CRE National Price Indices Maintain Upward Trend

 

The CoStar Commercial Repeat-Sale Index (CCRSI) ended this past summer much as it began, with upward momentum in pricing momentum for commercial real estate as both national composite indices advanced by a healthy margin for the 12-month period ending in August, driven by improving price conditions for smaller, lower-end properties in markets across the U.S. 

The value-weighted U.S. Composite Index, which reflects larger asset sales common in core markets, advanced 3.5% in August from a year earlier while the equal-weighted U.S. Composite Index, reflecting lower-priced property sales typical in secondary and tertiary markets, rose by a solid 16.5%. 

Continue reading "CRE National Price Indices Maintain Upward Trend"

End of the Current Real Estate Cycle

Real News by RealNex

Author: Jeffrey D. Fisher Ph.D.

Sam Zell (pictured above) recently stated: “The real estate cycle is nearing its end” (Pensions & Investments, May 1, 2017).  We must admit that Sam had great timing when he sold his Equity Office REIT to Blackstone in 2007 which was the peak of the last cycle.

Of course, Sam is also not afraid of real estate recessions.  He earned the title “The Grave Dancer” back in the early 90s when he bought properties at steep discounts from their replacement cost during the bottom of that cycle.

So, what are the facts?  Yes, returns have been falling for about 8 consecutive quarters according to the NCREIF Property Index, which includes over a half trillion dollars of real estate around the country managed by the large institutional investors.  The first quarter 2017 total return was 1.55 percent, down from 1.73 percent in the fourth quarter 2016 and 2.21 percent a year ago.

Continue reading "End of the Current Real Estate Cycle?"

Fully Occupied Multifamily Properties Open Showing - Wednesday Sept 13th 12-2PM
 

Fully Occupied Multifamily Properties

Next Scheduled Showings:   Wednesday Sept 13th 12-2PM
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Big deals heat up west suburban apartment market

 

A gang of real estate investors has descended on the western suburbs, dropping more than $350 million in a flurry of apartment deals near Interstate 88.

Four firms including Goldman Sachs and CBRE Global Investors have acquired big multifamily properties in Wheaton, Naperville, Warrenville and Aurora, according to DuPage County property records. In another nearby deal, a San Francisco investment firm is buying the 640-unit Addison of Naperville but has yet to close on the acquisition, according to people familiar with the transaction.

Continue reading "Big deals heat up west suburban apartment market"

Q4 2015 Apartment Trends

 

Separate studies issued this week share the same conclusion that demand for rental apartments and other housing options will stay at elevated levels largely due to the continued robust household formation and limited affordable housing options, especially for detached single-family houses.

The first study was co-commissioned by the National Apartment Association (NAA), sponsor of NAA Education Conference & Exposition running this week through Friday at the Georgia World Congress Center in Atlanta. The report projects that based on current trends, an additional 4.6 million new apartment units will be needed by 2030 to keep up with demand as younger people delay marriage, the U.S. population ages and immigration continues.

Continue reading "Elevated Demand for Apts. Expected to Remain Due to Household Formation and Lack of Affordable Housing Options"

Naperville shopping center triples in value after Mariano's opens

 

A Naperville shopping center that lost a Dominick's supermarket in 2013 has generated a huge gain for a Chicago developer that filled the empty space with a Mariano's grocery store.

A joint venture led by Bradford Real Estate has sold Fox Run Square, a 148,000-square-foot property at 1212 S. Naper Blvd., for $78 million to First Washington Realty, a Bethesda, Md.-based real estate investment firm, according to DuPage County property records.

That's more than triple the  $25.6 million price  that the Bradford venture paid for the shopping center in 2014. The price was so low because Dominick's had closed its store, leaving the property nearly half empty. It's so high today because the  Mariano's opened  about a year ago and the shopping center is full.

"What a great buy on their part," Derrick McGavic, managing director of  Newport Capital Partners,  a Chicago-based developer who wasn't involved in the transaction, said of Bradford.

SAFER HAVENS

Though retail bankruptcies, store closings and the rise of e-commerce have fueled  widespread pessimism  about the future of retail real estate, that's not the case of grocery-anchored shopping centers like Fox Run Square.

Investors have been paying up for the properties, which are perceived as a safe haven in the turbulent retail world. The rise of e-commerce is less of a threat to a grocery store than it is to, say,  Sports Authority,  which went out of business last year.

"There is still a truly large investor appetite for that kind of asset, especially on the institutional side," McGavic said.

POPULAR CHAIN

Mariano's are especially popular, generating big returns for developers and investors that have sold properties leased to the supermarket chain. British investment firm IM Properties recently sold three Mariano's stores for  $116.3 million,  40 percent more than it paid for them a few years earlier. IM Properties was also Bradford's joint venture partner in Fox Run Square.

May Real Estate, an Oakbrook Terrace-based brokerage, sold Fox Run Square for the venture.

First Washington owns 92 shopping centers encompassing 12.5 million square feet. Fox Run Square is one of five properties the firm owns in the Chicago area, which also includes Roscoe Square, a 140,500-square-foot Mariano's-anchored shopping center in Chicago's Roscoe Village neighborhood, and Civic Center Plaza, a 265,000-square-foot shopping center in Niles anchored by a Home Depot.

