Midwest Real Estate News August 2012 : Page 1

midwest R E A L AUGUST 2012 E S T A T E N E W S ® VOLUME 28, ISSUE 4 THE DAKOTAS | ILLINOIS | INDIANA | IOWA | KANSAS | KENTUCKY | MICHIGAN | MINNESOTA | MISSOURI | NEBRASKA | OHIO | TENNESSEE | WISCONSIN WWW.REJOURNALS.COM DIRECTORIES: Finance • Economic Development • Real Estate Law Firms • Industrial Developers • Business & Industrial Parks PAGE 44 Multi-family continues to boom across the Midwest Developers still need good fundamentals to nab financing By Dan Rafter, Editor sectors. Mike Jehle : You’re right. I was shaving this morning and wondering what I was going to be able to say about multi-family that I haven’t said before. t’s no contest. Multi-family remains the top commercial performer both in the Midwest and across the country. And this is nothing new. Multi-family What is new these days in the sector? has been the top-performing commercial Jehle : I think what’s most interesting is the preoperty type since the earliest days of trend that we are seeing with multi-family. It is the Great Recession. David Roberts Gregory Warsek James Cope becoming a preferred way of living for many There is a new twist, though; new Mike Jehle Arbor Commercial Grandbridge Real Associated Bank Walker & Dunlop younger consumers. And that is an important apartment buildings are rising across Mortgage Estate Capital change. The goal for young people used to be several Midwest markets today. And to own a condo or single-family home as soon as they those markets that feature major colleges and could after graduating from college. That is no longer universities are seeing multi-family construction Mike Jehle the case. increase at a fairly rapid rate. Midwest Regional Director Midwest Real Estate News recently spoke with some Bloomfield Hills, Mich., office of What’s behind this trend? of the key multi-family financing professionals in the Arbor Commercial Mortgage Jehle : A lot of these young people have seen their country about the booming multi-family sector and parents struggle. They’ve seen their parents fall into what developers need to do to earn financing for their Midwest Real Estate News: foreclosure. They’ve seen their parents’ homes fall in apartment projects. We’ve talked every year about multi-family financing value. Many young people, because of this, no longer Here is some of what they had to say. for the last four. The story’s been largely the same: Multi-family is outperforming all other commercial > MULTI-FAMILY (continued on page 12) I Signs of improvement buoy brokers in Louisville, Lexington By Dan Rafter, Editor The two key Kentucky markets of Louisville and Lexington are both in the middle of their own recoveries. Midwest Real Estate News recently spoke to brokers in each market about these recoveries and what is fueling them. are decreasing throughout the region. In the industrial sec-tor alone, we’ve had six straight years of positive net ab-sorption. A solid market: I don’t think there are too many other markets that can claim to have had positive net absorp-tion each year during the recession. But we did. We haven’t seen any new construction for the most part since the recession, so that has helped. Innovation: There is a project here that everyone is excited about, the Nucleus Innovation Park. That’s a site in downtown Louisville that is home to businesses that focus on health-care products for older people and on research into aging and retirement. The fourth building is now in the process of going up, an eight-story, 200,000-square-foot office building. This is a very interesting project for us, and we hope that it will attract other tenants to the area. Retail activity: Retail is following suite, too. We are seeing that the bigger blocks of well-located space are pretty much all gone in the market. Now we are seeing more activity in the “B” and “C” spaces. The “A” centers in all the large formerly vacant big boxes are now full. A new Cabela’s has broken ground in Louisville. Kevin Grove senior vice president and partner CBRE | Louisville Hitting on all three cylinders : Right now, we are see-ing improvements in retail, office and industrial in Louisville. We’re basically hitting on all three cylinders with these sec-tors. It’s my feeling that industrial kind of never really missed a beat, even during the recession. It remained steady for us. Retail has picked up in the last 12 months, which has been a positive for our market. Office is taking a little bit longer to pick up, but it is slowly getting better. We are seeing significant activity on all those fronts. Vacancies Trader Joe’s has opened a space in Louisville. The Mall St. Matthews in Louisville is starting a major redevel-opment of a big-box retail piece that they have. They are opening a cinema, something they just announced in February. Percolating interest: We are starting to see more interest in the market in all sectors. Maybe someone will soon pull the trigger on some spec space. Last year, we lost some potential businesses to competing cities because we just didn’t have the available space for these companies. We didn’t have buildings for them. We have had two new buildings added to the market in the last 90 to 120 days, which is good news. One of those is under contract with a user. The other building is in lease negotiations. Those negotiations should culminate in the next several weeks. E-commerce boom: We are getting a lot of e-com-merce companies locating in Louisville. Part of the rea-son is because we are home to the UPS WorldPort Facility. That’s the third-busiest air-cargo hub in North America, one of the top-10 busiest hubs on the globe. For these e-commerce companies, being able to have their product delivered on time is critical. We have the WorldPort right here, and that has made a difference. > KENTUCKY (continued on page 25)

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