3 Experts Talk the State of the Chicago Market
This development cycle is strong wherever you look. But what sectors are providing experts with their biggest successes? Today, we speak with three execs who'll speak at Bisnow's 7th Annual State of the Market event at the JW Marriott, Oct. 29, at 7am.
HSA CEO Bob Smietana (pictured) says his company’s strongest sectors these days are retail, industrial and healthcare. The availability of capital and low interest rates continues to be “combustible fuel” for a variety of deals. Bob expected an interest rate hike, and still does, so HSA used the current low rates as an opportunity to refinance its debt. Bob says HSA can now build that refinancing into pro formas on deals. He likes what he sees in the industrial sector, where construction remains strong and development is driven by the need for Class-A space from e-commerce, retail and pharmaceutical companies. Healthcare real estate is growing as it adapts to the ACA, and providers are adopting a retail model, competing with each other to reach patients in neighborhoods, instead of focusing on large campus models.
Bob says HSA is very active in retail, especially in the Milwaukee area. One project, The Mayfair Collection (shown), involved the conversion of over 1M SF of obsolete warehouse property into modern retail space. The first phase, featuring a Nordstrom Rack and Saks Fifth Avenue Off 5th, is 100% leased, and the second phase under development will be anchored by a Whole Foods Market.
Cushman & Wakefield executive managing director Chris Wood (pictured, with NelsonHill SVP Zach Pruitt) says companies relocating from the suburbs to Chicago will continue. Corporate tenants moving downtown have accounted for 4.5M SF in leasing the past four to five years, as companies are chasing younger workers with technological skills. Chris says investor interest is at record highs and wouldn’t be surprised if we ended 2015 with more than $8B in office sales. Chris also sees more discipline in development this cycle, thanks to conservative underwriting. He predicts Chicago will have 3M SF delivered by 2018, but the more controlled pace of development has allowed the market to avoid the missteps of previous cycles.
Newmark Grubb Knight Frank director of analytics Bob Bach (pictured) says construction activity relevant to inventory is as low as he’s seen in such a strong market, as lenders are more cautious about what they back than in the previous cycle. Bob says demand for NGKF’s consulting and corporate services is strong, and the company has made some solid moves in the past couple of years, with the acquisitions of Cornish & Carey Commercial, Frederick Ross and ARA. NGKF is looking for good brokerage team hires in key markets. To learn more, please join us at Bisnow's 7th Annual State of the Market event at the JW Marriott, Oct. 29, at 7am. To register, click here.
