March April 2022 Midwest Real Estate News by RE Journals

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MARCH/APRIL 2022 VOLUME34

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CRE MARKETPLACE PAGE 37: ARCHITECTS/DESIGN-BUILD FIRMS ASSET/PROPERTY MANAGEMENT FIRMS DEVELOPERS MULTIFAMILY FINANCE FIRMS

Did ecommerce and COVID kill experiential retail? Not a chance By By Dan Dan Rafter, Rafter, Editor Editor

emember those long-ago days before COVID-19 hit the United States? Back then, retailers were embracing experiences. Offering consumers an experience that they couldn’t get online was one way for brickand-mortar retailers to battle the Amazons of the world. But during the height of the pandemic? Consumers either couldn’t, or were too nervous to, go to indoor golf ranges, adult arcades or high-tech bowling alleys. That led to worries that experiential retail, which had been so strong, would fade away. The fear was that

consumers would be hesitant to gather in indoor spaces even after COVID cases began to fall. The good news? That fear seems to have been misplaced. Across the Midwest, commercial real estate professionals report that experiential retail in their markets has rebounded in the last six to nine months. People are again flocking to fitness centers, are returning, in slower numbers, to movie theaters and are happy to spend their dollars at bowling alleys, indoor golf simulators and trampoline parks. RETAIL (continued on page 22)

RETAIL

Retail Sector Continuing to Heal from Pandemic

By Brandon Svec, CoStar Group, Inc. Like the antagonist from a 1980s horror movie, brick-and-mortar retail is once again remerging from the grave. Following the over expansion of department stores and specialty retailers in the early 2000s, the retail sector found itself over-extended and underperforming as online shopping permeated the daily habits of American consumers. Hundreds of retailers were forced into bankruptcy, while tens of thousands of underperforming stores were closed. With the sector on its heels, many were tolling retail’s bell well before the pandemic dealt retailers their most difficult RETAIL (continued on page 36)

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FEATURES 8

The Midwest’s commercial real estate publication, providing useful, unbiased and accurate coverage of the industry and its professionals since 1985. WWW.REJOURNALS.COM Publisher | Mark Menzies menzies@rejournals.com

Editor | Dan Rafter drafter@rejournals.com

ADVERTISING Vice President of Sales & MW Conference Series Manager | Ernest Abood eabood@rejournals.com Vice President of Sales | Frank E. Biondo frank.biondo@rejournals.com

Retail Sector Continuing to Heal from Pandemic: Like the

antagonist from a 1980s horror movie, brick-and-mortar retail is once again remerging from the grave

Did ecommerce and COVID kill

That industrial boom? Don’t expect it to slow anytime soon: The

COVID-19 hit the United States? Back then,

Now companies have to earn their

industrial sector had been booming long

commutes: Office buildings have sat

before COVID-19 hit the United States. And

largely quiet for two years now thanks to

during the pandemic? An increase in online

the COVID-19 pandemic. Today, though, the

shopping has fueled an even bigger boom

move is on to bring many of these workers

in this asset class.

back, at least in a hybrid mode in which

experiential retail? Not a chance:

Remember those long-ago days before

Workers are returning to the office.

they work some days from the office and

Commercial construction in 2022

others remotely.

is a story of soaring demand and

retailers were embracing experiences.

rising challenges: These are interesting

Offering consumers an experience that

times for commercial construction.

they couldn’t get online was one way for

Demand for new industrial facilities,

brick-and-mortar retailers to battle the

multifamily properties, data centers and

Amazons of the world.

advanced-technology manufacturing

COLUMNS/DEPARTMENTS 4 Editor’s letter

Vice President of Sales | Marianne Grierson mgrierson@rejournals.com Classified Director | Susan Mickey smickey@rejournals.com EVENTS/CONFERENCES Managing Director, National Events & Marketing | Allyssa Gawlinski agawlinski@rejournals.com Midwest Real Estate News brings real e state leaders together to explore the challenges and opportunities unique to their markets.

31 A return to the office?

spaces is soaring. At the same time,

The near-term financing outlook?

developers and contractors face labor

High demand, a need for speed and

shortages and long delays for the building

signs of life in even the most challenged

materials they need.

of sectors: The commercial real estate market has displayed true resiliency throughout the COVID-19 pandemic. And

The new formula for construction industry success: infrastructure

spending and the transition to electric

market? It’s done the same.

vehicles: St. Louis-based general contractor Alberici Constructors recently

Milwaukee-area CRE brokers,

made eight promotions in its executive

developers didn’t let COVID slow

leadership team. The reason for this

them down: Surprisingly resilient. That’s

expansion? The firm expects business to

what a pair of commercial real estate

continue to boom, spurred in part by the

pros said about the performance of the

renewed focus in the United States on

CRE market in Milwaukee and its suburbs

infrastructure spending and the country’s

throughout the COVID-19 pandemic.

steady transition to electric vehicles and the manufacturing facilities that this

The world has changed. So has the multifamily market: A future in

which people spend more time working from home than they do commuting to the office. The lure of the open spaces and lower costs of the suburbs.

33 Future leaders: Hai Cao, Sansone Group

that means that the commercial financing

32 The self-storage boom

transition will require.

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34 Women in Real Estate: Kelly Diehl 37 CRE Marketplace

Midwest Real Estate News® (ISSN 08932719) is published bimonthly by Real Estate Publishing Corp., Oak Park, Il 60301 (rejournals.com). Current and back issues and additional resources, including subscription request forms and an editorial calendar, are available on the internet at rejournals.com. Sub scriptions: Within U.S.: 1 year, $69; 2 years, $89; 3 years, $109. Single copies, $10.00. Subscription information: Alyssa Gawlinski, 1010 Lake St Suite 210, Oak Park, IL 60301 312-933-8559. ©2022 Real Estate Publishing Corp.

FROM THE EDITOR

Midwest Real Estate News

March/April 2022

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The 10 most expensive cities for renters? Not a single one is in the Midwest

By Dan Rafter, Editor

partment rents continue to rise across the country. How much? A new study from Zumper says that the median one-bedroom apartment rent in the United States hit an all-time high in March.

ants? The latest research from the National Association of REALTORS found that renters are spending a lot more of their household income on rent this year than they were in 2021. According to the association, in January of 2022, renters earning the household median income for their area were spending 29.7% of their income to lease a typical apartment unit. That is up from 24.8% in January of 2021.

According to that study, the median one-bedroom monthly rent hit $1,400 in March. That’s as high as this figure has ever been, according to Zumper. It also represents an increase of 2.5% for the year, ahead of the 1.9% growth in apartment rents at this time last year. Renters in the Midwest, though, have a bit of a reprieve. No Midwest city — not even Chicago — showed up in its list of the most expensive cities in which to rent in March. That list was topped, in no surprise, by New York City, where the median one-bedroom monthly rent is $3,260. San Francisco came in second at $2,910, while

Boston rounded out the top three at $2,660. Increased demand for apartment units is surely fueling at least some of this increase in monthly rents. In November of last year, Zumper surveyed renters and found that 81.6% said they planned on moving in 2022.

At the same time, there aren’t enough multifamily units available to meet this demand, a sure formula for rising rents. The $1,400 median one-bedroom rent in March is a jump of 12.2% from the same month one year earlier. It’s the 11th time in the last 12 months that one-bedroom rents have hit an alltime high. The median price for a two-bedroom apartment unit is up 13.8% on a yearover-year basis, hitting $1,723. This marks the 14th consecutive month in which two-bedroom units have hit an all-time high. Renters looking for a bargain can find one in at least one major Midwest city. Zumper said that the median one-bedroom rent in Cincinnati actually took a fall this March, slipping to $870.

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The most expensive Midwest city in which to rent is Chicago, where the median one-bedroom monthly rent is $1,600 and the median two-bedroom rent is $1,900. But Chicago ranks as only the 23rd most expensive metro area in which to rent this March. The next most expensive Midwest market is Cleveland, where monthly one-bedroom median rents are $1,240. Then comes Minneapolis, where the median one-bedroom rent was $1,200 in March.

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How have rising apartment rents made life more challenging for ten-

The challenge, then, becomes affordability. How many renters won’t be able to afford apartment units as monthly rents continue to rise? In January, renters earning the median household income in 15 of the top 50 metro areas in the United States were already spending more than 30% of this household income on rent. This is important. Generally, economists say that households should spend no more than 30% of their income on housing costs. HUD defines cost-burdened households as those that pay more than 30% of their income for housing, including utilities. Households that pay more than 50% of their incomes on housing costs are defined as severe cost-burdened households by HUD. The most affordable rental city among the top 50 largest in the United States in January was in the Midwest, Kansas City. Here, renters earning the median area income were spending just 20% of their income on a typical apartment with zero to two bedrooms. St. Louis ranked as the fourth most affordable city for renters, with those earning the household median income spending 22.3% of their income on a typical apartment unit, while in the Indianapolis area, that figure stood at 22.8%, good for fifth on the list. Two other Midwest cities made the most affordable list: Louisville, where renters earning the median area income spent 23.1% of this income on a typical apartment unit; and Minneapolis-St. Paul, where that figure was the same.

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FINANCE

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The near-term financing outlook? High demand, a need for speed and signs of life in even the most challenged of sectors By Dan Rafter, Editor

Apartments continue to attract a large share of commercial financing requests

he commercial real estate market has displayed true resiliency throughout the COVID-19 pandemic. And that means that the commercial financing market? It’s done the same. Just ask the professionals working in this field. They’ll point to steady activity as financing requests continue to soar, especially for such in-demand sectors such as multifamily and industrial. And the best news? These same professionals are even seeing a small uptick in the demand for office and retail deals. This trend doesn’t look to slow anytime soon, either. Financing professionals working in the Midwest said that they expect demand for commercial loans

should only increase throughout 2022. Normal is back … mostly Jim Doyle, executive vice president in the Cleveland office of Bellwether Enterprise, said that he is seeing the signs of a return to normalcy in the financing market. But this isn’t necessarily new. Doyle said that requests for commercial financing have been strong for more than a year now. “Last year was similar to what we are seeing now in the sense that there hasn’t been much of a change in the financing world,” Doyle said. “We have been busy, and we haven’t seen that change going into 2022.”

The challenge? Most lenders are chasing the same product types, multifamily and industrial. Self-storage facilities are popular, too. Charles Krisfalusi, director in the Detroit office of Walker & Dunlop, knows just how strong the multifamily market is today. That’s because he specializes in originating multifamily loans. He’s seen, then, demand for multifamily financing steadily rise, even during the pandemic. But that doesn’t mean that this sector doesn’t face challenges, Krisfalusi said. “Right now we are at a crossroads,” he said. “There is a ton of activity on the investment sales side. People

are looking to buy. There is very little yield in the market, so multifamily is a strong performer. There is a lot of capital looking for a home in multifamily. But there is also volatility in the Treasury market. The next day, you’re either value-constrained or interest-rate constrained. The good news is that this is not yet dampening activity.” Krisfalusi said that the key for commercial lenders in today’s busy market is speed. Clients want deals to close quickly, before interest rates rise any higher. “We have been differentiating ourselves with early rate locks and streamlined rate locks,” he said. “Anything FINANCE (continued on page 10)

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Lenders say that they are seeing an increase even in office financing requests.

FINANCE (continued from page 8)

we can do to eliminate uncertainty will help people who know when they want to execute. The difference-maker lately has been speed.” In the multifamily sector acquisition financing is hot, Krisfalusi said. And many borrowers in this space today want the HUD 223(f ) loan. Borrowers can use this loan to refinance newly constructed properties and take cash out while doing it. “It is the best tool we have now in our chest,” Krisfalusi said. “We focus on this product when we have anything under construction or in stabilization or recently stablized and less than three years old. This is a product that adds stabilization and that cashes out beyond construction costs. Demand for that product has been increasing in the last several months.”

Not all asset types are created equal today The more challenging asset classes for financing? Doyle points to office, retail and hotels. But there are positive signs even in these asset classes that were hit particularly hard by the COVID-19 pandemic. “We are seeing the ability to get office and retail deals done again,” Doyle said. “Those sectors are a little more active now. We have closed more retail deals in the beginning of this year than we did all of last year. There has been a little more receptiveness from lenders to finance those.” Doyle said that lenders are still concerned about office deals. They still have questions about the overall office market, too. Will law firms downsize because some of their senior partners are working from home? Will the new

flexibility in workspaces, with more employees certain to be spending more time working remotely, impact the amount of office space companies need?

Doyle said that smaller strip centers anchored by known performers such as Chipotle, Panera, AT&T and Verizon-type users are also seen as financeable today by lenders.

“There has to be a story behind an office deal if it is going to get done,” Doyle said. “Are companies shrinking? Do they still need as much office space? What will the office market look like five years from now? Unfortunately, none of us know the answers to those questions yet. Because of that, lenders are more conservative when it comes to underwriting and looking at office deals. There is a push to lower loan-to-values.”

“Where we do get some pushback is from the junior-anchor spaces,” Doyle said. “Lenders like TJ Maxx and Ross Dress for Less. But there is still uncertainty around Staples and other office stores and places like pet stores. How much space will they need going forward? Who will fill those junior-anchor spaces if those retailers aren’t there?”

As far as retail goes? Doyle said that lenders are focused on grocery-anchored retail centers or centers that feature big-name home-improvement stores such as Home Depot or Lowe’s. Centers anchored by major retailers such as Target are viewed as lower risk by lenders, too.

While multifamily has held steady throughout the pandemic, Krisfalusi said that not all apartment properties are performing equally well. In the Detroit market, for example, apartment developments in suburban locations tend to see lower vacancies and rents that are rising faster, Krisfalusi said.

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“There hasn’t been as strong a return yet to the urban core,” Krisfalusi said. “The rents are going up in that outer circle of suburbs. That is where we are seeing new construction happening, too.” Krisfalusi says that he expects apartment rents to continue to rise in most markets throughout the rest of this year. They probably won’t rise at the same rate as they increased last year, though, when monthly rents rose at an historic pace.

