Universal Beauty Purchases Glendale Heights Warehouse

October 27, 2011

As seen in RE Journals

Universal Beauty Products, the private label manufacturer of health and personal care products, has purchased a 221,104-square-foot industrial facility in Glendale Heights, Ill. The warehouse, located at 500 Wall Street, is situated on 9.45 acres and includes 35,772 square feet of office space, 16 interior docks, two drive-in doors and parking for 170 cars.

Universal Beauty will relocate from its current Elk Grove Village location after the completion of the construction of its office and lab space.

Brian Colson, executive vice president, and Eric Fischer, senior associate, with NAI Hiffman’s industrial services group, represented Universal Beauty Products in the transaction. David Bercu and Brian Kling with Colliers International, represented the seller, ML Realty Partners.

“Univeral Beauty needed to expand and decided to take advantage of the favorable financing environment by purchasing a building they could claim as their long-term headquarters,” said Colson in a release. “The facility at 500 Wall Street in Glendale Heights fit their location, warehouse and office requirements along with achieving their financial goals.”

Posted by NAI Hiffman | Filed Under Industrial

NAI Hiffman CEO Petersen gives back to the community

October 26, 2011

As seen in TribLocal

Dave Petersen (seated), CEO of NAI Hiffman in Oakbrook Terrace, and wife Diane (left) get involved in the bidding during the live auction portion of the recent Edward Foundation Gala, “The Big Gig: Untamed Adventure.” More than 700 people attended the event which raised $521,000 for Edward Hospital’s newborn and pediatric critical care areas and soon-to-open Ronald McDonald Family Room.

NAI Hiffman CEO Dave Petersen was among the 700 people in attendance as a record $521,000 was raised at the Edward Foundation’s recent 21st annual Gala, The Big Gig: Untamed Adventure. The event was held at Bobak’s Signature Events in Woodridge on Saturday, October 15. Proceeds from the Gala will, in part, go to Edward’s KidsCare Campaign which is supporting the complete renovation of Edward’s newborn and pediatric critical care areas, special procedure rooms, and construction and operation of the Ronald McDonald Family Room, scheduled to open in 2012. The Foundation has raised $26.5 million since 1990 to benefit numerous departments and programs at Edward Hospital. The Foundation also raises funds through an annual summer golf outing. To make a donation to or for more information about the Foundation, call (630) 527-3954 or visit www.edward.org/foundation.

Posted by NAI Hiffman | Filed Under Media Coverage

Mixed signals: Local commercial real estate market still shaky

October 24, 2011

As seen in the Daily Herald Business Ledger
By Erik Martin
Contributing Writer

Ask experts to give their assessment of the state of the local commercial real estate market, and many will tell you that, while they see some positive signs, 2011 has felt like a continuation of 2010.

“The anemic job market means a limited demand for desk space for office workers, and unemployed and fearful workers are not big spenders at retail establishments,” said John Rutledge, president of Rutledge Company LLC in Wheaton.

“Financing is difficult for all but the well-leased properties with substantial equity. The trophy properties are always the exception, but most properties are smaller and represent the vast majority of leases and sales.”

Rutledge said that, while politicians are encouraging lending, regulators have their feet firmly on the brakes and their eyes on the rearview mirror. Banks are being told to improve their capitol ratios, which they can do by either seeking equity investors or reducing their assets by not making new loans and refusing to extend those that are maturing. Consequently, properties with positive cash flow and equity cannot get refinanced because the value may have declined to the point where the loan to value ratio is too high. In short, the regulatory environment is not hospitable to lending to commercial real estate players.

“Financing has killed countless projects in the past two years, as the banks are not lending or are making it extremely difficult to qualify for a loan,” said Gary Skoog, Director of Economic Development for the Village of Hoffman Estates. In addition, “village budgets universally have been cut due to reduced revenues.”

Despite these challenges, Hoffman Estates is a good example of a town that has seen some progress in year-over-year sales in the retail sector the past 18 months, with value retailers like TJ Maxx, Audi, and Savers being active. Additionally, Skoog has observed smaller stores, retrenching and remodeling activity, and new, diverse shopping center owners.

Like many municipalities, Hoffman Estates has experienced the ebb and flow of companies moving out and coming in. A few examples of the latter are Tate and Lyle choosing a 120,000-square-foot office in the village for its global research center, and the addition of DMG Mori Seiki, BIG Kaiser, and NSK America — three Japanese precision toolmakers — that moved to establish American headquarters in Hoffman Estates.

