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Real Estate Bisnow
   
January 17, 2012 
 
 
 
Superior Spaces LTile2
Taxes Rising

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We haven’t fallen off the fiscal cliff, but capital gains tax rates still rose to 20% this year. (Like when Wile E. Coyote dodges the oncoming train only to be hit by a handcar.) Tack on an extra 3.8% for Obamacare and some CRE investors could be paying over 50% more in taxes on sold assets, according to CohnReznick partner John Woodbury.
 
It sounds like a tough pill to swallow, but savvy investors and their accountants are getting more creative, John told us. (You can't see us, but we're conducting the interview from beneath his kayak in the Fox River.) By deferring income, selling in installments or through a like-kind 1031 exchange, investors can keep skin in the game without the steep surcharges. Trust John and don’t despair, he was a psychology major.
 
Leopardo Intext
Speaking of Obamacare, Crown Commercial Real Estate & Development president Musa Tadros hopes to host the Commander in Chief one day in the hotel he’s developing at 168 N Michigan Ave.  Still on the hunt for financing for the $30M project, a proposed 156-room Hotel Indigo featuring an 8,000 SF unknown restaurant concept from celebrity chef David Burke, Musa thinks tightened lending markets will limit CRE sales and development activity this year much more than rising tax rates. “Sophisticated investors don’t pay much in taxes,” he says.
 
Bisnow (PropManage)

Fed Forecasters
 
We snapped Rick Mattoon and William Strauss, both Chicago Fed senior economists, at CoreNet Chicago’s annual forecast luncheon. Rick says that the Chicago regional economy has some positive momentum, but it still lags; among other things, Illinois is broke and needs to focus on tax reform and investments in infrastructure to pay off its debt. Also, Chicago’s going to be a megacity by 2030, with more than 10 million people in the metro area. Though the broader recovery is still muted compared with past recoveries, William predicts the US economy is on track to expand above trend by 2014.

I-55 Alive and Kicking
 
Leasing velocity and rents were up in the I-55 industrial corridor in late 2012, and Champion Realty Advisors managing principal JD Salazar tell us that smaller users drove much of the increase. “Major industrial space users are still looking for 500k SF or 1M SF along I-55, but recently we’ve been seeing entrepreneurial operators who’ve been on the sidelines coming back into the market,” he says, looking for 150k SF or 175k SF blocks. JD says he’s on the verge of selling a one-acre lot in Romeoville to an end user, “a kind of deal we haven’t done since 2008. It’s a positive sign for all of the industrial market that bread-and-butter users are coming back.” And not all those on the hunt for smaller spaces are entrepreneurs: JD recently repped landlord ProLogis in leasing 125k SF at 505 Crossroads in Romeoville to Dedicated Logistics, which has operations throughout the Midwest.

Down to the Wire Deal
 
If the deal didn’t close by New Year’s, everyone would turn into a pumpkin. But First Western Properties pulled off something magical with its recent 23-day close of a $5.2M Oak Lawn shopping center, 6310 W 95th St, according to president and managing broker Paul Tsakiris (right with sales and leasing VP Leo Solarte). The buyer, on holiday in Mexico, was a fund with a year-end deadline and the seller just happened to be in the Middle East with the deed. Thanks to early morning international flights and old-fashioned elbow grease, the all-cash deal on the 32k SF property closed after 8.5 hours on New Year’s Eve.

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Upcoming Bisnow Events!
 
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Say hello to our new Chicago reporter: marissa.oberlander@bisnow.com.
 
 
 
 
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