FINANCE

Midwest Real Estate News

“There is still a focus on good accounts receivable to make sure we are not catching a spike when closing,” Krisfalusi said. But despite this added caution, Doyle said, there is also more optimism today on the part of lenders. There is a feeling that the United States has already made it through the worst of the COVID-19 pandemic. “When looking back at April of 2020, we were all fearful of bad outcomes in

retail and in multifamily, too,” Doyle said. “I have been surprised at the resiliency of commercial real estate. We’ve looked at 10 to 15 shopping center deals already this year. All the centers were paying full rent. Any kind of COVID concessions have been fully paid back. We saw that multifamily tenants for the most part did not stop paying their rents. We are now starting to see a rebound in most sectors. The future looks promising.”

He said that tenants historically have paid their monthly rents even during challenging economic times. Why? Everyone needs a home, and consumers prioritize housing when they face financial struggles. “People historically have paid their rents and mortgages,” he said. “And during COVID? People’s homes became their offices, their cocoons. People did everything they could to pay their rents to keep their cocoons.”

Krisfalusi agreed with this sentiment.

“Consumers are absorbing price increases everywhere,” Krisfalusi said. “Rent is just one more of those areas.” What are lenders looking for? Lenders today are focused heavily on the rents and sales that retail centers are logging per square foot, Doyle said. They also want to ensure that these centers’ occupancy costs are in line. Doyle said there is more of a focus from lenders on the quality of the tenants at retail centers. And when looking at loan-to-value? Doyle said that in the past lenders would be able to get up to 75% LTV on retail financing deals. Today, that figure is capped by most lenders at 65% LTV, he said. “There has to be a little more selling today from sponsors to make lenders comfortable,” Doyle said. “We need a good sense of the strength of the center. There is more data out there today. We have data that can tell us if we are looking at a top-10 store in the market. Lenders are digging in and trying to understand the story behind a deal and trying to learn how strong a center might be.” Krisfalusi said that while COVID cases have been falling -- at least as of the writing of this story -- the multifamily market is still not completely out of the woods when it comes to the renters’ assistance programs that states and municipalities launched during the pandemic. When considering financing requests, then, Walker & Dunlop looks at the accounts receivables and collections of sponsors. Lenders want to be certain that there haven’t been any spikes in the prior 30 to 60 days of tenants entering economic assistance programs or renters not making payments.

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MILWAUKEE

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A resilient market: Milwaukee-area CRE brokers, developers didn’t let COVID slow them down

By Dan Rafter, Editor

urprisingly resilient. That’s what a pair of commercial real estate pros said about the performance of the CRE market in Milwaukee and its suburbs throughout the COVID-19 pandemic. As in all cities, real estate pros in this slice of Wisconsin worried that the pandemic, when it first grabbed headlines in March of 2020, would throw the commercial real estate market and the economy in general into chaos. But while there were slowdowns – more in some commercial sectors than in others – the commercial real estate market here remained mostly steady throughout even the scariest days of the pandemic. What’s behind the resiliency of the Milwaukee-area market? Midwest Real Estate News spoke to two CRE veterans in this city about that. Their responses? The Milwaukee area benefits from a great location, near plenty of transportation options. The workforce here is strong and ready to work. Local governments are friendly to businesses. And demand remains high for commercial properties, especially for multifamily buildings and industrial facilities. Busy times for Irgens Need proof of the strength of Milwaukee’s CRE market? Just look at the schedule of one prominent real estate developer here. Developer Irgens remains extremely busy in Milwaukee. Tom Irgens, executive vice president with the firm, says that Irgens is currently involved with four significant projects in the Milwaukee market.

use additional land on the site for a 180-unit multifamily development and an 8,000-square-foot retail building. “We see the future of suburban office parks as being amenitized with housing and other service-type businesses that provide services to the office park occupants,” Irgens said.

Irgens is building a new office building on land purchased from the University of WisconsinMilwaukee in Wauwatosa, Wisconsin.

Work at the existing office building will include a redo of the lobby and a reworking of the parking areas. Irgens will add common-area amenities such as a fitness center with lockers and showers, tenant lounge, new conferencing areas and outdoor patio space. This amount of activity is clear evidence that Irgens expects continued demand for office and multifamily space in the Milwaukee market.

The Golf Parkway Corporate Center is another office project, this one in Brookfield, Wisconsin, being developed by Irgens.

foot office building mostly leased to Milliman, an international actuarial and consulting firm. Milliman is scheduled to move into that building, known as the Golf Parkway Corporate Center, this summer. Irgens has signed two additional leases at this building, one with an accounting firm and another with a regional bank.

Irgens is now putting the finishing touches on two buildings in the Brookfield, Wisconsin, market. One is a 450,000-square-foot build-tosuit that will serve as the corporate headquarters for Hydrite Chemical Company.

Irgens also purchased 25 acres of land from the University of Wisconsin-Milwaukee in Wauwatosa. On May 1, the company will break ground on a 70,000-square-foot three-level office building here and a two-story, 633-stall parking structure. Irgens has received permission, too, to build a six-story 178,000-square-foot office building on the same site.

The second is an 186,000-square-

The University of Wisconsin-Milwau-

kee Innovation Campus is designed to be environmentally friendly, with all buildings reaching for LEED-certification. The project has also received a SITES designation, meaning that the entire site, and not just its buildings, will follow certain green principles. This means that the site will feature native landscaping and heightened stormwater management practices. The parking structure will feature a green roof with a solar array. “This is a very exciting project for us,” Tom Irgens said. Irgens has also purchased a vacant office building in the Milwaukee County Research Park in Wauwatosa that was previously occupied by United Healthcare. Irgens plans to renovate the existing building and

“We are seeing a definite flight-quality and a willingness of users to pay for quality product in the office sector,” Irgens said. “Companies want amenities in their office spaces. They want the newer HVAC systems and they want to be in good locations that are convenient for their team members. They want to be in vibrant suburban locations that offer local restaurants and retail options.” Irgens is seeing this in its Wauwatosa and Brookfield projects. Irgens said that the number of new leases during the last six months has been high. This includes new tenants leasing space, tenants that are renewing and some that are expanding their footprints. This doesn’t mean that the Milwaukee office market isn’t facing challenges. Older office buildings are not as attractive to tenants today, Irgens said. Many of these are being converted to new uses, such as a large office building at the Mayfair Mall in Wauwatosa that has been converted into a hotel. Other obsolete office spaces are being turned into multifamily buildings. MILWAUKEE (continued on page 14)

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MILWAUKEE (continued from page 12)

One sector that isn’t seeing many challenges? Multifamily. Irgens said that demand for multifamily development remains strong throughout the Milwaukee market. This is especially true in suburban markets where there hasn’t been much construction of new apartment product in many years. “At the same time, you see limited growth in single-family housing,” Irgens said. “And the single-family homes that are available are more expensive. Municipalities realize that having alternative housing options both market-rate and affordable are important for the ecosystems of their communities. These municipalities have become more receptive and open to quality multifamily developments in strategic locations.” Katherine Bills, a shareholder who works out of the Milwaukee and Chicago offices of Milwaukee-based law firm Reinhart Boerner Van Deuren, said that commercial real estate across the country and in the Milwaukee market has proven to be especially resilient during these challenging times. And when it comes to the country’s strongest commercial sectors, multifamily and industrial? Bills said that the Milwaukee market, and the entire state of Wisconsin, is well-positioned for even more growth in the future. Bills pointed to Milwaukee’s proximity to both Mitchell Airport in Milwaukee and O’Hare International Airport in Chicago as one reason for this bright future. The Milwaukee area also has plenty of land on which to build and a strong workforce that Bills said is ready, willing and able to work. “And then when you compare our market to Illinois, costs are cheaper here,” Bills said. “It’s the perfect storm. You still have the proximity to ship goods through a global airport in O’Hare but it is more cost-effective than if you build just south of the border.” And while industrial is certainly booming in the Milwaukee market, multifamily is thriving here, too. Bills said that there is a tremendous need for new multifamily developments in

Irgens is developing a new corporate headquarters for Hydrite Chemical in Brookfield, Wisconsin.

both the city and suburbs of Milwaukee. Part of the reason for this demand is the boom in industrial development. “As more industrial sites are built in places like Mt. Pleasant, you need housing for the workers,” Bills said. “It’s a nice feedback loop. People are continuing to move to Wisconsin. Because of that, multifamily is a huge need.” There are other factors behind the growth of multifamily, of course. After the 2008 recession, homebuilders here never returned to their pre-recession levels. This has left a lower supply of new homes in the area. At the same time, members of the Millennial generation who waited longer than other generations to buy their first homes have now jumped into the housing market in greater numbers. There isn’t enough single-family housing out there to meet the demand for it. Finally, prices are playing a role, too. Single-family home costs are rising, and it looks like mortgage interest rates will increase in the near future, too. That combination is pricing many would-be buyers out of the market for single-family homes. “I think demand for multifamily will remain strong,” Bills said. “One of the attractive things about the Wisconsin apartment market is that

there are certain segments that are hot but there aren’t all these crazy prices like you sometimes see in L.A. or other cities.” Not all commercial segments are booming in Milwaukee today. The office market here, as it does across the country, faces uncertainty as companies struggle with when and how to bring their workers back to the office. Bills said that companies are now reevaluating how they will use their office space. “You are not seeing companies build out a ton of space right now,” Bills said. “There was a fear at the beginning of the pandemic that there would be a mass exodus of companies giving up 100% of their office space. But we are not seeing that. There is definitely some consolidation. In the last two years, companies, especially larger ones, have been looking at their office portfolio and considering ways to consolidate. But I think a lot of this contraction might have already occurred.” The retail market in Milwaukee also faces its own uncertainty, with retailers in the suburban areas of the market generally performing better than those located in downtown areas. The fate of the office market is also impacting the fortunes of the retail market in downtown Milwaukee neighborhoods. It’s tough for retail-

ers in downtown Milwaukee when those office workers aren’t around. “Everyone wants a vibrant downtown,” Bills said. “But if you are a lunch spot for downtown workers and there are no downtown workers, how do you justify keeping that expensive downtown rented space?” But Bills said that Milwaukee has one advantage over markets like Chicago when it comes to downtown office and retail: Rents aren’t as expensive. “If you are a national company with 200 office spaces throughout the country, your per-square-foot Chicago office costs more than your persquare-foot Milwaukee office space,” Bills said. “Those office spaces might house the same number of workers. You might keep the Milwaukee office open because it is more affordable.” And what does the future hold for Milwaukee? Bills says that no one can predict the future, but she is optimistic that commercial real estate activity will remain strong in the city and its suburbs. “If the past two years have taught me anything, it’s that no one can really predict anything,” Bills said. “But I think Milwaukee will continue to see strong development activity. The rising interest rates might slow things down a bit, but those rates will still be at historically low levels. So, yes, I am positive about the future of commercial real estate in Wisconsin.”

Berkadia’s Chris Bruzas: The world has changed. So has the multifamily market

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March/April 2022

Midwest Real Estate News

By Dan Rafter, Editor

The Circle City Apartments offer an example of the modern touches and amenities that renters are looking for in apartment complexes today.

future in which people spend more time working from home than they do commuting to the office. The lure of the open spaces and lower costs of the suburbs. And a growing appreciation of smaller but still bustling cities such as Indianapolis, Kansas City, Milwaukee and Omaha. The world has changed since the COVID-19 pandemic turned life upside down in the United States back in March of 2020. And the multifamily market? It has changed with it. But here’s the twist: Many of the changes that have surfaced because of the pandemic have actually strengthened an already sizzling multifamily sector. More people working from home? Apartment life becomes even more important.

“ Indiana is very business friendly. We have slow-and-steady rent growth. T there are reasons why Indianapolis is an attractive market for out-of-state investors.” People ready to leave more expensive urban downtowns? Apartment owners in the suburbs are happy to welcome them. Midwest Real Estate News recently spoke with Chris Bruzas, senior di-

rector in the Carmel, Indiana, office of Berkadia, about the enduring strength of the multifamily market. Bruzas is a particularly good source for this story. He and his team – the members of which no longer work

side-by-side but, like at many other companies, are scattered throughout their own home offices – are busier than ever. And the Indianapolis-area multifamily market remains a sizzling one. Here’s some of what Bruzas had to say about Indianapolis’ apartment sector and what the future might hold for it. The Indianapolis apartment market has been strong for a long time. How is it performing today? Chris Bruzas: The market continues to stay crazy. It’s hot. At the end of last year, we started to see a decrease in the number of investors bidding on multifamily properties MULTIFAMILY (continued on page 24)

CHICAGO

Midwest Real Estate News

March/April 2022

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That industrial boom? Don’t expect it to slow anytime soon

By Dan Rafter, Editor

he industrial sector had been booming long before COVID-19 hit the United States. And during the pandemic? An increase in online shopping has fueled an even bigger boom in this asset class. But what does the industrial market look like in Chicago and its suburbs? How strong is demand for industrial space in this key slice of the Midwest? We spoke with R. Kelly Disser, executive vice president for industrial services with NAI Hiffman in the Chicago suburb of Oakbrook Terrace, about just how active the industrial market has been in the Chicago market. Disser said that demand for industrial space continues to rise, with spec facilities filling quickly and a steady stream of new users seeking warehouse and distribution space in Chicago and its surrounding counties. Let’s start with the obvious question: How strong is the industrial sector today in the Chicago suburbs? R. Kelly Disser: Without getting into too much hyperbole, it’s very strong. You talk to leaders in the industry, developers and brokers, who have longstanding careers in the industrial real estate market, and nobody’s seen anything like this before, to this extent. No one has seen this much broad-based strength throughout the entire industrial sector. There might be a pocket here or there where you have some holes in demand, maybe in the city of Chicago in some certain pockets. But all the corridors have been experiencing declining vacancy rates, increased absorption, increased amounts of new construction and increased rental rates. It’s just been incredibly strong. Industrial was thriving before the COVID-19 pandemic hit and continued to boom during the pandemic. Are you surprised at how long industrial has been so strong?