From her perspective, Aubrey Van Reken, an associate with NAI Hiffman, a real estate services firm in Oakbrook Terrace, said the suburban Chicago office market has shown signs of improvement over the past year, as evidenced by an increase in tenants actively touring the market, expanding their office spaces, and opening new locations.
“Twenty-four months ago, most tenants were focused on cutting costs and maximizing office space efficiency,” said Van Reken. “Some were able to find relief with early renewal negotiations where they agreed to extend length of term in exchange for a lower rental rate. Others downgraded from Class A and B buildings to Class C in order to cut costs.”

Additionally, tenants are seeking shorter-term deals (1-to 3-year terms versus 3- to 5-year terms common in previous years), and landlords are offering better concessions to new tenants, she said.

“I’m also seeing a trend where some landlords are offering prebuilt, fully furnished offices with move-in ready appeal,” added Van Reken. “One building that took this approach, located at 4355 Weaver Parkway in Warrenville, recently went from about 60 percent occupancy to 100 percent occupied in the past few months.”

In the north and northwest suburbs, on the other hand, vacancy levels for commercial buildings are as high as 30 percent, which Cassell attributed to a number of factors, including stiff competition from other leasing markets, an increase in telecommuting, greater corporate consolidation and mergers, and high corporate state taxes.
Indeed, the biggest impediments holding back commercial real estate activity are tax and wage rates that are higher than other states, said Cassell.

A big positive for the Chicagoland market, however, is the growth in the education sector, with both for-profit and nonprofit higher educational institutions expanding footprints outside of their main campuses, Cassell said. He cited Robert Morris College, Olivet Nazarene University and Corinthian Colleges as prime examples.
Cassell believes that the near future looks brighter for the region’s commercial real estate sector, primarily due to the high supply of office space available and improved job growth.

“But we won’t see a tremendous amount of new buildings being built due to low demand,” he said. “The O’Hare Airport area and I-88 corridor will continue to be healthy, but as you head further west and north, that’s where continued challenges lie.”

Rutledge said “it’s pretty hard to be optimistic when the unemployment numbers are stuck at over 9 percent. The bad news is that the market is weak. The good news is that we’re a year closer to recovery than we were a year ago.”

Posted by NAI Hiffman | Filed Under Office

LaSalle pays $51.5 million for industrial portfolio

October 5, 2011

As seen in ChicagoRealEstateDaily

By: Todd J. Behme October 05, 2011

(Crain’s) — LaSalle Investment Management paid $51.5 million for a portfolio of five industrial buildings, most of them in the Interstate 55 corridor in the southwest suburbs.

LaSalle bought the buildings from Panattoni Development Co. in a deal that closed Friday. The portfolio totals just over 796,000 square feet, with three buildings in Romeoville, one in Bolingbrook and one in north suburban Lincolnshire.

Panattoni thought it was a good time to sell the buildings, as the capital markets are strong for fully leased, institutional-quality industrial buildings in core markets, says John Pagliari, the local partner for Sacramento, Calif.-based Panattoni.

The $51.5-million sale price results in a capitalization rate, or first-year yield, of about 6%, Mr. Pagliari says.

The properties, all built between 1999 and 2008, are 85% leased, with the only vacancy 119,500 square feet at the Bolingbrook building, according to Jeff Devine, a principal with Colliers International who brokered the sale with colleagues Steve Disse and Jeff Kahan.

The smallest building is 98,000 square feet and the largest is 270,000 square feet, according to Mr. Devine. The three Romeoville buildings are in the Windham Lakes Business Park. Tenants include meat company John Morrell & Co.

Both the buyer and the seller did well in the deal, says Mike Tenteris, a senior vice-president at NAI Hiffman who handles industrial investment sales and was not involved in the transaction.

The buildings, mainly those in the southwest suburbs, are “great product,” says Mr. Tenteris, who calls I-55 the “most dynamic submarket in Chicago right now.”

LaSalle, the investment unit of Chicago-based Jones Lang LaSalle Inc., declined to comment.

Posted by NAI Hiffman | Filed Under General Business

Large block spaces scarce in I-80 corridor

October 3, 2011

As seen in RE Journals

A string of large deals has made floor spaces of more than 500,000 square feet a scarce resource in the I-80 submarket, prompting many area experts to start speculating about new construction.

