poolside patio, fitness center, tennis courts, a fenced-in playground, dog park and pet washing station, and more. In-unit features include upgraded kitchens and appliances, large closets, and private patios or balconies. To further elevate the living experience for residents, Morgan Properties plans to invest nearly $4 million into renovations, including upgrading unit interiors, expanding amenities, and integrating smart home technology.

with private balconies and modern finishes such as wood-style plank flooring, granite countertops, kitchen subway tile backsplashes, stainless steel appliances and in-unit washers and dryers.

The Darby at Briarcliff offers a wide range of community amenities including a resort-style outdoor pool, resident lounge with billiards, private event space, fitness center with yoga room, patio with grilling station and firepit, work-from-home lounge with coworking and private office spaces, complimentary coffee bar, a pet spa and dog run.

The development is part of a master-planned community initiated by Charles Garney of Briarcliff Development Company. Over the course of two decades, the firm has revitalized what was once a 400-acre infill site by developing hundreds of single-family residences, apartments, commercial spaces and hotels.

CBRE has arranged the $88.5 million sale of a 941,564-square-foot industrial portfolio to Edina, Minnesota-based industrial real estate firm Capital Partners in a joint venture with Eagle Realty Group, a Cincinnati-based real estate investment firm.

The portfolio included eight buildings in Fridley, Eagan and Brooklyn Center, Minnesota, ranging in size from 72,268 square feet to 207,558 square feet.

Judd Welliver, Bentley Smith, Mike Caprile, Zach Graham, Ryan Bain and Joe Horrigan with CBRE National Partners represented the seller, PCCP, a Los Angeles-based real estate private equity manager, in the transaction.

The portfolio was 98% occupied at the time of the sale.

42 | Midwest Real Estate News | November 2023 | www.rejournals.com

ASSET/PROPERTY MANAGEMENT FIRMS AREA REAL ESTATE ADVISORS

4800 Main Street, Suite 400 Kansas City, MO 64112 P: 816.895.4800 Website: openarea.com Key Contact: Tim Schaffer, Founder & President, tschaffer@openarea.com Services Provided: 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.

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 Hillsv, 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

CONSTRUCTION COMPANIES/GENERAL CONTRACTORS

CENTERPOINT PROPERTIES

1808 Swift Drive Oak Brook, IL 60523 P: 630.586.8000 Website: centerpoint.com Key Contacts: Nate Rexroth, Executive Vice President, Asset Management; nrexroth@centerpoint.com; Danielle Radtke, Senior Vice President, Asset Management; dradtke@centerpoint.com Services Provided: CenterPoint Properties is an innovator in the investment, development, and management of industrial real estate and multimodal transportation infrastructure. CenterPoint acquires, develops, redevelops, manages, leases, and sells state-of-the-art warehouse, distribution, and manufacturing facilities near major transportation nodes. Our experts focus on port-proximate distribution infrastructure assets near America’s major population centers.

Company Profile: CenterPoint Properties continuously reimagines what’s possible by creating ingenious solutions to the most complex industrial property, logistics, and supply chain problems. With an agile team, substantial access to capital, and industry-leading expertise, we give customers a competitive edge to ensure their success — no matter how great the challenge.

GERSHMAN COMMERCIAL REAL ESTATE

150 N. Meramec Ave., Suite 500 St. Louis, MO 63105 P: 314.862.9400 Website: gershmancommercial.com Key Contacts: Chris Fox, CCIM, SIOR, President & CEO | Managing Principal, cfox@gershmancommercial.com; Molly Studer, Chief Operating Officer | Principal, mstuder@gershmancommercial.com Services Provided: Gershman offers an extensive array of commercial real estate services, including brokerage, landlord and tenant representation, investment sales, valuation advisory, market research, corporate services, property & facility management, project/construction management, client accounting and maintenance/engineering.

Company Profile: Gershman Commercial Real Estate is a full-service real estate firm providing comprehensive, personalized services to owners and occupiers of commercial property. With an over 75-year history in St. Louis, and firm leadership based locally, we are uniquely positioned as the longeststanding independently owned firm in the metro area.

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 2022 was $2.4 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

ALSTON CONSTRUCTION COMPANY

1901 Butterfield Road, Suite 1020 Downers Grove, IL 60515 P: 630.437.5810 Website: alstonco.com Key Contact: Robert Murray, SVP/ Regional Manager, RMurray@alstonco.com, 908.966.1306 Services Provided: Alston offers a diverse background of design-build experience, general contracting and construction management of industrial, commercial, healthcare, retail, and municipal projects.

