| Bisnow’s State of Chicago
panels on Thursday had it all (we even saw one guy lugging around a
kitchen sink): CRE, the economy, the election, optimism, pessimism,
word of new development in the Chicago market. It packed in more than 500 at the storied Palmer House Hilton. |
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| The event featured two panels of Chicago CRE luminaries plus one-on-one interviews with the U of C’s Randy Kroszner (who’s on a first-name basis with Ben Bernanke) and Deputy Mayor Steven Koch. The Chicago panel, moderated by Reznick Group office managing partner George Klenovich, focused on local CRE, for better and worse. Better: demand for office, industrial, multifamily, and even retail is growing. Worse:
financing is still tough, since lenders inexplicably still prefer
major coastal markets. (The beach is the greatest snake oil salesman
ever.) |
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| FRC Realty CEO Steve Fifield says opportunities for multifamily are shifting to Chicago’s neighborhoods,
since as a submarket, downtown is seeing all the high-rise multifamily
development it can support for now. Developers need to be willing to
think in terms of 20- to 150-unit properties in neighborhoods, rather than 400- to 500-unit towers in the CBD. He also predicted a new wave of office development
downtown in the next 18 to 24 months, and the new structures aren’t
going to be like the existing office stock; instead they will include
bike rooms, showers for employees, balconies (where people can dry
their bike clothes), and other cool features that don't involve bikes.
Expect “cool and funky.” |
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| HSA Commercial Real Estate CEO Bob Smietana notes that diversification, especially into MOB, helped his company not only survive during the last four years, but thrive. The company is preparing to develop two spec industrial buildings in the suburban Chicago market (its first since 2007) now that there's increasing demand.
The company is also at work on a 250k SF retail center in suburban
Milwaukee. "We're positive about development for the first time in
years," Bob said. Confidence in CRE and even the wider economy seems to
be slowly returning. |
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| Chicago’s CDB will see an influx of new multifamily tenants, as it has in recent years, says MB Real Estate president John Murphy. That is going to stimulate demand for office space. Right now Class-B office space downtown is filling up, and demand will increase
even more as the economy improves—which John believes it will,
especially after the uncertainty associated with the election. Whoever
the winner is, his most important task will be to push for pro-business policies that help create jobs (like the one that guy in the painting is doing on the right). |
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| In our best Barbara Walters impression, we had University of Chicago economics professor Randy Kroszner,
a member of the Fed’s Board of Governors during the tumultuous late
2000s, be interviewed by Pircher, Nichols and Meeks partner David Pezza. An overriding concern of the Fed at the time was forestalling catastrophic deflation, Randy notes, something that the central bank of the 1930s failed to do. The modern Fed acted boldly and succeeded in preventing deflation, but he said he’s a little more skeptical
of its recent efforts (QE3), partly because it will be difficult to
exit when the time comes. Further repairs to the economy are primarily
up to the new Congress. If it isn’t still gridlocked after the election, larger fixes might be possible: "The Fed has done about all it can” to promote an economic climate that will create sustainable job growth." |
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| We were able to round up the team from sponsor MB Real Estate. The company reports considerable demand for space at Michigan Plaza, which it reps. So far this year, there’s been 90k SF of new leases and 170k SF of renewals at the building, which also has the distinction of winning LEED Gold this summer. |