Disser: You had the financial crisis years in 2008, 2009 and 2010. The industrial market bottomed out then. We started coming out of it in early 2010, and in 2012 we started gaining some traction. Then in 2013, 2014, 2015, 2016, 2017, 2018, 2019, we had a fairly healthy recovery. Every developer was trying to peg what inning we’d be in if this was a baseball game. Then COVID hit. In March, April and May of 2020, those were frightening times. Everything locked up. In June 2020, the industrial sector started to thaw. In July, we saw more activity. In August, it was the same thing. Every month started building on the last. Early to mid year 2021 was gaining strength, and now for the last six months, the industrial sector has been hitting on all cylinders. Are there any signs that industrial demand might start to lessen soon? Disser: Not yet. The industrial market has a lot of support from a lot of different fundamentals. The question is how long this current strength might persist. We are starting to see interest rates rising. We are deal-

ing with the war in Ukraine. Those factors cause concern. But they haven’t caused a noticeable change of momentum in the industrial sector. The supply chain is complicating construction, making building costs more expensive. But the supply chain issues are driving the increased warehouse demand. We are actually seeing tilt-up panels being considered in Chicago for new construction, which was historically a pre-cast concrete panel construction market. This is due to such strong demand to accommodate all of the new construction. If you have a project to be delivered in the next 18 months and you don’t or your general contractor doesn’t have panels secured today – you may need to consider Tilt up or get in line for pre-cast. Consumers increased their online shopping during the pandemic. How has that impacted the industrial market? Disser: Online shopping has increased during the last two years. But if you zoom out historically, this is a relatively new phenomenon. It had started pre-Covid, but COVID

forced many online transactions, and it has greatly accelerated a transition to the ecommerce marketplace. It broadly changed the buying habits of the American consumer. Brickand-mortar will never go away, but it has been forever changed; more and more consumer goods are now purchased online than ever before, as compared to through brick-andmortar real estate. There are a lot of studies looking at what every dollar spent online translates to in the necessary amount of distribution space needed to fulfill the collective orders and ultimately bring it direct to every consumer’s doorstep. The ecommerce economy continues to be built out today. We are still seeing the infrastructure needed to support this ecommerce economy being built. It will take a couple of years to support the foundation and infrastructure needed to support that level of economic activity. There is still an incredible amount of demand for the facilities needed to support ecommerce. CHICAGO (continued on page 28)

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CONSTRUCTION

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March/April 2022

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Commercial construction in 2022: A story of soaring demand and rising challenges

By Dan Rafter, Editor

hese are interesting times for commercial construction. Demand for new industrial facilities, multifamily properties, data centers and advanced-technology manufacturing spaces is soaring. At the same time, developers and contractors face labor shortages and long delays for the building materials they need. Anthony Johnson knows all about these highs and lows. He’s president and shareholder and industrial business unit leader for St. Louis-based real estate, construction and architecture firm Clayco. He understands just how unusual these times are. Midwest Real Estate News recently spoke with Johnson about the state of the commercial construction industry. Here’s what he had to say. Let’s start with the hottest sector: How strong is industrial in your home market of St. Louis? Anthony Johnson: St. louis is a smaller industrial market, but going by a pro-rated set of standards, St. Louis has had some very strong years in industrial. We have seen strong development activity on the Missouri side of the St. Louis market. In fact, we just completed a couple of facilities for Amazon last year. There is also the portion of our market that extends to the eastern side of the river in Illinois. Right now, the largest spec warehouse building that has ever been constructed in this market is being developed on that side of the river by NorthPoint Development. Why has industrial been so strong for so long? Johnson: The reasons seem to be evolving on a near-daily basis. There has been a substantial change in consumer behavior when it comes to ecommerce. Online shopping became even more prevalent when the pandemic started, and as the pandemic extended, more people’s shopping habits changed. They became even more comfortable with buying more

Clayco’s Macy’s Flagship project in Chicago earned the Office Redevelopment Project of the Year.

products online. That growth and demand came at the same time we saw so many challenges with the supply chain. This combination changed a lot of companies’ approaches to how they structured their supply chains, how much product they held close at hand. There has been an ongoing modification and evolution that exacerbated the growth in industrial demand.

a need for more distribution space, but also the growth of manufacturing here that has contributed to industrial’s strength. How challenging is it today, though, with the labor shortage and the longer time it is taking to get building supplies?

Some of the shipping and supply chain issues that we saw with distribution also surfaced in the manufacturing world. Having product available domestically versus relying so heavily on having your products overseas became an important move for companies. The geopolitical issues that have been ongoing have also influenced the demand for more industrial space here. Earlier, we had the rapid Chinese shutdowns in response to COVID. Now we have the current situation in Ukraine and Russia.

Johnson: Those concerns top of all our conversations internally. There is not a day that goes by where material procurement is not part of a conversation. The products that are delayed, though, have changed over time. Initially it was steel. Then it was roofing products. For a while it was lumber. The biggest thing that has surfaced lately is electrical and mechanical equipment. There is a very large demand for that type of equipment with all the new builds. There is a large demand for mechanical and electrical systems that manufacturers haven’t been able to keep up with.

Because of all this, a lot of companies are focused on onshoring their manufacturing. That, too, has driven a lot of demand in the industrial market. So it’s not just ecommerce, not just

Then there are one-time events that cause supply chain issues. For instance, a copper bust production plant caught fire. Electrical gear uses copper busts. That exacerbated some

supply chain issues. These challenges are not something that has gone away or is going away anytime soon. These challenges will continue into next year. We are going to have to continue to pivot quickly in reaction to these challenges. We’ll have to adjust our processes. We need to be in real-time dialogue with all our customers, contractors and suppliers to adjust schedules when needed. The multifamily market has been strong, too, right? Johnson: The market-rate apartment market is one that has a lot of momentum behind it, both in traditionally active markets like Chicago but then also in some of the markets that as people have transitioned to remote working they are looking to move into. Markets like Nashville, Charlotte and Phoenix are seeing strong demand for multifamily product. Any other commercial sectors that are particularly strong right now? Johnson: There is a strong demand for mission-critical data center construction. There has not been a slowdown

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CONSTRUCTION

Midwest Real Estate News

in that market at all. As the pandemic progresses and we see more remote working, virtual meetings and the cloud-based storage of information, the demand for data centers has continued to grow significantly. These data centers are getting built in traditional markets like Virginia, but also in markets in the Midwest, like in Ohio. There are a couple of largescale data campuses getting started in Ohio right now. We are also seeing big demand for data center space in Boise, Idaho. Then there is the advanced-technology manufacturing space. A lot of the demand for these spaces is driven by consumers’ habits when buying electronics. The semiconductors required to power these electronics are in high demand. We are also seeing the transition to electric vehicles. Those two things are resulting in an incredible demand for new construction space in this area. There are more than 30 large-scale advanced tech projects at around $1 billion either under construction or about to start in the country right now. Those are large-scale, billion-dollar capital investments per project that are under construction or

is trying to determine what the next phase of office growth is. They will start to figure that out soon. The large employers are starting to get their employees back to the office. Companies like Google and Apple have made their announcements. The fine print, though, shows that some companies are only requiring their employees to come into the office one day a week.

Clayco has built facilities for Amazon recently in the St. Louis market.

are starting construction in the next six months. And it doesn’t look like the transition to electric vehicles is slowing any. Johnson: Not at all. You had the startup companies like the Teslas in the mix early. Now you have newer startups. Like Lucid Motors. But the big thing that has happened, is that the big-three automakers have started their push toward electric vehicles.

They are building their infrastructure out at a rapid pace. It is now a complete industry boom. How about the office market? I know that has been a challenging sector across the country. Johnson: We are very active in the office market. That, though, is the segment that the customers have put a pause on as people have worked from home. The investment market

The key thing is to see how that evolves over time. How are employees going back to the office? We do have some larger clients that have already started talking to us about office projects in the future as they are anticipating getting their workers back. They are planning to fill offices again and need space in the not-too-distant future. That mimics with Clayco’s approach: We were very intentional about getting our workers back in the office as soon as possible in a safe way. We believe in collaboration. People perform better when they are surrounded by their peers. They are more efficient in person than when working virtually. In the long run, I think that is how this will all shake out.

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RETAIL

Midwest Real Estate News

March/April 2022

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The House of Sports, a new concept from Dick’s Sporting Goods, has already opened in Knoxville, Tennessee.

RETAIL (continued from page 1)

“More and

The rebound is here

more retailers

Deb Carlson, director at the Bloomington, Minnesota, office of Cushman & Wakefield, said that experiential retail is bouncing back strong in her market, especially as COVID-19 numbers continue to fall.

are offering experiences like

“Consumers are looking for interesting ways to spend their dollars,” Carlson said. “They want to spend them on experiences today.”

this as a way to fight back

This is good news for indoor minigolf spots targeted toward adults or bowling alleys offering gourmet meals and light shows. It’s good, too, for movie theaters with heated seats and meal service and adult playlands that offer retro arcade games and golf simulators. Carlson points to the trend of revenge shopping. Some consumers waited so long to return to retailers, that they are now ready to spend their dollars with a vengeance.

against online shopping.” Puttshack, which offers electronically scored indoor miniature golf, has already opened in the Chicago market and is planning new locations in Nashville and St. Louis.

“We are as anxious in the Twin Cities as anybody to get out of our houses,” Carlson said. “We are ready to

get out there and spend our money. The experience piece is going to be more important going forward. We

haven’t had many experiences the last couple of years. There’s a real interest now that we are getting out of the house again on what interesting things we can do.”

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March/April 2022

X-GOLF, which runs indoor golf simulators, is firmly in expansion mode. The retailer has locations in Illinois, Michigan, Wisconsin, Minnesota, Ohio, Indiana and Kansas.

And experiential retail isn’t just about big chains offering electronic putt-putt and high-end bowling. It’s also about local retailers. Carlson said that shoppers are aware that local retailers got hit especially hard during the pandemic. They didn’t have the cash reserves of some of the national chains. Consumers, then, are ready to patronize local retailers again. And these locals are ready to provide them with experiences of their own. When consumers shop at local stores they might meet the shop’s owners. They might get into a conversation with the owner of the local toy shop about what educational toy would be the best fit for their grandchildren. Or maybe they’ll attend the signing of a local author at the neighborhood independent bookstore. These are all experiences, too. “More and more retailers are offering experiences like this as a way to fight back against online shopping,”

RETAIL

Midwest Real Estate News

Carlson said. “Some of the malls here have even added more local players. They are adding more local, Midwest-based vendors. They are trying to bring that local experience retailer back in.” In addition to offering experiences, Twin Cities-area retailers are looking at right-sizing their footprints, Carlson said. This might mean opening smaller locations in urban centers, spaces designed for consumers who want to run into a store, grab a few items and take public transportation or walk home. Other retailers are closing locations that are no longer performing well. Still others are adding additional retailers inside their spaces, such as Target stores adding CVS branches. Consider Kohl’s, too. This chain has brought Amazon into its stores. Consumers who want to return their Amazon purchases can simply bring them to a Kohl’s. They might then

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MULTIFAMILY

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MULTIFAMILY (continued from page 15)

when compared to earlier in the year. A lot of investors were getting frustrated. They were spending a lot of time on deals they couldn’t land because the competition was so intense. But even as the number of bidders on these properties fell, the pricing went through the roof. At the end of the day, you only need one buyer to find a deal. There is so much money out there chasing the market. What we are seeing today is that to win a deal, you have to assume higher rent growth in the first five years. You have to assume a lower cap rate. You have to look past some issues with properties. If you get hung up on any of those, you’ll lose the deal. Someone else is available to make that deal. Is there anything else unusual about the Indianapolis-area apartment market today? Bruzas: Last year, more than 70% of my buyers were from New York City or had New York equity. Usually, that figure is below 50%. Do investors love markets like Indiana? Do they even know how to get here? I don’t know. But they do see markets like Indiana as safe vehicles. Indiana is very business friendly. We have slowand-steady rent growth. The amount of New York money we saw last year is an anomaly. But there are reasons why Indianapolis is an attractive market for out-of-state investors. Why is the multifamily market such a good bet for investors today? Bruzas: At the end of the day, everyone needs a place to stay. In a market like Indianapolis, if you are in an apartment, your options are to renew your lease when it expires and agree to pay, say, 5% more than in the previous year in rent. Or, as option B, you can move into a starter home that costs about $300,000 to $400,000. If you go with option B, by the day houses hit the market, they have 10, 15 or 20 offers. There is extremely high demand out there for single-family homes. And there is low supply. Some people bid on houses and then get frustrated. If 20 people bid on a house, 19 don’t get it. Faced with that stress, it’s a pretty easy decision for many to stay where they are and to continue renting.

“Indianapolis has done a good job with job growth. It’s easy to get around here. Traffic is not crazy. A dollar still goes a long way here, especially when compared to a market like Chicago. A lot of people in Indianapolis have moved here from Chicago. We are seeing bigger companies coming to Indianapolis and growing here. Salesforce is a good example.” What makes Indianapolis in particular such a strong apartment market for investors? Bruzas: Indianapolis has done a good job with job growth. It’s easy to get around here. Traffic is not crazy. A dollar still goes a long way here, especially when compared to a market like Chicago. A lot of people in Indianapolis have moved here from Chicago. We are seeing bigger companies coming to Indianapolis and growing here. Salesforce is a good example. There has also been little new construction in the apartment market throughout the whole city. This has been particularly true the last year or two as lumber and other costs have gone up. Developers are waiting to start projects, hoping that costs go down. We have had very little new supply during the last two years. The demand for apartment space, then, continues to climb. Are you seeing more people move to Indianapolis from other more expensive markets? Bruzas: I was one of those people. When the pandemic hit, I moved from Chicago back to Indianapolis where I grew up. I have been back two years now. I am bullish on markets like Indianapolis. A dollar goes a long way

here. If you are looking on a restaurant or social level, you can’t compare Chicago to Indianapolis. Chicago wins all day. But Chicago also has more issues. There is more crime. The state is in financial trouble. There is a lot more to deal with when walking in Chicago versus walking around Indianapolis. I think it makes less and less sense, depending on where you are in life, to continue long-term living in apartments in a market like Chicago. People are now going to the lower-cost suburbs or markets like Indianapolis. That, along with more work-from-home, has benefitted the apartment market in Indianapolis. How has the increased number of people working from home impacted the apartment sector in markets like Indianapolis? Bruzas: My analysts can be sitting in Anchorage, Alaska, as long as they have Internet. I don’t care where they are. I don’t need everyone sitting next to me in an office. I think this trend will continue. Companies will need less office space and will have less of a desire to spend big-ticket money on office space. If you are working from home, why live in a high-rise for $4 or $5 a foot in Chicago? It makes more sense to rent in a market like Indianapolis. I

believe that more people will move to lower-cost major cities in the future. What’s the apartment situation like in Indianapolis’ suburbs? Has the suburban rental market gotten a boost? Bruzas: Downtown Indianapolis has been back from COVID for almost a year now. If you are a young, 20-yearold, there’s still a lot to like about living in downtown Indianapolis. But not as many young people are renting in downtown Indianapolis for 10 years anymore. They are staying downtown for a shorter period of time. At the same time, there are these new downtown areas in Indianapolis’ nearby suburbs. Places like Carmel and Fishers have created these mini downtowns with an urban feel to them. But you are still in the suburbs. You’ll get cheaper apartment rents than you would in downtown Indianapolis, but you’ll still get a downtown feel. You might be able to walk to three or four restaurants from your apartment as opposed to 10 or 20 in downtown Indianapolis, but you get more bang for your buck when it comes to your apartment unit. And you’re only 15 to 20 minutes from downtown Indianapolis. These little suburban downtown areas are hot.

