New investors in Ravenswood development a hit with neighbors

December 7, 2011

As seen in the Chicago Sun Times

There’s a new cast of characters involved in a plan to build a grocery-anchored retail complex and housing along Lawrence Avenue in Ravenswood. Their performance so far is drawing positive reviews from the neighborhood.

Gone from the investors is Magellan Development Group LLC, whose downtown pedigree and preference for building at least a multi-floor residential building made the community nervous. In place is a new group, some responsible for the retail part, others for a low-rise housing component planned for the open lot at 1900 W. Lawrence, just west of Metra’s Ravenswood stop.

Spearheading the retail is Seymour “Sy” Taxman, head of Taxman Corp. He said he hopes to have a 72,000-square-foot Mariano’s grocery open there by mid-2013. He said he expects the rest of the retail, totaling some 35,000 square feet, will be leased by the time the complex opens.

Working with Taxman are investors Timothy Barrett and Gene Porto and the firm Sierra Group Inc. The project preserves two oft-stated community priorities for the site: attracting a grocer and rebuilding a Sears auto repair facility that currently uses a small part of the property. Sears Holdings Corp., owner of a store nearby, also owns the lot.

Taxman said that after he presented his plans at a neighborhood meeting last week, he got a rare honor for a developer: a standing ovation.

The rest of the 6.5-acre site would get 162 units of rental housing, said Ald. Ameya Pawar, whose 47th Ward includes Ravenswood. He said they would be grouped in three walkup-style buildings, with 10 percent of the units reserved as affordable. Pawar said the residential developer is Greg Merdinger, who works with Belgravia Group Ltd.

Pawar said the housing development will get no subsidies from the city. The retail portion is in line for a $4.5 million boost from tax-increment financing, he said. Pawar has been a critic of the city’s use of TIF, but he said this subsidy is reasonable because the parcel’s tax revenue should repay it in about five years.

“This should be a catalyst for redevelopment along Lawrence Avenue, where a lot of the property is under-used,” he said. Pawar has scheduled two more community forums on the deal Dec. 15 and 19.

BANKRUPTCY LOG: I’ve written recently about the financial problems facing two high-end developments for the elderly on the Near North Side. Now comes word that a similar development in Bartlett has filed for bankruptcy.

Clare Oaks at 825 Carillon Drive filed for Chapter 11 protection Monday but will not shut down or liquidate. The site serves 325 residents and is owned by the Sisters of St. Joseph of the Third Order of St. Francis.

Michael Hovde Jr. president of ownership’s board, said the filing will create time to find a new partner or owner. Trouble in the housing market has hit the senior sector, keeping many people in their homes who otherwise would move to facilities that offer a range of care options.

Hovde said Clare Oaks’ assisted living and memory support units are full, but that the independent living homes have been slow to draw occupancy.

Clare Oaks is not to be confused with the Clare at Water Tower, a senior development on the Loyola University Chicago downtown campus that also has filed for bankruptcy.

DOING THE DEALS: The 25-story, 304-unit apartment building at 77 W. Huron sold for $90 million to L&B Realty Advisors. Holliday Fenoglio Fowler LP marketed the building for owner Archstone. … JBS Logistics leased nearly 304,000 square feet at 2043 Corporate Lane, Naperville, with NAI Hiffman and Darwin Realty & Development Corp. advising on the deal. … Lowe Enterprises Investors said that on behalf of a pension fund, it acquired the 237-room Embassy Suites Chicago-North Shore/Deerfield at 1445 Lake Cook Road in Deerfield. Lowe Enterprises is from Los Angeles, so maybe it is unaware that Deerfield is not in the North Shore. … The law firm Hogan Marren Ltd. moved from 180 N. Wacker to 321 N. Clark, where it leased more than 11,000 square feet. Jones Lang LaSalle Inc. represented the firm. … Urban Partnership Bank will open a branch Thursday at 4310 St. Charles Road, Bellwood. It’s the bank’s third new location in two months in its effort to target areas that the competition neglects. … Chicago-based Heitman LLC said it formed a venture with Signature Senior Lifestyle Ltd. to put up senior housing in the United Kingdom.

Posted by NAI Hiffman | Filed Under General Business 

LEASING NEWS

November 29, 2011

As seen in Real Estate BISNOW

AMEC leased 7,700 SF at 650 Warrenville Rd in Lisle, relocating from another space in Lisle. Cushman & Wakefield’s Jordan Rovito andAlex Smith repped AMEC. NAI Hiffman’s Patrick Kiefer repped the landlord, Winthrop Realty Trust.

Posted by NAI Hiffman | Filed Under General Business 

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 

Migration Absolute

September 26, 2011

As seen in RE Journals
By Adam Roth
Vice President – NAI Hiffman

People were already gathering in the meeting room for the logistics session and it was going to be crowded.  This particular panel had seven members.  A little large in number for a panel, however, the panelists were an all-star cast:  three CEOs from major 3PLs, two heads of logistics for major retailers and two high profile transportation analysts.  When the presentation started, each panelist spoke about their company before moving to the analysts’ projections.

The analysts began with issues facing the logistics industry and where they foresee companies focusing in the coming year.  I was in the front row, pen in hand.  Unfortunately, at the end of their segment, my paper was still blank.

Forecasting issues and visibility were their main theme – not much of a real estate play there.  The moderator then moved to questions from the audience.

