Ryan Companies is making a splash in a highly valued suburban Chicago office market.
GlobeSt.com has all the details of the Minneapolis-based CRE firm’s purchase of 11 acres at the I-88/I-294 interchange in Oak Brook. Plans call for a combined office and medical campus complete with structured parking.
As Tim Hennelly, president of Ryan’s Great Lakes region, told GlobeSt., “This acquisition continues our strategic approach for Ryan to be a leader in delivering complex, signature developments in proven markets and asset classes throughout the Chicago metropolitan area.”
Location is a key part of the transaction, which proves there are still strong suburban markets capable of attracting development. Vacancy rates for class A properties in Oak Brook are low (per NAI Hiffman’s year-end office market report), making the type of office space Ryan plans to develop extremely attractive.
Suburban Pricing on the Rise — Want to invest in the downtown area of a top suburb? You’re probably going to pay for it. Investors are paying higher-than-average prices for the best suburban properties, recognizing that proximity to jobs, amenities and transit make them attractive options. Millennials and older baby boomers are responsible for driving the trend. (NREI Online)
Investment Outlook — Is there such a thing as too much buying in the world of commercial real estate? At least one expert asked himself that question after reviewing the Colliers International Global Real Estate Outlook report, which found that more than half of the 600 investors it surveyed plan to increase their allocation to real estate in 2016. (Real Money)
Listing Option for Small Tenants — If you’re a small tenant who has wished finding office spaces was as easy as ordering a cab or setting up an online date, meet Crelow, a Minneapolis-based tech app. CEO and co-founder Jim Simpson described Crelow as “an eHarmony or Uber or Priceline.com for office space.” There are no listings on Crelow. Instead, the tenant lists information about itself and hopes to make a great impression to attract landlords. (San Jose Mercury News)
Buy it online. Pick it up in the store. This new twist on e-commerce is taking hold with many retailers, but is it working? A new report from Retails Systems Research/SPS Commerce reveals that a growing number of retailers — including giants like Walmart, Lowes, Home Depot and Target — are offering customers a buy online, pickup in the store service.
According to the report — reviewed by Bisnow here — 61 percent of retailers offered a ship-to-store option as of September of 2015. That’s an even larger majority than the 53 percent of retailers who offer a 2-day delivery fulfillment option.
For retailers, the benefit of this strategy is twofold. The shipping fees for delivery of online purchases can be enormous, even for high-volume retailers. A ship-to-store option can bring those expenses down. It also gets customers in the door of a brick-and-mortar store, where they are more likely to make impulse buys.
Consumers appear to be warming up to the idea. A survey by UPS found that 38 percent of shoppers will now choose a ship-to-store option. That’s an uptick of 3 percent from 2014, with the potential to grow even more in the years ahead.
The Dangers of Ship-to-Store
The Ship-to-store strategy is not foolproof, however.
Just last year, a JDA Software Group Inc. survey of more than 1,000 U.S.-based online shoppers revealed some troubling numbers. Of the 35 percent who opted for a ship-to-store option in the previous year, 50 percent reported having problems retrieving their purchases.
This approach only works if it is convenient enough that it doesn’t drive customers away. The ship-to-store strategy can be an excellent tool, but only if the stores are staffed to handle the additional volume.
No disrespect to Peyton Manning and the champion Denver Broncos, but everyone knows the commercials are the star of Super Bowl Sunday. There was a lot of variety, with Amazon making its Super Bowl debut, Mountain Dew causing a stir online and a series of real estate commercials.
These commercials represent a significant financial investment — it’s been reported that CBS set its base rate for 30-second advertisement at $5 million — so we rounded up the best of the bunch. What’s your favorite?
Amazon produced one of the most talked-about commercials of the night, packing in the star power with Alec Baldwin, Dan Marino, Missy Elliot and Jason Schwartzman. The spot also starred the Amazon Echo, a product that can “stream music, order things and … turn on the lights.” And as a bonus, viewers got to see Baldwin lob insults at Marino. National treasure, indeed.
The mission: Make getting a mortgage sound cool. Quicken Loans aimed at younger homebuyers with this 60-second commercial for its new Rocket Mortgage phone app. “What if we did for mortgages what the Internet did for buying music, plane tickets and shoes?” the lender asks. The central thesis is that a boost in home buying — brought on by the simplicity of the Quicken Loans app, of course — will strengthen other sectors of the American economy.
Puppy. Monkey. Baby. This commercial was, frankly, terrifying. But it did get people talking. Of course they were mostly talking about the Puppy Monkey Baby and not the product, which was Mountain Dew (in case you didn’t notice).
Here’s one for the multifamily crowd. Actor Jeff Goldbloom returns in the latest installment of this well-known ad campaign for the online apartment listing service Apartments.com. In this commercial, Goldbloom’s Brad Bellflower plays the piano and sings “Movin’ On Up,” the theme song from the TV show “The Jeffersons,” as he’s being raised (by crane) up the side of an apartment building. At one point, he even meets George and Weezy … just not the George and Weezy you’re probably expecting.
Actress Elizabeth Banks stopped by to remind you that if you don’t use Realtor.com‘s app, you don’t like “sunshine, three-day weekends or puppies.” Shame on you.
