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Real Estate Bisnow
January 10, 2013
Leopardo 2 LTile
Cash is Back

If finance is oxygen, Aries Capital CEO Neil Freeman says no more gasping for breath (or money). He tells us that “city values and leverage points have improved for all property types, with hotels and apartments especially booming.”
Neil's not merely looking forward to a good year for financing deals in Chicago; he’s anticipating a “robust” year. Neil (with SVP Jeff Bucaro and a ram head who just had to butt in) adds that the company has recently financed several apartments around Lincoln Park at 10-year fixed rates below 4%, non-recourse. Aries is also closing a $27M hotel loan at 4.3% for a 10-year fixed. “We even financed a busted condo deal,” he says. “This is about as good as it gets.”
Bisnow (PropManage)

This week Aries finalized the $26.5M 10-year non-recourse CMBS loan for Chicago’s Green Exchange, a 270 SF LEED Platinum, mixed-use property at 2545 W Diversey. Formerly the Cooper Lamp factory, Baum Development undertook its redevelopment in the mid-2000s but was delayed by the economy until recently. New financing had to overcome “major obstacles and complications” because of the subsidies already in place, he says. Eventually the new financing was integrated with existing HUD 108 Loan, Historic Tax Credit financing, TIF dollars and Class L tax freeze benefits.

NW Indiana's Industrial Market Heats Up
In Chicagoland’s sprawling industrial market, NW Indiana is an up-and-coming submarket, after years of languishing because of manufacturing decline. NAI Hiffman VP Chris Gray, an industrial specialist says the overall economic recovery is helping drive demand for space in NW Indiana, but he tells us it’s more than that. “The state of Indiana has had a balanced budget for several years, and the overall economic health of the state is superior to its neighbors, particularly Illinois,” Chris says. (Oh those two states: always trash talking.) “Last year Indiana became a right-to-work state, which has increased its attractiveness to manufacturing companies.”
That’s not all: Indiana also maintains significant cost advantages relative to Illinois on workman’s compensation, unemployment insurance, and property taxes, Chris adds. There’s still a heavy concentration of steel and petrochemical industries in NW Indiana, including Arcelor Mittal, US Steel, and BP Amoco, but distribution companies are also locating in the region, encouraged by that lower cost of doing business. Pictured: 1575 Louis Sullivan Dr at Ameriplex at the Port in Portage, Ind., which Chris reps. It has the largest block of space currently on the market, 200k SF.
Paine/Wetzel/TCN Worldwide’s Adam Karras, who’s also active in NW Indiana, says that it’s more than just a business-friendly climate in Indiana attracting industrial space users. Some are actively looking to escape the high-cost business climate of lllinois, while at the same time remaining in the Chicago area, which still offers immense logistical advantages. (They need some economic relief, but they don't want to miss Bulls games.) But there’s also organic growth among manufacturers already in Indiana. Recently Adam repped landlord Metal Management Indiana in its lease of 11.5k in East Chicago to a steel fabricator who needed more space. 

Foreigner Investors Like Industrial Space, Too
Speaking of industrial space—the greater Chicago market has about 1.2B SF of it. Association of Foreign Investment in Real Estate CEO Jim Fetgatter tells us office and multifamily remain popular (and flashy) acquisitions for overseas buyers, but industrial is the No. 2 preferred product type in AFIRE’s annual member survey, released this week. He says foreign buyers like the consistent yields and new demand drivers, such as online retailers like Amazon.

Upcoming Bisnow Events!
Tuesday, Jan. 29, 7am-10am. Bisnow's Chicago Data Center Boom! All-star panelists will discuss what's driving demand for data centers, what are user requirements, what new technologies are required, and the different data center technology methodologies. Register here.
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