At that moment, power went out in the hotel.  The exit lights provided minimal lighting, but the moderator apologized and calmly continued the session asking for questions.   Seated in the front row near the moderator, I was probably one of the few people he could actually see.  I raised my hand and he pointed to me. I asked, “What about energy (fuel) fluctuations and how this affects your business?” The panelists’ responses were uniform.  “What was once a topic of quarterly to semi-annual conversation was now a regular monthly if not weekly agenda item.”

The lights remained off, I raised my hand and the moderator called on me again.   “What is the outlook for capacity in the trucking sector?”Again, their response was uniform.  “We are closely monitoring the anticipated impacts of CSA 2010 and any further modification to the Hours of Service.  It is anticipated that the trucking sector will tighten up and retain purchasing power – truck pricing will be going up.”

The lights flickered, and soon the room was lit. My hand went back up. The moderator once again gave me the nod so I asked one final question.  “Where does rail fit into your plans and do you foresee increased utilization of rail?” The response from the panelists was again consistent.  “We are looking for ways to integrate more with the rail networks and increase our business with them.”

The panel took a few more questions before breaking.

On average, transportation costs are typically eight to ten times the cost of real estate and in most scenarios, transportation is the true “driver” behind real estate decisions.  With this being the case, as a real estate broker, I attend or am directly involved with about ten logistics conferences per year and  find a consistent theme: whether a particular conference or tradeshow focuses on ocean trade, rail trends, intermodal shipping, logistics, exporting, 3 PL’s, commodities or port infrastructure, real estate is rarely a topic of main focus or even on the agenda.

The most interesting thing is that the issues raised at these conferences and the obstacles the transportation-centric companies are attempting to overcome are without question shaping the foundation for the future of industrial real estate.

So what is that future?  What is the path that addresses the issues of higher fuel costs, decaying infrastructure and fewer truck drivers?  The answer is rail.  Migration to rail is absolute.  The industrial developments that include a rail component will be in demand, able to charge a premium and maintain occupancy.

The railroads have been preparing for the increase.  The BNSF Railroad anticipates capital expenditures in 2011 alone to be $3.8 billion.  Their capex budget in 2010 was $2.7 billion.  The BNSF, Union Pacific, CSX, NS, CN and Kansas City Southern have all been expanding and/or developing their logistics hubs during the economic downturn.

There are other indicators.  The Journal of Commerce has reported that a trucking shortfall of 180,000 is predicted for 2012.  A recent survey by the Wolfe Trahan research group stated that shippers shifted freight from all-truck modes to intermodal at the fastest pace in years during the second quarter of this year.  Rail is the only viable alternative to trucking.  For most of the products being shipped, barge transport is not feasible due to perishable content or time sensitive delivery. Airfreight, as an alternative, is too costly for most and drives up the cost of the goods beyond competitive points.  Other than trucking, intermodal presents the only real option from a transportation perspective.

For those who dare, check out Chuck Taylor of Awake! – an organization he founded to raise awareness so supply chain professionals will understand the stakes and take an active role in shaping energy policy.  To be clear, Chuck does not state that we are going to run out of oil, however, 98 percent of supply chains run on oil and at the moment, there is no readily available cost effective substitute.  As Chuck states, “Get ready for the Inevitable, the End of the Oil Age is Coming.”

In commenting on energy (oil), the point is not to discuss if in fact we’ve reached “peak oil” (the point when maximum global petroleum extraction is reached, after which the rate of production enters decline).  Economic growth is still slow, but when things begin to pick up, oil prices will, without a doubt, begin to rise.  People in China, India, Brazil, Russia and Middle Eastern countries want a more westernized lifestyle, which means their demand for oil will rise as well.

With the unpredictable fluctuations in oil prices, it is safe to assume that costs will continue to rise.  This will drive and force change in the supply chain network.  The majority of the distribution networks were designed with the assumption of cheaper oil as well as a more traditional level of trucking capacity.  With the comparative level of corporate spend on transportation, companies will be forced to evolve their network strategy to survive.  Influencing and accelerating this is the fact that network change is not a fast process.

Network change will happen by shifting to the next “path of least resistance.” Rail is the logical migration. This is not five years out: this is now.

 

Posted by NAI Hiffman | Filed Under General Business 

May We Never Forget

September 11, 2011

For those of us in the commercial real estate business, when we look at a building we often think only of asset class, rental values and square feet requirements. The 10-year anniversary of 9/11 reminds us that the buildings we manage, lease and sell are simply the packages that connect the lives, careers and the dreams of those who occupy this real estate.

May we remember the loss of the nearly 3,000 people who walked into the buildings as first responders or worked within the walls of the World Trade Center towers, the Pentagon and who flew on those planes on September 11, 2001. May we always recognize the individual cost that was paid on this day and may it inspire our continued building and expansion of the American dream.

Posted by NAI Hiffman | Filed Under General Business 

The Hiffman Derby

September 9, 2011

NAI Hiffman hosted an event at the Arlington Race Track for emerging leaders in Chicago’s Suburban office market. NAI Hiffman’s host brokers were Adam Johnson and Jud Henry. The event was sponsored by DSI, Henricksen and MRSA.

The Hiffman Derby Slideshow

Michael Collins, Matt Schiffler, Garrett Schultz and Jud Henry

 

Posted by NAI Hiffman | Filed Under General Business 

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