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Can you talk a bit about how you’ve kept your business strong during the pandemic? Bruzas: We are seeing an enormous amount of activity this quarter. My team, specifically, is operating leaner today. Everyone knows his or her role on our team. And with the exception of me – I am still meeting with clients on a more daily basis – the rest of my team just needs Internet access. We have this machine set so that if there is any clog in the line, we know where the clog is. We all hold each other accountable. Everyone knows his or her role. We don’t need to be next to each other. That is a thing of the past. We are all younger than the average team that is doing this much business. We are more efficient and quicker. COVID has accelerated that. Our efficiency is a big reason for our success. It’s why we’ve won so many listings. Our clients want everything done yesterday, so they are looking for efficiency from their partners.

MULTIFAMILY

Midwest Real Estate News

“Buyers still need to see the real estate before they make a decision. They need to see the property to remove much of the risk of their investment.” Do you think this way of working – leaner and more efficient, people not required to be in an office all day – will remain even after the pandemic fades?

Bruzas: Buyers still need to see the real estate before they make a decision. They need to see the property to remove much of the risk of their investment. That still needs to happen. That is always going to be there. But

in terms of getting acquainted with a deal, the videography we offer, the photography, the quarterly reports, the monthly third-party reports, that takes away 90% of the guesswork for a lot of our clients. They can tell quickly if a property fits their business plan. This has created a more efficient atmosphere. Commercial real estate is still oldschool. The technology is better than it used to be, but this is a business that has been dominated historically by older men. A lot of that has to do with the weed-out rate. If you don’t make money for a year or two, you probably won’t stick with commercial real estate. But there are people who are embracing new technology. That’s why I like Berkadia. This company is more focused on your production. You are encouraged to create a more efficient atmosphere. And I think this mentality of boosting how efficient you can be is here to stay.

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CONSTRUCTION

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March/April 2022

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The new formula for construction industry success: infrastructure spending and the transition to electric vehicles By Dan Rafter, Editor

t. Louis-based general contractor Alberici Constructors recently made eight promotions in its executive leadership team. The reason for this expansion? The firm expects business to continue to boom, spurred in part by the renewed focus in the United States on infrastructure spending and the country’s steady transition to electric vehicles and the manufacturing facilities that this transition will require. Greg Hesser, president and chief executive officer of Alberici Constructors, and Aaron Walsh, Alberici market leader for automotive, discussed the impact of these two factors on the construction industry, and how the push for infrastructure spending will benefit their company.

curement of many projects. We’ll likely see 10 to 12 years’ worth of work put into place in five to six years. For example, Lock and Dam 25 located in Winfield, Missouri, is a U.S. Army Corps of Engineers project that we have been tracking for several years. With the passage of the infrastructure bill, what was initially expected to be procured five to seven years from now is now being procured in 2022.

Why was this the right time to make so many promotions? Greg Hesser: We are in a transfor-

mative era for the type of complex construction projects Alberici has delivered for decades. Our executive leadership promotions position Alberici to fully leverage our experience and core knowledge for the next generation of projects, fueled by unprecedented infrastructure spending. Recruiting and retaining talent is critical to our business, and we need talented leaders to deliver these projects and build strong teams. We hired more than 50 new employees last year and continue to hire at all levels from project engineer to vice president of construction. We serve a diverse set of markets and industries and have considerable flexibility in our financial, engineering and skilled workforce resources to serve emerging markets.

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Why does Alberici expect so much growth in infrastructure jobs? What are the trends behind this? Hesser: Overall, nearly 75 percent of our work nationally is industrial and infrastructure-related with a focus on water/wastewater treatment, manufacturing and heavy civil/marine work. Looking at our pipeline and capacity, our revenues from our infrastructure business could double in the coming years. The infrastructure bill passed last November will accelerate the pro-

More importantly, infrastructure spending supports more than just a building project. In our 104-year-old history, we have found that increased infrastructure spending energizes innovation not only in what we build, but how we build it. We’re repairing, rebuilding and replacing infrastructure that is nearly 100 years old. We expect to innovate as always to deliver greater value in how we build. Developments in technology will provide more robust, longer-lasting and more functional infrastructure while keeping our workforce safer than they’ve ever been. We’ve developed a deep bench of resources and a roster of traveling talent that we can deploy anywhere to serve existing and new markets. What impact is the auto industry’s move to electric vehicles having on the construction industry, and what impact does Alberici expect it to have on its business in the coming years? Aaron Walsh: It is more than just building new plants or retrofitting plants to build electric vehicles. It is also the ancillary industries that serve the production of electric vehicles, such as battery plants. Our automotive clients are partnering with technology companies to provide the process systems and technology to manufacture batteries in multi-billion-dollar facilities. The scale, speed, and complexity CONSTRUCTION (continued on page 28)

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CONSTRUCTION CONSTRUCTION (continued from page 26)

of these projects require significant resources, expertise and financial stability to deliver. As a result, many clients have engaged contractors in unique partnerships to deliver these projects on time and at good value. Alberici is in an excellent position to serve. I’ll ask the same question about the increase in environmental projects: Does Alberici expect that to boost its business over the coming years, too? Walsh: Industries are responding to accelerating customer and regulatory demands to protect our environment, and our work and processes are responding to those demands. In the automotive sector, for example, Canada is looking to ban combustion engines by 2035, several international governments are looking to ban gasoline-powered vehicles by 2040 and companies like Ford, GM and Mercedes have agreed to work towards a zero-emissions fleet by 2040. There has always

CHICAGO (continued from page 16)

Is this a trend that will continue after the pandemic eases? Disser: I don’t see the demand for online shopping slowing. That habit is here to stay. You will, however, reach a saturation point of distribution centers required for that online fulfillment. At some point, you’ll have enough to supply that level of economic activity. But as of today, that infrastructure is still being built out. Are you still seeing a lot of speculative construction in the Chicago suburbs? Disser: There is an impressive amount of spec development. And that space is being leased relatively quickly. This fuels more development and the cycle continues. Developers and end users like locations that are easily accessible to freeways but are near areas of dense rooftops. That makes sense: A lot of the materials in those ware-

Midwest Real Estate News

been a sustainable component to the work we do in auto manufacturing, but the move to electric vehicles and the investment in EV battery manufacturing is advancing at an unprecedented pace. Hesser: The definition of an ‘environmental project’ has also expanded in ways not imagined 20 years ago. We are seeing some projects that are related to climate change. One of our projects, the Mid-Barataria Sediment Diversion project, will divert 10 percent of the Mississippi River to reverse coastal erosion and begin to build back land mass for the state of Louisiana. Our $494.2 million Wichita Northwest Water Treatment Facility project is a new state-of-the-art, fully redundant, drought-resistant treatment facility that will be able to deliver 120 million gallons per day to residents and businesses in Wichita, Kansas. How is Alberici working around the challenges facing the construction industry today, everything from labor shortages to increased supply costs to supply delays?

March/April 2022

Hesser: We’ve always innovated because we perform enormously complex projects that integrate many moving parts. Our construction workforce is obviously a big part of that. We are driven to develop the highest-skilled and safest workforce by broadening the pool of talent. That includes a more inclusive workforce, specifically recruiting and developing more women and minorities into the trades. Our large self-perform crews allow us to optimize workforce productivity while maintaining quality, schedule and safety. Last December, our peak workforce for directly employed craft labor was more than 460 people. We’ve also deployed our extensive pre-fabrication capabilities and those of our subcontractors to effectively manage labor. It allows us to produce precision modular components off site for safer and more cost-efficient installation on projects. Supply chain challenges continue, but we’ve adapted by creating an internal task force that monitors a wide variety of industries and supply

“Chicago and the suburbs have a couple of major things going for them. The transportation infrastructure is strong. We have the rail infrastructure and the interstates.” houses and distribution facilities are going direct to people’s homes. What makes the Chicago suburbs such an attractive destination for industrial tenants? Disser: Chicago and the suburbs have a couple of major things going for them. The transportation infrastructure is strong. We have

the rail infrastructure and the interstates. We have the BNSF Railway running from the Port of Long Beach in California. But the real big driver, what really attracts tenants and necessary operations here, is the population base of Chicago and its surrounding counties. Chicago also contains a diverse labor base, which is a strength.

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chains to understand what may drive future impacts. Once we identify concerns, we focus on strong communication and collaboration with our clients to provide solutions to mitigate impacts to their projects and ongoing operations. This includes substitute products, refining the timing of procurement, engaging trade partners early in project planning and creating short windows to make decisions while bid pricing is still valid and locking in material production schedule and budget. One of Alberici’s more significant advantages is our steel fabrication subsidiary, Hillsdale Fabricators. Steel has become a major issue in the supply chain and is a critical path item that has significant schedule and cost implications. Engaging our own steel fabrication shop allows us more control over pricing and delivery, giving our clients more certainty in an unstable market. On one of our recent projects, our early involvement with the owner and designer allowed us to lock in our steel mill order early and saved nearly $600,000.

I know it’s difficult to predict the future, but do you think demand for industrial real estate in this market will continue throughout this year? Disser: Barring something unforeseen, some global conflict that could derail this momentum, I think it will. So long as the status quo holds, I think demand will remain strong. We are already seeing the fundamentals for a strong full calendar year in 2022. The demand is there. Vacancy rates are historically low. Effectively, in some submarkets there is truly no available space. If you need 100,000 square feet with 30-foot clear heights in the O’Hare submarket, you can’t find it. It’s not available. That type of situation leads and forces tenants and operators to consider other areas that they might not have initially targeted. There is growth throughout the submarkets of Chicago.

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March/April 2022

OFFICE

Midwest Real Estate News

Workers are returning to the office. Now companies have to earn their commutes

ffice buildings have sat largely quiet for two years now thanks to the COVID-19 pandemic. Today, though, the move is on to bring many of these workers back, at least in a hybrid mode in which they work some days from the office and others remotely.

Workers are also interested in offices that feel more like home, providing comfortable furniture and greater control over where they perform their work. Midwest Real Estate News recently spoke with Chris Congdon, director of global research communications with Steelcase, about the results of the survey and the steps companies and office owners need to take to boost the productivity of workers as they return to the office.

But what do these workers want when they return to the office? What are they looking for from their employers to make the return to the office as stress-free and productive as possible? Steelcase, the national manufacturer of office furniture, attempted to find out in a report released in February of this year. The report, The New Era of Hybrid Work, surveyed 5,000 workers in late 2021, asking them what they wanted to see in the layouts and

By Dan Rafter, Editor

Here is what she had to say.

functionality of their offices in 2022 and beyond. The results? Steelcase found that workers want private dedicated workspaces and aren’t happy with com-

pletely open office plans. They also want their offices to offer a variety of spaces that support individual work and in-person and virtual collaboration for small and large groups.

Let’s start with the important question: How would you describe a hybrid workplace?

OFFICE (continued on page 30)

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OFFICE OFFICE (continued from page 29)

Chris Congdon: A hybrid workplace is about empowering people to work from diverse locations. Different organizations will have different policies regarding the frequency of when they expect people to work in company offices or their own home offices. Right now, as people come back to the office, that will be fluid. What’s important, though, is that the workspace be designed to support this kind of work. A few fundamental factors need to change from the way office has been set up in the past.

Midwest Real Estate News

March/April 2022

“At the highest level, you are trying to achieve equity. You want the people who are in the office and the people who are home to all be having a similar experience.” in different ways based on the medium in which they are working.

What are some of those changes? Congdon: At the highest level, you are trying to achieve equity. You want the people who are in the office and the people who are home to all be having a similar experience. You don’t want to compromise part of your employee base depending on the locations from which they are working. The second big factor is engagement. Companies need to recognize that people engage

Consider that during this interview, we are all on Zoom. But not everyone has cameras on. In a lot of organizations, you have people working in an office and people who are on video. If I were to feel that I am not a full-on equal participant in a meeting because I am on video, I might be quieter. I might spend part of the meeting checking emails, tuned out and not engaged.

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How can companies create that equity once people are working both from home and in the office? Congdon: First, it has to be easy for people to do whatever it is they have to do throughout the day. Anything that creates friction for people causes them to resist. A workplace supporting hybrid work has to solve for those issues. The way offices are set up can help with this. If more people are attending meetings on video, not everyone will be gathering in a big conference room. Instead, people can gravitate to spaces where they have higher levels of acoustical privacy. They can head to enclaves and enclosed spaces that have four walls and a door. You are going to see more people in the workplace needing those spaces. That is the number-one thing people asked for in our survey: private spaces. That is more important now than before the pandemic. In our survey, 64% of respondents said they need places to do this hybrid collaboration. If companies want to support that equitable experience, they need to offer these spaces. What else do people want to see from their workplaces as they return to the office? Congdon: There is an increased demand for privacy. Even before the pandemic, there was a pushback against the open office plan. The way the open plan was interpreted by a lot of organizations was that everything was wide open. People were shoulder-to-shoulder. They were at benches. There was not a place to escape and get any kind of privacy, whether you needed to focus or needed to make a personal phone call. The push against that was happening before the pandemic. Now you have

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sent people home for two years. During this time, 70% either had a dedicated private office or were able to take over a guest room or some other space that became their private office. Contrast that with what people have in the office. More than 50% of people are sitting in open workspaces. After two years, people have more control over privacy at home than they do in the office. As they migrate back to the office, they expect spaces with higher levels of privacy. People want that privacy when they come back. They also want more work furniture that can either be moved easily by the user or by the installer. The demand is for less of a focus on permanence and more on flexibility. How about safety measures? Are people worried about their safety with COVID and a return to the office? Congdon: That does continue to be one of employees’ concerns. They want good air quality. There is less of a focus on material surfaces and more on air quality as we have learned more about COVID. Overall, employees have a heightened expectation that the workplace should be a place where you should be able to feel relatively safe from picking up crud, whether that’s a cold and flu or COVID. Organizations that are smart and savvy will focus first on their indoor air quality, on improving ventilation and filtration. They want to be able to say with confidence that they are providing a good turnover of fresh air for the people in their workplace. If they can’t do that, they’ll have to at least find more space for room-based air-purification systems or even personal ones. Will companies use the improvements to their office space as recruitment tools? Congdon: They already are. You can see where the investments are going. Organizations recognize that they have to earn people’s commutes. If people have alternatives, you can’t expect them to make those commutes for the same old thing they left behind two years ago. Organizations are very seriously looking at creating spaces that are checking all the boxes: inspiring, safer, designed specifically to suit the kind of work people are doing today. The pandemic challenged our traditional assumptions about the way things are or might work, and that’s true, too, in the office.

