Tom’s Recommended Reading for the Week
Check out the top news in Chicago commercial real estate before heading into the weekend!
- Chicago’s Suburbs Suffer from Companies’ Flight to CBD – As members of the millennial generation continue to choose downtown living, the companies that follow them may be the bigger story of the economic recovery. But this flight to urban cores is coming at the expense of suburban class-A office parks.Suburban Chicago’s 155-million-sq.-ft. office market, which now has approximately a 23 percent vacancy rate, shows a continued struggle for relevancy. The Windy City’s suburbs experienced 1.2 million sq. ft. of negative space absorption in the first quarter, with demand stunted in part because large firms were either packing up and moving downtown or consolidating multiple uses in single locations. The moves included Motorola Mobility’s removal from 1 million sq. ft. in Libertyville, Ill. to the Merchandise Mart in the Chicago Central Business District (CBD), and Capital One leaving 200,000 sq. ft. in Mettawa to move to the former United Airlines space at 77 West Wacker… NREI
- Energy, Jobs Loom Largest as CRE Issues – The number one issue affecting commercial real estate in the near and long term? America’s growing energy independence, says the Chicago-based Counselors of Real Estate, which put it at the top of its annual Top Ten Issues Affecting Real Estate list, released Wednesday. Other issues in the association’s top 10 list this year: jobs, millennials, healthcare, globalization, water supply, the capital markets, housing, manufacturing and agriculture. “The list reflects growing economic and political turmoil, changing demographics and the lifestyle choices of an emerging generation, rising energy independence in the United States and a strengthening job market fueled in part by massive changes in the delivery of healthcare,”… Globe St.
- Four new hotels under way in Schaumburg – The long paralyzed growth of the hospitality industry in Schaumburg will break its shackles this summer as construction gets under way on four new hotels. Final approval is scheduled Tuesday for an extended-stay TownePlace Suites and a short-stay Fairfield Inn & Suites to be built side by side along National Parkway, near Higgins Road and the Tilted Kilt restaurant. A 93,000-square-foot Cambria Suites hotel delayed by economic concerns since its approval in 2006 has changed to a Radisson hotel and will break ground next month… DailyHerald
- Office investor doubles down on Monroe Street with $122 million buy – A Florida office investor is paying about $122 million for a 29-story Loop tower next to another office building it already owns. Real estate fund manager Beacon Investment Properties LLC is working to finalize a deal in which it would pay about $196 per square foot for 230 W. Monroe St., which is about 32 percent vacant, according to people familiar with the transaction. Although it is a relative newcomer to Chicago, Beacon is quickly gaining familiarity with the neighborhood around the 623,524-square-foot tower, which was completed in 1971… Crain’s Chicago
- Incremental Improvements in the Office Market Are No Longer a Surprise – The national vacancy rate for the office sector fell to 16.8 percent in the second quarter, a 10 basis point decline over the first quarter of the year. This is in line with trends witnessed over the last three and a half years. Vacancies peaked at 17.6 percent in late 2010, and since then any recorded declines were no larger than 10 basis points. It has certainly been a slow recovery, but quite in line with expectations, given an economy that has been growing at an average of 2 percent per year since the end of the recession. On a slightly positive note, net absorption registered its highest quarterly increase since late 2007, with occupied stock rising by 9.8 million sq. ft… NREI