Quarterback Roger Staubach won two Super Bowls with the Dallas Cowboys.
Sunday’s Super Bowl at Levi’s Stadium in San Francisco promises to be a matchup of quarterbacks headed in opposite directions, with rising star Cam Newton and the Carolina Panthers taking on aging legend Peyton Manning and the Denver Broncos.
Las Vegas is siding with Newton, making the Panthers a 5.5-point favorite as of Thursday evening. But another quarterback legend — two-time Super Bowl champion Roger Staubach of the Dallas Cowboys — teamed with CRE experts at JLL to make his own prediction.
Is Staubach taking the favorite? Is he calling for Manning to have one final triumph? Click hereto hear the former Super Bowl MVP make his case for the winner of Super Bowl 50.
18-hour cities: The rise in interest among markets like Austin, Denver, and San Diego was detected in last year’s report, and ULI sees that movement outside of 24-hour gateway cities continuing.
Moving to the suburbs: Within gateway markets, rising prices are leading investors to consider suburban opportunities. Millenials may favor downtown areas and urban environments now, but it’s only a matter of time until marriage and family push them to the suburbs. Suburbs that also offer the benefits of an urban setting should do well.
Office strength: Look no further than the office sector for signs of continued economic recovery. Office jobs have accounted for more than one third of the employment gain, bringing vacancy down and pushing rents up. That’s a trend that should hold in 2016.
Moving forward: Home ownership rates dropped drastically during the global financial crises, settling in at 63.4 percent in the second quarter of 2015. ULI expects the future housing to be shaped by a necessity to improve housing options for everyone.
Keep an eye out for more on ULI’s findings in the weeks ahead.
Three fast-rising cities have broken into the top five of the annual City Momentum Index published by brokerage firm JLL and reported by GlobeSt.
The City Momentum Index highlights the top cities in the world for creating environments that attract business, technology and foreign investment. Innovation-rich cities dominated the top 10, illustrating the importance of building an economy through technology and creating new businesses.
Boston ranked second nationally — behind Silicon Valley, CA —and fifth globally. Now, thanks to record rent growth, its lowest vacancy rate in eight years and strong global investment, Boston has given the United States two cities in JLL’s top five.
“This year was further recognition that Boston is one of the most important ‘innovation hubs’ in the world,” JLL New England research manager Lisa Strope told GlobeSt.com.
The City Momentum Index is published annually. To arrive at its rankings, JLL studied 120 global cities and used 37 social and economic indicators.
Much of the conversation centered on which multifamily markets will do well in terms of transactional activity in 2016. Multifamily performance has been strong in most markets during the economic recovery. But there are a few places to watch as investors continue to seek out rent growth and low vacancy rates.
Multifamily investment sales set records in 2015.
Multifamily investment sales set records in 2015.
Start with the old standbys New York, Washington, D.C., Miami and San Francisco. Bryan Sullivan, VP of acquisitions and investment at the Habitat Co., said those primary markets are still pulling in institutional and foreign capital. That’s especially good to see in the case of Washington, D.C., which underperformed in the first half of 2015 before seeing a drop in vacancy rates and some mild rent increases. Its multifamily market is on the mend.
Investors will also look to changing markets like Denver, Chicago, Atlanta, Charlotte and Nashville. What makes them changing markets? An influx of young professionals and companies that has legitimized some overlooked neighborhoods. Sullivan cited the example of Chicago’s West Loop, which has seen its growth start to accelerate.
As per usual, Millennials will be a factor. Gary Goodman, SVP of Acquisitions at Passco Cos., made a point to highlight Southeastern markets like Atlanta, Nashville and Tampa as especially appealing to that demographic. As a result, they are expected to be strong multifamily markets. These are trends we’ll keep an eye on!
New capital is entering the real estate market. Where will it end up?
Money is flowing into the U.S. real estate market, and that trend is expected to continue in 2016. The big question: Where will all that new capital go?
Total acquisition volume for the 12 months ending June 30, 2015, was $497.4 billion (up 24 percent year-over-year), according to the 2016 ULI Emerging Trends Report. That type of growth isn’t likely to be sustainable, but the fact remains that investors will have capital to spend in 2016.
As we try to figure out where that new money could flow, here are a few options:
Secondary markets: We’ve written about the rise of 18-hour cities before, and this seems to be a likely place for investors to spend capital. Markets like Austin, Denver, San Diego, and San Antonio are “cool,” “hip” and starting to grow.
Outside the box: Investors may rethink their definition of real estate, or at least expand it. ULI highlighted the expansion of Real Estate Investment Trusts (REITS) to include cell towers and outdoor advertising. The market could grow by offering investors more opportunities to invest in infrastructure.
Comeback story: Old properties are becoming new again thanks to the popularity of renovation and redevelopment. Consider the number of companies that are re-thinking the design of their office spaces. In some cases, the current demands of millennial workers can make rehabbed industrial space even more desirable than new Class A options.
Going alternative: Properties that have traditionally been of interest to a small number of investors (medical offices, senior housing, data centers, labs) may find themselves in demand on a larger scale.
Clearly, CRE investors will be looking at their full range of investment options in 2016. The U.S. market offers plenty of choices, and now investors have the capital to match.