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March/April 2022

OFFICE

Midwest Real Estate News

Ripe with opportunities: Midwest’s office market is on the rebound

By William Bubniak, Farbman Group

ith the Omicron wave receding and the prospect of a spring and summer where COVID is less of a disruption than at any time since the start of the pandemic, commercial real estate professionals are enjoying a period of optimism and opportunity. The office sector has been slower to recover than the surprisingly resilient retail and restaurant sectors, but there are signs that office leasing and investment activity is picking up. The Midwest, where office sales are rebounding in an encouraging way, mirrors some of the patterns we are seeing nationally. Understanding the Midwest office market dynamics is instructive, not just as a snapshot of where the sector stands today, but what might be in store in the months and years ahead.

portunities are perhaps best suited for investors who are not looking for safe returns but are willing to take on a little more risk for a potentially significant up-side in the not-too-distant future. It’s not hyperbole to suggest that investors might make more money in office than in any other commercial real estate sector during the next several years. While sectors like industrial remain hot, so much of the value is already priced into the asset that genuinely lucrative opportunities can be tougher to come by.

Market headlines While there are clear differences from one Midwest market to the next, there are some key themes that show up across the region:

Disruption and opportunity

Chicago

It’s clear that a great deal of disruption and uncertainty remains in the office market now. There are very real questions about what comes next, and because virtually every tenant’s space needs are in play and few office tenants really know how much (or what kind of ) space they will need in the future, some hesitancy is understandable.

Chicago still faces some high-tax headwinds, along with safety and security issues and political challenges. Foreclosures of office deals in Chicagoland are at their highest point in some time. Judging by the enthusiasm with which investors are pursuing deals right now, there is widespread confidence that Chicago is going to come back.

Some prominent brands and businesses that had moved to a virtual or hybrid model have been bringing their people back to the office, while others have remained more cautious. For all the excitement about newly flexible remote operational models, the overwhelming consensus seems to be that in-person office remains enormously valuable. Most decision-makers believe that getting your people back in the office will fuel greater ingenuity, creativity and productivity.

Recent highlights of noteworthy office transactions include the sale of the controlling interest in the Bank of America tower at 100 N. Wacker Drive. With the building valued at around $1 billion, that makes it one of the biggest office transactions in Chicago history. Two other downtown towers also recently sold, including the 64story Wacker drive building next to the iconic Willis tower, in transactions approaching $400 million.

Industrial and multifamily may be dominating commercial real estate headlines, but we are also seeing growing numbers of investors taking advantage of market conditions by buying a sizable number of office assets—and looking to buy more.

Fulton Market is a particularly hot area of the city, sapping some of the energy from the fabled Loop, where activity has been more sluggish. However, the Loop isn’t going away. As the Chicago office market rebounds, there will be an inevitable flight to quality, and betting against Chicago and The Loop is a sucker’s bet.

While leasing activity is still gathering steam, we are starting to see more law firms, financial services and tech companies signing downtown deals. From an investment perspective, the market seems to be at a place where if you buy now, you will capture a lot of opportunity with upcoming leasing. Detroit In Detroit, we are also seeing a relatively modest uptick in leasing. On the investment side, many investors are still being quite selective about what opportunities to pursue and are taking advantage when they can get a deal with favorable basis points. Detroit isn’t flashy, but savvy investors have recognized for several years that it is a city on the rise. A market that was already amid a significant civic renaissance before the pandemic, Detroit is still in a strong place in its broader economic and civic revival. Square footage remains more affordable, the auto industry looks poised for growth with the advent of the electric vehicle market and we are already seeing money invested across Southeast Michigan. Challenges and priorities We are already seeing lots of firsttime investors coming to the Midwest to tap into buying opportunities that simply don’t exist on the coast. Given the still-somewhat uncertain state of the market, the most promising op-

In other words: If you have the equity resources, now is a great time to invest. That said, the near- and midterm will not be without challenges, and all investors should be cognizant of what lies ahead. Owners and operators will have to be more hands-on and expect to spend more time and resources taking care of their tenants. For all the recent optimism, COVID remains a wildcard—and current and prospective tenants are understandably nervous. Smart landlords will consider designing and retrofitting buildings with high-quality air filters, extra janitorial services and other health and safety benefits that could help them stand out in what seems likely to be an increasingly competitive market in the near future. They will also need to be flexible when it comes to redesigning or renovating spaces. Some up-front investment now in helping tenants adjust to their new operational needs and priorities could pay real dividends in the long run. Those that can most effectively balance running properties aggressively while keeping tenants happy throughout the ups and downs will find themselves positioned for sustainable success, regardless of what the future holds. William Bubniak is executive vice president of investment sales at Midwest commercial real estate firm Farbman Group. To reach him directly, email bubniak@farbman.com

STORAGE

Midwest Real Estate News

March/April 2022

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Self-storage is on a growth kick—and it’s not slowing down

By Michael Baillargeon, senior vice president, operations at Store Space

elf-storage has long been lauded as a recession-resistant industry. A few years ago, conventional wisdom told us that a healthy supply of self-storage space lived at six net rentable square feet per capita. Today, most people in the industry will tell you that the number rests anywhere between 10 and 13 square feet per capita, depending on the region. As the market continues to reverberate from the economic impact of COVID-19, the self-storage industry is still experiencing meteoric growth. That growth is projected to continue. While other real estate asset classes, even those previously considered stable, have taken heavy hits during the pandemic, self-storage has been insulated from the impact of broader market changes. In 2020, the global self-storage market was valued at $48.02 billion. It is expected to reach a value of $64.71 billion by 2026, registering a compound annual growth rate of 5.45% from 2021 to 2026. When I joined Store Space two years ago, the company had 26 locations. Now, we have 119 locations with roughly 30% of those located in the Midwest. Why does the industry keep growing? While asset classes like office or retail tend to have a few significant customers in one location at any given time, self-storage has a broad customer base, which offers an unusual level of stability.

fordability in the housing market. These shifts will feed the Midwestern real estate market and increase storage demand across the region. New opportunities for innovation As the millennial population grows as a customer base, new opportunities to disrupt the self-storage industry are emerging. Millennials typically expect a technology-rich and responsive experience, and self-storage businesses are evolving to meet the demand. At the beginning of the pandemic, Store Space started to test in-store kiosks to supplement in-person services. When the pandemic hit, what began as a test quickly became a more permanent business model.

On the residential side, self-storage is also booming. Today, 10.6% of households rent a self-storage facility. Whether times are good or bad, people always need storage. When the economy is healthy, people accumulate material goods and need space to store them. When times are tough, people and businesses downsize. As families seek smaller and more affordable living spaces and businesses move out of their brick-and-mortar properties, self-storage proves to be an affordable alternative to residential or commercial rental space. Spurring investment

When a global event like the COVID-19 pandemic causes broad market shifts, retail and office customers re-evaluate their model—or are forced to move out. In an office or retail development, which may have three or four renters, the loss of one customer can cause significant financial instability. On the other hand, self-storage provides services to hundreds or thousands of customers from one location at any given time. As a result, the customer base is stable—and the demand is high. Pandemic-driven demand As more and more workers opt for remote or hybrid work, business owners are re-evaluating their office rentals. Having to shift to work-from-home for large portions of 2020 and 2021 drove up the demand for self-storage as business owners looked to cut costs on rental office spaces. Now, companies are considering a permanent shift to remote work. Office spaces, as a result, are being downsized or abandoned altogether, further increasing the need for storage.

Self-storage is unique as an asset class in that it has maintained steady growth throughout the Great Recession, COVID19 and the Great Resignation. That stability spurs new investment in the industry, and as prices and inflation heat up, more and more money is rolling into storage. Since joining the industry more than 20 years ago, I’ve seen the industry grow exponentially both in the level and diversity of investment. While traditionally, investors in self-storage have been REITs and high net-worth individuals, institutional money is now joining the scene. Large private equity firms are moving capital into the self-storage industry, fueling higher sales prices and elevated acquisition activity. Like housing, self-storage is considered a stable investment—indeed, many of the equity funds investing heavily in storage are also bulk buying housing. These private equity firms are looking for steady growth and return on investment, and self-storage has a track record of de-

livering. From 2009 to 2018, self-storage facilities experienced an average annual ROI of 16.9%, outpacing office, industrial, retail and residential properties. With major investors here for the long haul, growth patterns will only continue. Generational shifts Generational shifts are also informing growth in the self-storage industry. As Baby Boomers permanently leave the workforce, they’ll navigate a fixed-income lifestyle against rapidly increasing housing costs. Increased living costs will drive up the demand for storage as more and more retirees choose to downsize. Migration patterns are likely to be affected, too. Traditionally, the older generation has headed South for retirement, settling in states like Florida and Texas. However, as housing costs surge, retirees are more likely to take advantage of the high quality of life that affordable regions, like the Midwest, can offer. Meanwhile, the millennial preference for urban living is driving self-storage demand up, too. As millennials flock to urban centers, they’ll be met with increasingly small, expensive living spaces and adopt a transient lifestyle, moving more frequently than previous generations. Self-storage is the obvious and economical alternative to larger, more expensive living spaces. The Midwest stands to benefit from these trends. While increased housing costs have hit the region, the growth has been less dramatic. As a result, people are migrating inland in search of affordable housing. The Midwest also offers a viable choice for millennials looking to stretch their dollars and access enhanced af-

While millennial customers typically embrace new technology, older generations can be harder to predict. Surprisingly, contactless methods of doing business proved popular across all customer bases. For example, in Bonita Springs, Florida, where the average age is 70, Store Space found that self-service kiosks were so popular that the local branch moved to a more technology-driven model. As a result, the facility has performed better in the last two years than ever before. Self Storage is here to stay Investors and consumers agree: Self-storage is on an upward curve. As the pandemic continues to impact migration patterns, the storage industry looks to cash in. These shifts are particularly good for under-saturated markets like the Midwest, which stand to benefit from pandemic-induced and generational population migration. Today, the annual revenue of the self-storage industry is $39.5 billion. As Baby Boomers retire, the workforce shifts away from brick-and-mortar spaces and consumers swarm to urban areas, that revenue will only grow, paying dividends for those who choose to invest. Store Space is a self-storage operator and third-party management company. Located in Winter Garden, Florida. The company currently owns, has under purchase agreement and operates more than 100 properties in 20 states. Contact Store Space at inquiries@storespace. com, or visit the company at www.storespace.com.

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March/April 2022

PROFILE

Midwest Real Estate News

Future leaders: Sansone Group’s Hai Cao

ai Cao is a director of acquisition and development at Sansone Group in St. Lous. He’s played a key role in growing an industrial development and acquisition platform at Sansone from scratch to 14 million square feet under construction and another 40 million square feet in the pipeline across the United States.

What does an average day at work look like? My day mainly focuses on three pillars: advancing current projects, expanding company growth and focusing on personnel development. I now oversee more than 20 industrial developments coast to coast, all of which are in various stages of site selection, due diligence, entitlement, construction, completion and disposition.

Cao is also fairly new to the industry. He began his career at Sansone Group as a senior financial analyst before being promoted to lead the development and acquisitions department. Tell us about your background. Where did you grow up, where did you go to school? I was born and raised in Hanoi, Vietnam’s capital. Learning and exploring new things motivates me. As a result, when I was 18, I left my family in Vietnam. I moved to Singapore to pursue a bachelor’s degree in civil engineering at Nanyang Technological University, one of Asia’s top engineering schools. Because I am the first generation in my family to attend college, everything about a new college and a new country amazes me. Singapore became my second home. After graduation, I worked for some top Singapore real estate developers, managing projects in both Singapore and Vietnam. Later, I wanted to expand my knowledge outside of eastern culture, so I accepted a Master of Business Administration scholarship at Washington University in St Louis and began my fantastic journey with Sansone Group in 2017. How did you get your start in the industry? It never ceases to amaze me how real estate can revolutionize a neighborhood, an area or a person’s life. I followed my uncle, who worked as a general contractor in Vietnam when I was a kid. I enjoy observing how buildings were constructed out of the ground. That was my first real estate experience, and it sparked my interest in the field. With my analytical background, I chose civil engineering as my undergraduate major. After college,

I worked in a variety of areas to get experience in the real estate value chain, including public planning, development, marketing and asset management. During my MBA program, I was offered a position with Sansone Group. I’m grateful to the company for giving me the chance to use my civil engineering expertise, MBA and experience in development, marketing and asset management to achieve success. Did you have a mentor who helped you get on your feet, or is there someone you turn to now for support? The firm’s principals, Jim Sansone, Doug Sansone and Nick Sansone, have been my mentors throughout my time at Sansone Group. They are all real estate experts who have taught me firsthand how to navigate the industry. Nick is a visionary leader who constantly pushes me beyond my boundary. I also gain insight from his persistence, creative thinking and approaches to dealing with various parties. Jim has been a role model for me when creating relationships and managing difficult stakeholders while maintaining partnership trust. Doug always offers a unique viewpoint on challenges, and his negotiating skills are second to none. In addition, I have the privilege of working with several development partners that have 30 to 40 years of experience in the sector. Their expertise and advice have made a significant difference in my professional development.

