The Buck Stops With Mike Demetriou At Baum Realty
Baum Realty’s business has grown by leaps and bounds since Mike Demetriou joined the firm four years ago. And Mike was recently rewarded with a promotion from COO to president.
Mike, who came to Baum as a real estate attorney from Sidley Austin, calls himself a "Jack-of-all-trades" executive, overseeing all aspects of Baum’s operations, and says the promotion was made mainly to announce to the outside real estate community that the buck stops with him. Real estate brokerage firms, especially retail, don’t have room for a large bureaucracy. Having Mike at the top of Baum's chain of command, in a true leadership role, allows the firm’s brokers to do what they do best—make transactions.
We asked Mike to give us his views of the state of Chicago retail. Here are some of his observations.
1. Wabash Avenue Is Primed To Explode
Mike finds a lot to love about Wabash Avenue, from Randolph Street on the north, to Jackson Boulevard on the south. It isn't as sexy as the Gold Coast or Rush Street, but Wabash is fast becoming a food court with a variety of quick-service casual options for downtown office workers. Street construction is hampering Wabash a bit, but its location along the "L" and Millennium Park, and the installation of the Wabash Lights street art project underneath the tracks, have Wabash primed to take advantage of increased foot traffic projections and cater to tourists and office workers.
2. A Rise In Hyperlocal Suburban Markets
Mike says there are few connecting ribbons between suburban retail markets, with the possible exception of transportation and how consumers don't want to endure long commutes for their shopping needs. If you look at Vernon Hills on the north, Orland Park on the south, and larger submarkets in between like Schaumburg and Oak Brook, they form a nearly straight line of the suburbs' major retail submarkets affected by traffic from the O'Hare market. Mike says this is one reason we're seeing an increase in larger, grocery-anchored retail shopping centers. Supermarket chains like Mariano's are grabbing larger footprints and opening their own food courts in stores—a one-stop shop for consumers.
3. Retail Is Chasing Discretionary Income And Density
Mike says each market has its own fundamentals that are impacted by external events. Example: He sees the flood of activity in Fulton Market (shown) pushing acquisition prices to the top of the market. Investors aren't looking long term when it comes to acquisitions these days; they're in a structure where they constantly have to make deals.
Mike says it will be challenging for some of Baum's clients to pay the necessary rents to justify the rising sales prices. A mitigating factor is discretionary income from workers entering Fulton Market and the fast-changing Milwaukee Avenue corridor. Highly anticipated moves like McDonald's relocating its HQ to Fulton Market changes the calculus for asking rents, since retailers need to rely on discretionary income to capture sales. With more density, there's a better chance of achieving those goals.