Company Profile: Alston Construction’s success begins and ends with our approach to planning, scheduling, and choosing the right team. We have been adhering to an open and collaborative approach since our founding more than 35 years ago.

Notable/Recent Projects: Project Heartland 1.5 Million SF build to suit distribution facility for Proctor & Gamble in Morris, IL. Lakeshore Manor 210 unit senior living facility in Northwest Indiana. Dynamic Foods 3PL 500,000 SF build to suit distribution and packaging facility in Wilmington, IL. Brown Deer Distribution Center 420,000SF two building speculative distribution center in Milwaukee, WI. 106,000 SF meat packaging facility in Northwest Indiana.

BRINKMANN CONSTRUCTORS

16650 Chesterfield Grove Road, Suite 100 Chesterfield, MO 63005 P: 636.537.9700 Website: BrinkmannConstructors.com Key Contacts: Brian Satterthwaite, CEO, bsatterthwaite@brinkmannconstructors.com; Tom Oberle, President, toberle@brinkmannconstructors.com; Rebecca Randolph, Senior Director of Client Relations & Marketing, RRandolph@brinkmannconstructors.com Services Provided: General contracting services including design-build, design-assist, and construction management.

Company Profile: Brinkmann Constructors is an employee-owned construction company focusing on finding the best right answer to save clients money and time. From our offices in St. Louis, Denver, Kansas City, Richmond, Va., and Phoenix, Brinkmann works nationwide on construction projects in the senior living, multifamily/ student housing, warehouse/distribution, retail/mixed use, office, healthcare, and hospitality/ entertainment markets.

Notable/Recent Projects: Expo at Forest Park – St. Louis, MO – Transit-oriented development with 2 buildings totaling 457,100 SF with 287 apartment units, retail and parking; Signature at West Pryor – Lee’s Summit, MO – 250,000 SF multifamily apartment building with 184 units; 3000 Huron – Denver, CO – 354,000 SF mid-rise apartment building in downtown Denver with 300 units; Woodleigh Chase – Fairfax, VA - Three building, 618,000 SF senior living community with 262 units; Park Place Flagstaff – Flagstaff, AZ – 472,000 SF student housing development with 200 units.

www.rejournals.com | November 2023 | Midwest Real Estate News | 43 MCSHANE CONSTRUCTION COMPANY

9500 West Bryn Mawr Avenue Ste. 200 Rosemont, IL 60018 P: 847.292.4300 | F: 847.292.4310 Website: www.mcshaneconstruction.com Key Contacts: Mat Dougherty, PE, President, mdougherty@mcshane.com Services Provided: McShane Construction Company offers more than 35 years of experience providing design-build, design-assist and general construction services on a national basis The firm’s diverse expertise includes build-to-suit and speculative warehouse, distribution and manufacturing facilities, as well as multifamily, commercial and institutional developments.

Company Profile: Headquartered in Rosemont, Illinois with regional offices in Auburn, Alabama, Irvine, California, Phoenix, Arizona, Madison, Wisconsin and Nashville, Tennessee, McShane Construction Company provides comprehensive construction services on a local, regional and national basis for a wide variety of market segments. The firm is recognized as one of the Chicago area’s most diversified and active contracting organizations with a reputation built on honesty, integrity and dependability.

Recent/Notable Project: Industry Center at Melrose Park – the construction of three speculative industrial buildings in Melrose Park, Illinois. The new development incorporates a total of 651,617 square feet.

MERIDIAN DESIGN BUILD

9550 W. Higgins Road, Suite 400 Rosemont, IL 60018 P: 847.374.9200 | F: 847.374.9222 Website: meridiandb.com Key Contacts: 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 Profile: 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: Clarius Park Joliet Building #2, Joliet, IL - 906,517 sf speculative industrial facility for Clarius Partners. Commerce Park Chicago Building B, Chicago, IL - 602,545 sf speculative multi-tenant industrial facility for NorthPoint Development. Halsted Delivery Station, Chicago, IL - 112.000 sf package delivery station on a 17-acre redevelopment site for Prologis

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: Victor Construction Co., Inc. remains a family-owned and operated General Contractor.

Having been in business since 1954, our firm has extensive experience managing every aspect of interior construction for the corporate, manufacturing, industrial, and retail sectors.

Notable/Recent Projects: Owens + Minor Distribution – 600K SqFt distribution facility that involved a full LED lighting upgrade, new HVLS fans, 200K SqFt section that required new cooling for medical distribution, an office renovation of 20K SqFt, and a new exterior employee pavilion.