Each project presents its own set of opportunities and difficulties. I’ve created a matrix of priority and urgency for my portfolio, which I use to plan and prioritize according to my quarterly and monthly plans. During the day, I will focus on tackling key issues with our principals, development partners, team members and other stakeholders based on this priority list. To develop solutions for each project, we spend a lot of time brainstorming and discussing. These brainstorming sessions are a lot of fun for me. It sparks plenty of new and creative thoughts. In addition, I spend roughly an hour every day reaching out to brokers, consultants and other stakeholders in the Pacific Northwest and Northern California to find new sites. Finally, I always allocate time in my day for team development. I would never miss a one-on-one meeting with a team member or a team training session. I always set aside time during the day to review models, provide feedback and train our team’s associates. As our principals have always said, “You are only as good as your team.” Having a great team allows you to take more calculated risks, which leads to innovation and progress What do you like most about your job? I am a natural entrepreneur who enjoys experimenting with new ideas and expanding our development and acquisition platform. Since the onset of the health crisis, the industrial sector has experienced overwhelming demand driven by e-commerce and supply chain challenges. In such a fast-paced environment, things happen quickly and continuously. I often

By Dan Rafter, Editor

find myself moving from one project to another without much time in between or juggling many projects at once. Every day is a new day where I learn something fresh. It is an exciting place to be. Looking to the future, what do you hope to achieve/work on that you have not already? We have built great momentum at Sansone Group. We are now a well-recognized top national developer. My number-one focus now is to improve operational efficiency through better processes and adopt best practices to scale up the business. Our backend is in the process of upgrading to support the company’s rapid expansion on the front end. As a result, we have weekly department meetings and a weekly process sub-committee meeting to focus on best practices, standardization and process enhancement. Furthermore, I believe that the factors that drove 2021 industrial real estate growth will continue to influence the subsequent years, such as logistics challenges, labor shortages, inflation and e-commerce demand. Demand for warehouse space will continue to drive prices up and vacancy rates to new lows along the logistics supply chain. We frequently see spec buildings with several bids from several tenants. The time it would take for supply to catch up to demand would be years. As a result, my second priority is to expand the pipeline, with a particular focus on the Pacific Northwest and Northern California and strategic partnerships in the region. How do you spend your time away from the office? Before COVID, I enjoyed traveling and have visited 16 countries. While I still have a lot to knock off my bucket list of travels, COVID has slowed things down. I’m hoping to travel again now that we’re getting out of COVID. During COVID, I, like everyone else, developed a new interest, and it’s running. Every week, I set a goal to run at least 15 miles. I’m not quite ready for a marathon yet, but it’s another item on my bucket list!

PROFILE

Midwest Real Estate News

March/April 2022

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Kelly Diehl: Nearly three decades later, industry veteran remains a leader in St. Louis’ CRE market

By Dan Rafter, Editor

elly Diehl has worked in commercial real estate for nearly three decades. And all those minutes in the business? Diehl says she’s loved each one.

Diehl: When you look at the asset services side, that is where you have the largest female presence. In that trade, about 71% of the individuals in the office are women. But when you look at it from the construction or brokerage sides of the business, there are not nearly as many women. There is a huge opportunity for women to step into those roles.

Today, Diehl is managing principal with the St. Louis office of Cushman & Wakefield. She’s a leader in her market and her company. That, unfortunately, makes her a rarity: The percentage of women in leadership roles in commercial real estate remains low. Diehl, though, is an example of a woman who overcame the hurdles in this business and thrived. In honor of International Women’s Day, held on March 8 this year, Midwest Real Estate News spoke with Diehl about her career and the challenges she faced as a woman in a still male-dominated industry. How did you get started in commercial real estate? Kelly Diehl: I fell into it. My father was a real estate appraiser and developer of commercial property. In college, I worked for him. I learned the terminology of commercial real estate. I became familiar with real estate. And I enjoyed it. I moved to St. Louis, the closest major MSA near my hometown in Southern Illinois and looked for work in this field. I interviewed with a company that would eventually become part of Cushman & Wakefield. That was almost 30 years ago. Two hours after that interview started, I had a job. I’ve been involved in real estate ever since. It’s been a natural fit. I’ve loved every minute of it. What has kept you in this business for so long? What do you enjoy about it? Diehl: I have had the ability to evolve over time in my career, and I never have to worry about doing the same thing every day. I started in this business in property management. That was rewarding because you are involved in multiple facets of real estate. You get to work with owners and help them realize their goals. You work with them on the strategies they have for their properties. You work on how to meet certain key metrics. Not doing the same thing every day, then, has always been a very appealing part of this field to me. I think people in real estate also have a competitiveness in their DNA. It’s a healthy competitiveness. I always enjoyed getting that win. Whatever it is that I have accomplished, I feel that when you win, you feel good. And after that win? I’m ready to move on to the next one. Then there’s the way my career has evolved over the years. That has been interesting and enjoyable. I have learned so, so much in the real estate industry.

It is challenging, though, to find women who want to move into commercial real estate. There is a lack of awareness of the opportunities in this business. We are as an industry trying to show women that there are opportunities and ways to be truly successful in this industry. We are going to colleges and universities to speak to women about this profession.

Kelly Diehl at work.

I know you just mentioned that every day is different, but what is a typical day like for you? Diehl: In my current position as managing principal, one of the greatest rewards is when our team wins business. Whether it is through management getting a large construction job or whether it is winning a listing or completing a large tenant-rep deal with any of our teams, the best feeling we can get is seeing our team win and have success. My current position is a unique one. I’m like the quarterback of the team. I work with the brokerage team and I’m responsible for the overall performance of our team in our market in St. Louis. I spend a lot of time making sure our teams have what they need to be able to succeed. I do spend a lot of time on that. Culture is a large focus of mine. This is a collaborative business. It’s important that we make sure our team members work well together and treat each other with respect. We want team members to come with their whole selves to the office, wanting to contribute. We want to put the right people in the right seats. That is something that I look at constantly. I also spend a lot of time coaching and mentoring our team. If you look at the real estate industry, there is a need to focus on that next generation of leaders. That is very much the other area I am focused in on, making sure we develop our team so that they can be those future leaders of our organization. How have you managed to build such a successful career in CRE? Diehl: When I first started in the business, I was very shy. I was probably one of the most introverted individuals you can be. But I knew I didn’t want to stay in

the entry-level position I was in. I always strived to improve myself. I always tried to step outside my comfort zone. I am a quiet, shy person. I don’t enjoy public speaking. So I pushed myself to do public speaking. I developed an awareness of what my strengths and weaknesses are. I focused on those weaknesses. I don’t know if public speaking will ever be one of my top strengths. But I do focus on making improvements and strides in that area. I also surround myself with successful people. I like to have people around me who are smarter than I am. I don’t feel like I have to be the smartest person in the room. I want to surround myself with strong, talented people who move projects to the goal line. I no longer feel like I have to constantly prove myself. If you are surrounded by others who can do, it will benefit you in the process. Did you face challenges in this business because you are a woman? Diehl: This business has definitely changed in the last 30 years. Back then, it was very common to be the only woman in the room. That did add to some of my insecurities. I couldn’t contribute to some of the conversations that the men in the room were having. They did not apply to a woman. I had to learn to shift those conversations. But I never looked at it as me being the only woman in that room. I knew that I was in that room for what I brought to the table. It’s important to have enough confidence to feel that way. You have to know that you bring something important to the table. What has to happen to encourage more women to enter the commercial real estate business?

There are challenges, though. Take brokerage, as an example. You need that personality and drive, that motivation to grind day in and day out. It can take years before you see the fruits of your labor. But with the right drive, this can be a very lucrative career, and there are many female brokers in the St. Louis market who are immensely successful. Others are just getting started. The message we want to share is that people don’t want to walk into a room where everyone looks the same. It’s important to bring some diversity and a variety of opinions to the table. We need more awareness of the benefits of that. How important have mentors been to your success? Diehl: Mentors have been very important. There are different forms of mentors. You might have a formal mentor but also some mentor relationships that are more informal. It might be people you are watching to learn how they command respect, how they treat people and how they build their stature within an organization. There are individuals who have a lot of life experience. It’s important to find those people and take advantage of the knowledge they can share. How do you spend your time when you are not working? Diehl: I recently took up horseback riding. I plan on getting my own horse someday. I also enjoy taking walks with my dogs. I read quite a bit. We spend a lot of time out west in Utah. I enjoy being outside, hiking and skiing.

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March/April 2022

PROFILE

Midwest Real Estate News

Women in Construction Week: Kraus-Anderson Construction’s Morgan Seopa

By Dan Rafter, Editor

arch 6 through 12 marks this year’s Women in Construction Week, an event that takes place during the first full week in March each year. In honor of this, REjournals is running profiles of several Midwest women who have chosen the construction field as their career.

experience exposing students to the different trades and careers available in the construction industry. What do you like most about your job?

Morgan Seopa is a project engineer with Kraus-Anderson Construction in Minneapolis. Here’s a look at why Seopa chose a career in construction, what she enjoys about the industry and the steps she’s taken to thrive in this career. Tell us about your background. Where did you grow up and where did you go to school? I grew up on a lake in northern Minnesota in a little area called Side Lake, about 20 miles north of Hibbing. I still live there now. I graduated from Hibbing High School in 2018 and graduated from Bemidji State University in December 2021 with a degree in project management, with an emphasis on construction and facilities management. How did you get your start in the industry? As my time in high school was coming to end, I knew I wanted to be a part of the building process but didn’t know where I fit in. Then I learned about project management. I spent my junior and senior years of high school going to Hibbing Community College, where I received my Associates of Arts degree in May of 2018, a month before graduating from high school. With two years of college under my belt at the age of 18 and not a concrete idea of exactly what I wanted to do, I decided to take a gap year. During that time, I took off to Guatemala to volunteer doing manual construction and renovation labor in a village near Antigua. That experience solidified that I did want to continue in the construction field but didn’t want to be the one with the hammer in my hand. When I returned home, I applied to Bemidji State University to complete my degree in project management.

Megan Seopa enjoying demo day at the job site with fellow Kraus-Anderson workers Joe Hurd and Pete Auvinen.

“The reason this career keeps me so engaged and makes my job enjoyable, is each day is different. There is never a dull day in this industry.” Did you have a mentor who helped you get on your feet, or is there someone you turn to now for support? My family and friends have always been my biggest supporters. To say I’m fortunate is an understatement. At work, my mentor is Senior Project Manager Patrick Gallagher. He has believed in me from the start and continues to push me out of my com-

fort zone, making me achieve things I never thought possible. In addition, the entire Kraus-Anderson Duluth team – including all of the project managers, project coordinators and superintendents -- have always been there to help and support me in every step of in my career. What does an average day at work look like? Today I am a project engineer and work in northern Minnesota on Rock Ridge Public School District projects, including Rock Ridge Career Academy High School, Laurentian Elementary, North Star Elementary and on the district’s existing demolition projects. I’ve been lucky enough to spend the majority of my time on project sites. Most of my days are filled working in coordination with my team and our contractors. As a project engineer, I enjoy the variety of work on the job site. One day I may spend time reviewing project plans and coordinating them with contractors; and the next day I may be in my office contacting contractors about their bids they submitted for a specific project. I also have had the opportunity to work with the Rock Ridge Public School District’s Career Mentorship Program that serves students in all career fields by connecting contractors with students. It’s been a fulfilling

In addition to the variety of responsibilities, part of the reason this career keeps me so engaged and makes my job enjoyable, is because each day is different. There is never a dull day in this industry. No matter the task, each day we are working toward the same goal -- a successful project and a happy owner. But what I love most about my job is helping communities grow and improve with each project that we complete. I’m fortunate enough to be working on projects on the Iron Range, which is the corner of the world where I grew up and take pride in. And the team I work with is the cherry on top. They’re an exceptional group of professionals that create a welcoming place to begin my career, and a great place to grow my career. I think that speaks volumes about the culture at Kraus-Anderson. Looking to the future, what do you hope to achieve/work on that you have not already? I have really enjoyed working in the K-12 sector and look forward to gaining additional experience in other building sectors, which will help me be a versatile asset to my company. My main goal is to continue to learn and grow as a female in the construction industry, while building relationships along the way. This is just the beginning and I’m eager to see where this career path takes me. How do you spend your time away from the office? My time spent away from the office is mainly spent enjoying the outdoors with my 1 1/2 year old son and my boyfriend, along with family and friends. We like to hunt, fish, and ride our snowmobiles and side-by-side, and spend days on the lake. We’re lucky to live in area where we get to enjoy all that Minnesota has to offer.