Net absorption has continued at a steady clip in the I-80 corridor, with NAI Hiffman reporting 1.2 million square feet of positive gains through the second quarter. Vacancy is still north of 14 percent, but new tenants are moving into the market and taking larger spaces, making the remaining few large floor plates highly covetous. The prevailing belief is that some developer may attempt to enter the market with a new speculative development to engage this type of user.

“The fundamentals tell me that rents are not yet high enough to justify speculative development, but my gut tells me that someone will do it,” says Trevor Ragsdale, managing director, markets corporate solutions at Jones Lang LaSalle.

Tim Hennelly, president of the Great Lakes Region for Ryan Companies, is among the developers who are siding with the fundamentals for now.

“The vacancy rate has tumbled, but not to the point where we will see a new spec deal,” says Hennelly. “The good news is deals are getting done, but the bad news is rental rates are still too low to kick off speculative development.”

Speculative development would be seen as a large gamble in a still unstable economy, but recent activity shows that there is still a market for large distribution space.

Opus Development Corporation recently landed Electrolux, a Swedish-based global appliance manufacturer, for a 495,454-square-foot lease at 801 Midpoint Road (Minooka Ridge Building 2), Minooka, Ill.

CenterPoint Properties also signed a big lease with third-party logistics provider Saddle Creek Corporation for 415,800-square-feet of distribution space at the CenterPoint Intermodal Center in Elwood, Ill.

Both deals brought new tenants to the market and cleared a substantial amount of space.

“The market has been solid and we have seen a good flow of tenants,” says Charles Canale, senior vice president at Colliers International. “The availability of large buildings has drastically reduced since this time last year. There are really only a handful of buildings above 500,000 square feet.”

The number is three to be exact. Rock Run Business Park at 4100 Rock Creek Blvd in Joliet has a 509,216-square-foot space; Joliet Crossings at 3451 S. Chicago Street in Joliet has a 575,024-square-foot space; and the Tinley Park Corporate Center at 18801 Oak Park Avenue in Tinley Park has a 915,643-square-foot space.

With large space becoming a premium, Canale says that rents have ticked up, with Class A sites commanding around $2.70 per square foot, 15-20 percent higher than rents than last year.

“If tenant demand stays steady firms are going to have to consider build-to-suits or forward-thinking developers will start to do speculative buildings,” says Canale. “I think we will see a combination of the two.”

There are still several tenants looking. JLL’s Ragsdale says that he is currently representing a potential new user to the market that is in search of 300,000-400,000-square feet.

Yet for active tenants, I-80 is not the only option.

I-80 may be a tighter market, but when a broader picture is provided that includes space in the nearby I-55 corridor, the area is not as thin as it may appear. I-55 and I-80 are often lumped together in market reports and many distributors looking for space in the southwest region will tour sites in both corridors.

They are not interchangeable, but, as JLL’s Trevor Ragsdale says, when large blocks of space are being considered, they may as well be.

“I-80 tenants tend to have more of a regional focus and I-55 tenants probably focus more on distribution to the Chicago area,” he says. “But when you are dealing with large floor space it usually carries the characteristics of a regional distributor.”

In other words, big users could be accommodated in either corridor.

When the floor space is dropped to 400,000 square feet and the I-55 and I-80 markets are combined, there are more than 12 options for tenants right now, says Ragsdale.

While that may not be the most encouraging market for developers to roll the dice and build, Ragsdale says that some entities, especially REITs, may decide to initiate construction anyway.

“REITs have land in their portfolio just sitting there dormant,” says Ragsdale. “From my perspective they would be the ones who have to put land into production first.”

Ryan’s Hennelly envisions construction taking place in the short term, but of the build-to-suit variety.

“We will see an uptick in build-to-suits,” says Hennelly. “If a firm wants to be on I-80 it will have to be a build-to-suit. That made no sense before because of the vacancy rate. The I-80 corridor is still one of the main arteries of the country. There is really nowhere else to go in the area for one-million-square-footers.”

Hennelly expects a major build-to-suit to be announced sometime in the next 12 months. His firm has a 320 acre industrial park at Laraway Road and Rte. 53 in Joliet known as Laraway Crossings. The recent opening of the nearby CenterPoint Intermodal Center at Joliet has been a boost to the area and made it desirable for distributors looking to take advantage of the rail connections.

Posted by NAI Hiffman | Filed Under Industrial