MULTIFAMILY FINANCE FIRMS COLLIERS MORTGAGE

(Colliers Mortgage is the brand used by Colliers Mortgage LLC and Colliers Funding LLC.) 90 South Seventh Street, Suite 4300 Minneapolis, MN 55402 P: 612.317.2100 Website: colliers.com (find us under services) Key Contacts: Key Contacts: Matt Rocco, President, matt.rocco@colliers.com; Hal Collet, COO, hal.collett@colliers.com; John Randall, Head of National Production, john.randall@ colliers.com; Tim Larkin, Senior EVP Agency Financing, tim.larkin@colliers.com; Gregory Bolin, SVP Commercial Financing, greg.bolin@colliers.com Services Provided: Colliers Mortgage offers a comprehensive and wide range of products and services designed to meet our clients’ financing, funding and capitalization needs. Our experts are available to help clients’ access federal agency loan programs, structure competitive financing packages for borrowers and lenders, or identify capital sources for capitalization requirements.

Company Profile: Colliers Mortgage is a full-service nationwide mortgage banking firm. We connect multifamily owners and developers with the appropriate financing and funding options to execute their project plans. We are one of the industry’s top providers of multifamily financing and are currently servicing in excess of $10 billion of loans.

Service Territory: Nationwide.

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

MARQUETTE BANK

1628 W. Irving Park Road, Unit 1D Chicago, IL 60613 P: 708.873.8639 Website: emarquettebank.com Key Contacts: Bill Hinsberger, Executive Vice President, bhinsberger@emarquettebank.com; Patrick Tuohy, Senior Vice President, ptuohy@emarquettebank.com Services Provided: Multifamily/apartment building lending for all Chicagoland. Fast, local decision making. Dedicated local servicing staff. Simple, no-hassle paperwork. Quick close. Flexible terms. All clients enjoy ZRent – an automated, hassle-free, no-cost way to collect monthly payments from tenants.

Company Profile: Marquette Bank has 20 branches, 2 loan offices and $2 billion in assets. Independently owned/operated since 1945. Offering clients full-service, banking, financing, insurance, trust and wealth management services.

MAVERICK COMMERCIAL MORTGAGE SUMMIT DESIGN + BUILD, LLC

1036 W. Fulton Market, Suite 500 Chicago, IL 60607 P: 312.229.4630 Website: summitdb.com Key Contacts: Adam Miller, President, amiller@summitdb.com; Deanna Pegoraro, Vice President, dpegoraro@summitdb.com; Jon Silvers, Business Development, jsilvers@summitdb.com Services Provided: Summit Design + Build, LLC is a provider of full service general contracting, construction management and design/ build construction services for the commercial, industrial, multifamily residential, office/tenant interiors, hospitality and institutional markets.

Company Profile: Located in Chicago’s Fulton Market and with regional offices in Tampa, FL, Austin, TX and North Carolina, Summit Design + Build has been involved in the design and construction of over 400 buildings and spaces totaling more than 10 million square feet over the firm’s 18 year history.

Notable/Recently Completed Projects: Eli’s Cheesecake (Industrial), 2217 Loomis (Industrial), 1436 W Randolph (Adaptive Reuse Hotel), 718 Main (Multifamily), Prenuvo (Medical TI), 5691 N Ridge Ave (Multifamily).

853 N. Elston Avenue Chicago, IL 60642 P: 312.268.6000 | C: 312.953.4344 Website: mavcm.com Key Contacts: Ben Kadish, President, ben.kadish@mavcm.com; Services Provided: Maverick finances all commercial real estate properties for builders, developers, investors and owner-occupied properties. For apartment loans, Maverick has access to every multifamily program available for property owners as we are a correspondent for Fannie Mae and Freddie Mac execution along with Freddie Mac small loan program. CMBS fixed and floating rate non-recourse loans available. Bank, portfolio, and debt fund non-recourse construction and permanent financing available on a national basis.

Company Profile: Maverick Commercial Mortgage, Inc. is a boutique firm focused on middle market borrowers for properties in Chicago and surrounding areas, with a focus on Illinois, Indiana, Wisconsin, Iowa, Missouri, Michigan, and Kentucky. We are a niche lending source for Manufactured Housing Community mortgages and portfolio loans across the country with fundings in excess of $80,000,000 for MHC product on an annual basis. Significant financings in 2023 include a multifamily construction loan for $12,125,000, an industrial building loan for $7,500,000, a hotel to multifamily conversion bridge loan for $5,400,000 and a multifamily term loan for $13,000,000.

Service Territory: Midwest for general mortgage loans, and national for MHC financing