RETAIL

Midwest Real Estate News

March/April 2022

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RETAIL (continued from page 1)

hand in memory. While 2020 did prove to be a difficult year for brick-and-mortar retail, the sector bounced back with a vengeance in 2021 and in doing so, once again proved its long-term staying power. Where Goes the Consumer Goes Retail Like the broader economy, the health of retail is dependent upon the health of the American Consumer. Fiscal support provided by the U.S. government throughout the pandemic provided consumers with trillions of dollars, while a tightening labor market and record number of job openings supported robust wage growth, especially at the lower end of the income ladder. With additional funds at their disposal, American consumers pushed brickand-mortar retail sales to record levels in 2021. The rising sales tide lifted most retailer boats, as the number of retailers that filed for bankruptcy declined to a five-year low, while store openings outpaced closures for the first time since 2014. Demand for Retail Space Back on the Upswing Underpinning the resurgent retail sales environment has been a return to stores by many consumers as vaccination rates have risen and operations have normalized. Shopper foot traffic has returned to pre-pandemic levels at many centers around the Midwest, and the growing popularity of BOPIS (buy online pickup in store) has pulled even more consumers back to the store. With sales and foot traffic accelerating, retailers selectively returned to expansion mode in 2021. Nationally, over 258 million square feet of retail leases were signed in 2021, a more than 40% increase from 2020, though still 13% below the average seen during the fiveyear period preceding the pandemic. In the Midwest, slightly more than 32 million square feet of retail space was signed for in 2021, a 16% increase from 2020, but still 11% below the same prior five-year period. Leasing activity in 2021 continued to be dominated by discounters, off-price retailers, and grocers, though a few specialty stores expanded significantly throughout the Midwest as well, including Floor & Décor, which signed for over 300,000 SF of new space during

the year. Other retailers that signed for significant chunks of new space in 2021 include Dollar Tree Management, Hobby Lobby, Dick’s Sporting Goods, Big Lots, Dollar General, Planet Fitness, and TJX. From a geographic perspective, national retailers have concentrated their Midwestern footprints in the largest cities across the region. Nine of the ten largest cities in the Midwest recorded positive demand formation (net absorption) over the past year. The one exception was Minneapolis, which was the worst-performing metro in the Midwest, losing nearly 550,000 square feet of retail demand. The best performing Midwestern metros for retail demand formation were Chicago and Detroit at 3 and 2.1 million square feet, respectively. In total, the top 10 largest Midwestern markets recorded positive net absorption of 9.5 million SF in 2021 compared to -3.9 million square feet in 2020 and 3.8 million square feet in 2019. Bifurcation in Demand Creates Winners and Losers While the story surrounding retail is certainly more positive today, retailers continue to reorient their footprints and store layouts, which is driving bifurcation in demand based upon geography, box size, and center type. National retailers have grown more selective on locations, leaving secondary and tertiary corridors with older assets in the process. As retailers have gener-

ally targeted the same well-trafficked locations in middle to high-income areas of larger MSA’s, property-level performance has depended significantly on the surrounding demographic profile. For example, shopping center properties with an average income greater than $100,000 within a 3-mile radius are reporting vacancy rates that are nearly a third lower than those with average incomes lower than $50,000. At the same time, urban and central business districts across the Midwest have not yet bounced back to pre-pandemic health due to still stunted levels of foot traffic from office workers and tourists. Many suburban areas on the other hand, especially those with growing and relatively affluent populations, have seen demand for space increase significantly since the depths of the pandemic. Suburban retail properties across the Midwest have recorded 11.7 million square feet of positive net absorption over the past year, while properties located in urban areas and central business districts have not yet seen the same recovery. In addition to repositioning physical locations in response to changes in demographic trends, many retailers have shifted the size and layout of their stores and by extension, their space needs. Numerous large national retailers have been opening smaller format stores, while larger department and apparel retailers have been closing mall-based stores while opening new locations in neighborhood and community centers. As such, vacancy rates in malls across the Midwest continue to hover well-above pre-pandemic levels at over 10%, while average vacancy rates in Midwestern neighborhood and community centers have fallen back to pre-pandemic lows just under 8%. On the opposite side of the spectrum, freestanding retail properties are almost

completely occupied across the Midwest, with vacancy sitting at just 2%. Retail Transactions Hit Record High as Investors Target Stability As consumers returned to stores, so too have investors, as growing confidence in the retail sector and ultra-low interest rates have fueled record levels of transaction activity. Over $18 billion of retail property traded hands in the Midwest in 2021, a 36% increase from 2020 and $3.4 billion more than the prior annual record of $14.6 billion set in 2016. Helping support the record level of transaction volume in 2021 was significant appetite for single-tenant net lease deals, as investors increasingly targeted, and were willing to pay up for properties subject to long-term leases with credit tenants. Over $9.1 billion of single-tenant assets traded across the Midwest in 2021, a fact which contributed to the record average pricing for retail assets during the year. While the average price for all retail assets traded during the year hit a new record of $114 per square foot, the average price paid for a single-tenant asset was over $150 per square foot. Retail Outlook Grows Cloudy Given still significant excess savings and an extraordinarily tight labor market, American consumers should have enough firepower to continue propelling the retail market forward in the months ahead. However, headwinds are growing. Inflation is sitting at a multi-decade high, in part due to skyrocketing energy costs, while the Fed has begun raising interest rates. Thus, with consumers, retailers, and investors all facing higher costs in the year ahead, the probability of a pullback appears to be growing.

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March/April 2022 | Midwest Real Estate News

2021 ANNUAL RESOURCE GUIDE

ARCHITECTS/DESIGN-BUILD FIRMS LAMAR JOHNSON COLLABORATIVE

35 E. Wacker Drive, Ste. 1300 Chicago, IL 60601 P: 312.429.0400 Key Contact: Lamar Johnson, FAIA, LEED AP 2199 Innerbelt Business Center Drive St. Louis, MO 63114 P: 314.429.1010 Key Contact: Chip Crawford, PLA, FASLA, LEED GA Website: theljc.com Services Provided: Lamar Johnson Collaborative provides architecture, interior design, landscape architecture, urban planning, and urban design. Company Profile: Lamar Johnson Collaborative is a full-service design and architecture firm committed to enhancing the quality of the human experience and to improving how design and architecture can impact each individual’s emotional being. By harnessing the power of integrated design, including architecture, interior design, landscape architecture, urban planning, urban design and engineering, the company achieves its clients’ goals and aspirations. Notable/Recent Projects: 448 N LaSalle, Horizon Therapeutics, Triangle Square, 24 E Washington, T-Rex Lobby Renovation & Art Installation, POPCourts!, Mark Anthony Brewing, Katherine Ward Burg Memorial Garden, EDGE @ WEST, Northwestern Medicine Mokena Medical Office Building, St. Louis County Library – Lynn Beckwith, Jr. Administrative Building and Ladue Branch, Wildhorse Village Mixed Use Development.

ASSET/PROPERTY MANAGEMENT FIRMS

THE BROADBENT COMPANY

117 E. Washington Street, Suite 300 Indianapolis, IN 46204 P: 317.237.2900 Website: BroadbentCompany.com Key Contact: Tammy Brooks, Regional Property Manager Services Provided: Leasing - Brokerage - Acquisition Development - Management - Tenant Representation Company Profile: Broadbent is a full service real estate company in business since 1972; Leasing/ Brokerage, Management, Acquisitions, Development and Tenant Representation of retail centers throughout the Midwest. Notable Transactions/Clients: La-Z-Boy, The RoomPlace, Kohls, At Home, PetsMart, Ashley Furniture, Uncle Bill’s Pet Center, United Art & Education, The District Tap, Office Depot, Office Max, McAlister’s Deli, Moe’s Southwest Grill, Noodles and Company.

CENTERPOINT PROPERTIES

1808 Swift Drive Oak Brook, IL 60523 P: 630.586.8000 Website: centerpoint.com Key Contacts: Bob Chapman, Chief Executive Officer; bchapman@centerpoint.com; Nate Rexroth, Executive Vice President, Asset Management; nrexroth@centerpoint.com Services Provided: CenterPoint Properties is an innovator in the investment, development and management of industrial real estate and multimodal transportation infrastructure. CenterPoint acquires, develops, redevelops, manages, leases and sells state-of-the-art warehouse, distribution and manufacturing facilities near major transportation nodes. Our experts focus on rail and port-proximate distribution infrastructure assets. Company Profile: CenterPoint Properties continuously reimagines what’s possible by creating ingenious solutions to the most complex industrial property, logistics and supply chain problems. With an agile team, substantial access to capital and industry-leading expertise, we provide our customers with a competitive edge and ensure their success — no matter how great the challenge.

CRESSY COMMERCIAL REAL ESTATE ALL PROPERTY SERVICES

117 E. Washington Street, Suite 300 Indianapolis, IN 46204 P: 317.238.4500 Website: APS-PropertyMgt.com Key Contact: Jim Shields, Director of Operations, Jim.Shields@APS-PropertyMgt.com Services Provided: Commercial: Full Service Landscaping, Building Maintenance, Event Maintenance, HVAC, Grounds Maintenance. Company Profile: All Property Services provides the Highest Standard of Property Maintenance for Retail and Business Environments. The value of a quality appearance is immeasurable to a business environment. As Winter turns to Spring the effects of the snow and cold weather on your building and grounds will become apparent. But All Property Services will make your facility - and you - look good! Each day your property (or event) should give a positive first impression to your valuable customers. With 35 years of experience APS has finely-honed procedures and a professional staff in place to ensure your property (or event) projects the right image. Notable Transactions/Clients: The Broadbent Company, PK Partners, Accent Indy, Alrig USA Development, Centre Properties, Colliers International, Harshman Properties, Downtown Indy Inc.

AREA REAL ESTATE ADVISORS

4800 Main Street, Suite 400 Kansas City, MO 64112 P: 816.895.4800 Website: openarea.com Key Contacts: Doug Grossenbacher, EVP, Director of Property Management, dgrossenbacher@openarea.com Company Profile: AREA Real Estate Advisors is a full-suite commercial real estate firm in Kansas City. AREA is the hometown team that plays in the big leagues. Our size and scope allow us to be nimble and apply a team-driven approach while providing best-in-class service. At AREA, we deal in real estate, but our business is relationships. We are committed to meaningful partnerships with our clients to ensure that their goals are achieved. Our goal is to exceed our clients’ expectations. Services Provided: AREA’s Property Management team is determined to establish the premiere provider of commercial real estate services in Kansas City, while building strong relationships with clients and tenants. We feel the best way to achieve our goal is through common sense leadership; focus on real estate, not policy and procedure; employ and develop the best people in the industry; and provide an environment where our employees and clients can enjoy success. AREA Property Management is currently managing 2 million square feet in the Kansas City Metro, providing Lease Administration, Building Maintenance and Consulting Services. Notable Properties Managed: Plaza Vista (Welsh Plaza), 4800Main (Former BOT), Centerpoint Industrial Park.

4100 Edison Lakes Pkwy., Suite 350 Mishawaka, IN 46545 P: 574.271.4060 Website: cressy.com Key Contact: Brad Meier, Vice President Services Provided: Brokerage Services, Property Management, Financial Management & Reporting, Maintenance & Mechanical Services, Development, Architectural Services, Design Services, Project Management, Construction Services. Company Profile: Cressy Commercial Real Estate’s skilled, experienced staff specialize in the construction and professional management of office, retail, industrial, multi-housing communities and associations. Our experts design and construct improvement projects; and develop and implement customized management and maintenance strategies that integrate proactive, cost-efficient property management and tenant/resident retention.

CROSSROADS REAL ESTATE PARTNERS

4201 Lake Cook Road, Suite 100 Northbrook, IL 60062 P: 847.239.7519 Website: xr-partners.com Key Contacts: Kirsten Bowersox, COO and Managing Broker, kirsten@xr-partners.com; Christine Simek, Senior Vice President Brokerage/Development Services Provided: Management Services; Corporate Services; Advisory Services; Development Services; Real Estate Brokerage Services. Company Profile: Fully integrated real estate solutions firm and can assist with every aspect of real estate ownership and management, including property operations and accounting, zoning and entitlements, construction management, due diligence and financial underwriting, sales and leasing and more. Notable Transactions/Clients: Two professional / medical use buildings are fully occupied: 350 Houbolt in Joliet and Hobson Medical Campus with new Dermatology Group and Integrative Health Practice occupying over 8,000 SF. Please call for other availabilities.

CUSHMAN & WAKEFIELD/THE LUND COMPANY

450 Regency Parkway, Suite 200 Omaha, NE 68114 P: 402.393.8811 | F: 402.393.2402 Website: lundco.com Key Contacts: Jason Fisher, CEO, jfisher@lundco.com; Tanya Shapiro, President, tanya.shapiro@lundco.com Services Provided: Our staff of innovative and creative professionals offer a wide range of real estate services including brokerage, commercial and multi-family property management, real estate consulting, investment acquisition, and project and development services. Company Profile: Cushman & Wakefield/The Lund Company markets and manages over eight million square feet of commercial properties valued at over $1 billion. Also, included in our management portfolio are more than 16,000 apartment units.

Midwest Real Estate News

| March/April 2022 |

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FARBMAN GROUP/NAI FARBMAN

28400 Northwestern Highway, Suite 400 Southfield, MI 48034 P: 248.353.0500 Website: farbman.com Key Contacts: Andrew Farbman, CEO, afarbman@farbman.com; Andrew Gutman, President, gutman@farbman.com; Michael Kalil, COO and Director of Brokerage, kalil@farbman.com. Services Provided: Property Management, Leasing & Brokerage, Construction, Investment Sales, Asset Management, Site Selection Services, Acquisition & Disposition, Medical Real Estate Solutions, Move Management, Receivership Services, Facility Management, HVAC Services, Net Lease Brokerage Services. Company Profile: Farbman Group, a full-service commercial real estate company, is one of the largest and most respected names in Commercial Real Estate.

FRIEDMAN REAL ESTATE

34975 W. Twelve Mile Road Farmington Hills, MI 48331 P: 888.848.1671 Website: friedmanrealestate.com Key Contacts: David B. Friedman, President/CEO; Gary Goodman, Sr. Managing Director-Brokerage Services Services Provided: Friedman offers a full range of real estate services including commercial and multifamily property and asset management, tenant and landlord representation, investment and loan sale advisory, space planning, design and construction and a unique platform of lender focused bankruptcy, receivership and distressed asset services. All services are provided in house, though a single point of contact, which guarantees that clients receive the most timely and efficient service available in the marketplace. Company Profile: Founded in 1987, Friedman Real Estate is one of the largest privately held commercial real estate organizations in the nation; currently managing over 15M SF of commercial space and more than 15,000 apartment homes located throughout the country. Friedman’s commercial brokerage team has over 800 current listings with $20 billion in closed transactions. Notable Transactions/Clients: • Troy Technology Park - Troy, MI • Sakthi Automotive Industrial Portfolio - Detroit • Greyberry Apartments - Waterford • Tiffany Plaza - Youngstown • West 11 Tech Park - Southfield

OUTLOOK MANAGEMENT GROUP, LLC AMO

S74 W16853 Janesville Road Muskego, WI 53150 P: 414.369.3511 | F: 414.435.0251 Website: outlookmgmt.com Key Contact: Ray Balfanz, President/Partner, ray@outlookmgmt.com Services Provided: Full-service property and asset management services, financial analysis and reporting; budget preparation and expense reconciliations; lease administration; construction management; preventative maintenance and consulting services. Company Profile: Outlook Management Group, LLC AMO provides comprehensive property and asset management services for all asset classes in multiple states and markets in the Midwest. Notable Properties Managed: Washington Corners, Naperville, IL; Ironwood Office Park, Glendale, WI; Wood River Condominiums, West Bend, WI; Seven 10 West Luxury Apartments, Chicago, IL; MDJD Aesthetic MOB, Rockford, IL, Ascension Health MOB Milwaukee, WI.

WAVELAND PROPERTY GROUP, INC.

117 W. Willow Ave. Wheaton, IL 60187 P: 630.472.9800 Website: wavelandprop.com Key Contacts: Jonathan Swindle, President, JSwindle@wavelandprop.com; Conner Stout, Broker, CStout@wavelandprop.com Services Provided: Specializing in property management, property leasing, tenant representation, and consulting, Waveland is well-prepared to handle financial assignments, construction management, lease administration, market surveys, and receiverships. Company Profile: Waveland Property Group offers comprehensive real estate solutions. Our solid record of customer satisfaction is rooted in Waveland’s commitment to excellence in both service and quality. In real estate, trust and dependability are paramount. Our reputation is being formed with each and every transaction. Waveland continues to lead the industry. Notable Clients/Transactions: We have worked with a number of publicly-traded and private REITS including DOC REIT, Colony Capital, MLL, and Capital Crossing. We also cater to the boutique requirements of private investors.

DEVELOPERS THE BROADBENT COMPANY

GERSHMAN COMMERCIAL REAL ESTATE

150 N. Meramec Ave., Suite 500 St. Louis, MO 63105 P: 314.862.9400 Website: gershmancommercial.com Key Contacts: Chris Fox, CCIM, SIOR, President & CEO, cfox@gershmancommercial.com; Molly Studer, Executive Vice President, Operations, mstuder@gershmancommercial.com Services Provided: Gershman offers an extensive array of commercial real estate services, including brokerage, landlord and tenant representation, investment sales, valuation advisory, market research, corporate services, property & facility management, project/construction management, client accounting and maintenance/engineering. Company Profile: Gershman Commercial Real Estate is a full-service real estate firm providing comprehensive, personalized services to owners and occupiers of commercial property. With an over 70-year history in St. Louis, and firm leadership based locally, we are uniquely positioned as the longest-standing independently owned firm in the metro area.

KESSINGER HUNTER & COMPANY, LC

2600 Grand Boulevard, Suite 700 Kansas City, MO 64108 P: 816.842.2690 | F: 816.421.5659 Website: kessingerhunter.com Key Contact: John DeHardt Services Provided: Kessinger Hunter & Company, LC is a full-service, commercial real estate firm. Full service includes management, brokerage, development, accounting, and consulting services throughout the United States and globally. Company Profile: What really sets us apart is our People. Integrity, Passion, Knowledge, and Experience are a way of everyday life for us at Kessinger Hunter. Each group responds to our clients’ needs, and they work together to utilize the resources that come with more than 140 years of experience and 200 associates. We manage over 25,950,000 square feet of property and have developed in excess of 14,000,000 square feet of projects.

NAI FMA REALTY

1248 ‘O’ Street, Suite 550 Lincoln, NE 68508 P: 402.441.5800 | F: 402.441.5805 Website: naifmarealty.com Key Contacts: Drew Stange, CEO & Managing Broker, dstange@naifma.com; Scott Vyskocil, Senior Vice President, Property Management, svyskocil@naifma.com Services Provided: NAI FMA manages over 4 million SF and provides our clients premium value and customized solutions to fit their needs. Our years of experience and comprehensive, reliable service translates into success for our clients. Services include leasing, property management, facility maintenance, tenant representation, lease administration, research, project coordination, and marketing. Company Profile: NAI FMA Realty is the largest independent commercial real estate firm providing solutions for institutional, private owners and occupiers in Southeastern Nebraska for over 60 years. NAI FMA is a member of NAI Global, the largest managed commercial real estate service network with 300+ offices worldwide and managing 1.1 billion SF of property. Notable Properties Managed: Bryan Health’s 496,000-square-feet medical office portfolio. The local office and retail portfolio for Ameritas Life Insurance Corp. which includes the iconic Union Bank Place, a 312,000-square-foot downtown office building.

117 E. Washington Street, Suite 300 Indianapolis, IN 46204 P: 317.237.2900 Website: BroadbentCompany.com Key Contact: Dave Cheslyn, Executive Vice President Leasing Development & Real Estate Sales Services Provided: Leasing - Brokerage - Acquisition - Development - Management - Tenant Representation Company Profile: Broadbent is a full service real estate company in business since 1972; Leasing/ Brokerage, Management, Acquisitions, Development and Tenant Representation of retail centers throughout the Midwest. Notable Transactions/Clients: La-Z-Boy, The Room Place, Kohls, At Home, PetSmart, Ashley Furniture, Uncle Bill’s Pet Center, United Art & Education, The District Tap, Office Depot, Office Max, McAlister’s Deli, Moe’s Southwest Grill, Noodles and Company.

CENTERPOINT PROPERTIES

1808 Swift Drive Oak Brook, IL 60523 P: 630.586.8000 Website: centerpoint.com Key Contacts: Bob Chapman, Chief Executive Officer, bchapman@centerpoint.com; Michael Murphy, Chief Development Officer, mmurphy@centerpoint.com Services Provided: CenterPoint Properties is an innovator in the investment, development and management of industrial real estate and multimodal transportation infrastructure. CenterPoint acquires, develops, redevelops, manages, leases and sells state-of-the-art warehouse, distribution and manufacturing facilities near major transportation nodes. Our experts focus on rail and portproximate distribution infrastructure assets. Company Profile: CenterPoint Properties continuously reimagines what’s possible by creating ingenious solutions to the most complex industrial property, logistics and supply chain problems. With an agile team, substantial access to capital and industry-leading expertise, we provide our customers with a competitive edge and ensure their success — no matter how great the challenge.

CONOR COMMERCIAL REAL ESTATE

9500 W. Bryn Mawr Avenue, Suite 200 Rosemont, IL 60018 P: 847.692.8700 | F: 847.292.4313 Website: conor.com Key Contacts: David J. Friedman, President, dfriedman@conor.com; Brian Quigley, Executive Vice President, bquigley@conor.com Services Provided: Conor Commercial identifies and implements the most suitable commercial real estate strategy to yield increased returns for each real estate opportunity. With offices and seasoned real estate professionals strategically located throughout the country, the firm provides the experience and resources needed to develop and stabilize real estate developments that maximize positive returns to investors and partners. Company Profile: Conor Commercial Real Estate is the integrated real estate development firm of The McShane Companies headquartered in suburban Chicago, Illinois with regional offices located in Dallas, Houston, Irvine and Phoenix. The firm is active on a local, regional and national basis in the development of master-planned industrial and office parks, multifamily properties, medical office developments and built-to-suit projects for lease or purchase.

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March/April 2022 | Midwest Real Estate News

CRG

COLLIERS MORTGAGE

THE LUND COMPANY

GRANDBRIDGE REAL ESTATE CAPITAL LLC

35 E. Wacker Drive, Ste. 1300 Chicago, IL 60601 P: 312-658-0747 2199 Innerbelt Business Drive St. Louis, MO 63114 P: 314-429-5100 Key Contacts: Shawn Clark, President clarks@realcrg.com; Chris McKee, Chief Development Officer, mckeec@realcrg.com Website: www.realcrg.com Services Provided: Development, Site Selection, Site Planning & Cost Analysis, Engagement & Entitlements, Incentive Discovery & Negotiation, Financing, Development Management, Leasing & Administration, Asset Management and Investment Management. Company Profile: CRG is a privately held national real estate development and investment firm that has developed more than 10,000 acres of land and delivered over 210 million square feet of commercial, industrial, institutional and multifamily assets exceeding $13 billion in value. CRG leverages a powerful North American platform with local market expertise and offices in Atlanta, Chicago, Seattle, Southern California, St. Louis, Philadelphia and Phoenix. CRG’s philosophy of developing for the future and anticipating the enhanced needs of next-generation users led to the creation of its industrial brand, The Cubes, and its multifamily brand, Chapter. For more information, visit CRG’s website at www.realcrg.com.

450 Regency Parkway, Suite 200 Omaha, NE 68114 P: 402.393.8811 | F: 402.393.2402 Website: lundco.com Key Contacts: Jason Fisher, CEO, jfisher@lundco.com; Tanya Shapiro, President, tanya.shapiro@lundco.com Services Provided: Our staff of innovative and creative professionals offer a wide range of real estate services including project and development services, brokerage, commercial and multi-family property management, real estate consulting and investment acquisition. Company Profile: The Lund Company markets and manages over eight million square feet of commercial properties valued at over $1 billion. Also, included in our management portfolio are more than 16,000 apartment units.

MULTIFAMILY FINANCE FIRMS

(Colliers Mortgage is the brand used by Colliers Mortgage LLC and Colliers Funding LLC.) 90 South Seventh Street, Suite 4300z Minneapolis, MN 55402 P: 612.376.4000 Website: colliers.com ( find us under services) Key Contacts: Tim Larkin, SVP Agency Financing, tim.larkin@colliers.com; Gregory Bolin, SVP Commercial Financing, greg.bolin@colliers.com Services Provided: Colliers Mortgage offers a comprehensive and wide range of products and services designed to meet our clients’ financing, funding and capitalization needs. Our experts are available to help clients’ access federal agency loan programs, structure competitive financing packages for borrowers and lenders, or identify capital sources for capitalization requirements. Company Profile: Colliers Mortgage is a full-service nationwide mortgage banking firm. We connect multifamily owners and developers with the appropriate financing and funding options to execute their project plans. We are one of the industry’s top providers of multifamily financing and are currently servicing in excess of $10 billion of loans. Service Territory: Nationwide

14 North Tryon Street, Suite 2000 Charlotte, NC 28202 P: 704.332.4454 | F: 704.332.1931 Website: grandbridge.com Key Contacts: Matthew Rocco; Chairman of the Board / CEO, MRocco@Grandbridge.com; John Randall; EVP / National Production Manager, JRandall@Grandbridge.com Services Provided: Grandbridge provides comprehensive CRE and capital markets solutions on a national basis. As a full-service leader in commercial/multifamily finance, Grandbridge is a fully integrated commercial investment banking company that originates commercial/multifamily real estate loans, services loan portfolios, provides asset and portfolio management, and offers investments sales, and estate brokerage services. Company Profile: Grandbridge’s lender relationships include leading insurance companies, pension fund advisors, CMBS investors, investment banks and capital markets. Grandbridge is a Fannie Mae DUS® lender, a Freddie Mac Optigo® lender for Conventional Multifamily, Seniors Housing and Targeted Affordable Housing, and an FHA MAP and LEAN approved lender. Service Territory: The company operates its comprehensive CRE and capital markets, loan origination, investment sales, and servicing and asset management services nationwide (28 offices).

ASSOCIATED BANK

45 South 7th Street, Suite 2900 Minneapolis, MN 55402 P: 612.359.4414 Website: associatedbank.com/cre Key Contact: Paul Schmidt, Executive Vice President / Head of Commercial Real Estate, Paul.Schmidt@associatedbank.com Services Provided: Our clients include professional developers of income producing commercial real estate, including multi-family properties, retail, office, storage, student housing, and industrial. Company Profile: Commercial Real Estates offices are located in Chicago, Milwaukee, Madison, Green Bay, Cincinnati, Indianapolis, Minneapolis, Detroit, St. Louis, Dallas and Houston. Associated BancCorp has total assets of $35 billion and is one of the top 50 financial services holding companies in the United States.

BELLWETHER ENTERPRISE(BWE)

1375 E. 9th Street, Suite 2400 Cleveland, OH 44114 Website: BWE.com Key Contacts: Ned Huffman, CEO; DJ Effler, President Services Provided: As part of the Enterprise family of companies, we support its mission of creating and preserving affordable housing in thriving communities. With an unwavering commitment to regional expertise and unmatched customer service, we are making an impact beyond the bottom line. With offices throughout the country, we provide a wide variety of loan products from Life Insurance Companies and Pension Funds, Freddie Mac Optigo™ seller/servicer, Fannie Mae DUS Lender (Multifamily affordable and Market Rate Housing Lender), FHA, USDA and CMBS to name a few. We are Capital on a Mission! Company Profile: BWE is a national, full-service commercial and multifamily mortgage banking company that puts people and communities first. We provide flexible, competitive financing solutions with streamlined underwriting and enhanced loan servicing for Market Rate, Affordable Housing, Workforce Housing, Manufactured Housing Communities, Seniors Housing, Senior Communities, and Long-term Care Facilities. Service Territory: We originate, close and service loans for multifamily and commercial real estate properties throughout the country.

M&T REALTY CAPITAL CORPORATION

Chicago, IL P: 312.203.5410 Website: mtrcc.com Key Contacts: Monty Childs, Managing Director, mchilds@mtb.com Services Provided: Multifaceted Affordable Housing Specialists. Debt financing and loan servicing. Fannie Mae DUS® lender, Freddie Mac Optigo® Lender, FHA/HUD Healthcare & Multifamily lender. Correspondent with life companies and CMBS lenders. Bridge loan program for qualified borrowers. Company Profile: M&T Realty Capital Corporation® is a wholly-owned subsidiary of M&T Bank—one of the 20 largest US-headquartered commercial bank holding companies. Full-service mortgage banking company that provides competitive financing nationwide for commercial real estate. In 2021, M&T Realty Capital originated $5.1 billion in loans, and currently services a portfolio of more than $24.4 billion. Service Territory: Nationwide.

Q10 TRIAD CAPITAL ADVISORS

4622 Pennsylvania, Suite 810 Kansas City, MO 64112 Website: triad.q10capital.com Key Contacts: Joe Monteleone, President, jmonteleone@q10triad.com, P: 314.735.8780; Mark Reichter, Exec. VP, mreichter@q10triad.com, P: 816.841.0951 Services Provided: Triad arranges long-term fixed rate debt, construction to permanent financing, bridge loans, mezzanine debt and equity with over 50 capital sources. Transaction sizes range from $1 million to over $150 million. Company Profile: Headquartered in the Kansas City area with an office in St. Louis, the Company arranged nearly $4 billion in transaction volume in the past five years. Triad originates and services loans for over 25 life insurance companies, many on an exclusive basis.

March April 2022 Midwest Real Estate News

Articles inside

Future leaders: Hai Cao Sansone Group

A return to the office?

CRE Marketplace

The self-storage boom

Women in Real Estate: Kelly Diehl