Source: Crain's Chicago Business June 6th, 2017 By ALBY GALLUN

Retail For Sale

365 E North Ave
Glendale Heights, IL 60139


TYPE Retail
SF 6400
BUILT 1988
ACRES 0.70
ZONING B-2
OCCUPANCY 100%
GROSS INCOME $112958
NOI $70693
CAP RATE 7.9%
PRICE $899000

Highlights


  • Fully Occupied
  • High Visibility Center on Busy North Ave
  • Complimentary Retail Tenant Mix

Description


Fully Occupied 6,400 SF 4-unit retail strip center located in Glendale Heights Illinois. Prominent Retail Location on heavily trafficked North Ave corridor between Bloomingdale Rd and Glenn Ellyn Rd with an average daily traffic counts of over 64,000 cars minutes from I-355 NS toll way. Strong demographics with over 100,000 within 3- miles and Median Household Income of $71,971 30% greater than the national average. The center offers a complimentary tenant mix of a long established Miska's Corner Store, Salon, Laundromat and Pita & Kabobz restaurant.

Demographics


1 Mi 3 Mi 5 Mi
Pop 15688 105092 289715
HH 5285 37106 104469
Ave HH Inc $61492 $66238 $68888

Map Overview


Multifamily For Sale

1603 Reckinger Ave
Aurora IL 60505


TYPE Multifamily
UNITS 12
ACRES 1.12
BUILT 1979
PARKING 28
OCCUPANCY 100%
GROSS INCOME $128378
NOI $73480
CAP RATE 8.2%
PRICE $895000

Highlights


  • Desirable North Aurora Location Near Indian Trail & Farnsworth
  • Fully Occupied
  • Spacious Units with *W/D Hook-ups & *Central Air
  • Across the Street From Elementary School & Nearby I-88 Access 

Description


Highly sought after 12-Unit Multifamily offering on Aurora's North Side just North of Indian Trail minutes from I-88 at Farnsworth. Spacious 2Bd 1Bth Units with Patios/Balconies, pass-through kitchen & dining area, *washer & dryer hook-ups and *central air. Consistently high occupancy, tenant paid heat this offering is competitively priced. Situated on 0.6 acres providing 28
off-street parking spaces.

Map Overview


Bloomingdale apartments sell for $53 million
Chicago apartment landlord Stuart Handler is continuing his push into the suburbs, dropping $53 million on a housing complex in west suburban Bloomingdale.

A venture led by Handler acquired Stratford Place, a 342-unit property near Stratford Square Mall, said Handler, CEO of TLC Management. The seller was a venture of San Francisco-based Friedkin Realty Group, which paid $52.5 million for it in December 2012.

It's Handler's fifth big suburban apartment deal since the end of 2014, when he began to expand beyond his base in Chicago and Evanston. Using a slow and steady approach and targeting the mid-market, he has amassed a portfolio of about 4,500 units, including more than 1,500 outside the city and Evanston.

Handler, who doesn't bring in outside investors on his deals, aims to buy one more property in the Chicago area by the end of the year.

He has nothing fancy in mind for Stratford Place, a property that he classifies as B-plus. The 27-acre complex at 232 Butterfield Road, which has an occupancy rate in the mid-90 percent range, was completed in 1991. He expects to spend $1 million or so sprucing it up but doesn't see a need to do much more.

"It's a strong asset now," he said. "We're just going to move it up to another level."

Suburban apartment landlords have been operating at a high level for the past several years, a period of rising rents, occupancies and property values. The median net suburban apartment rent per square foot rose 3.7 percent last year, according to Chicago-based consulting firm Appraisal Research Counselors. Rents were up 22 percent over five years.

Handler remains optimistic about the market, but with interest rates rising again, he doesn't expect property values to rise much more.

"It's not as hot as it has been, but it's still good," Handler said.

Friedkin Realty, meanwhile, still likes the Chicago market and has been scouting the suburbs and downtown for more properties to buy, said Morton Friedkin, founder and chairman of the company. Friedkin Realty owns eight properties totaling more than 2,100 apartments in the Chicago suburbs. In its most recent acquisition, the firm paid $42 million for a 144-unit building in Des Plaines.

Though other suburban multifamily properties have sold for big gains the past few years, Stratford Place bucked that trend, with Handler paying roughly what Friedkin bought it for more than four years ago.

"We overpaid, and he underpaid," quipped Friedkin.

He expects Stratford Place to fare well under Handler, who can give it more attention than he could from 1,800 miles away.

"Stuart's local to the area," Friedkin said. "He's there to stay, and he's an operator."

Source: Crains Chicago Business May 15th 2017 Alby Gallun

Vacancy in Chicago-area retail properties declined for the second straight quarter during the first three months of 2017.

The rate fell to 9.5 percent, down from 10.1 percent in the fourth quarter—but an increase from the year-earlier period's 8.9 percent.

Vacancy is expected to remain more or less steady in the near term as supply of new space is pinched.

"I don't see anything on the horizon that's going to goose the vacancy," said Kim McGuire, a senior vice president of CBRE, which conducted the survey. Not that much new construction is hitting the market, he said, and what does is significantly pre-leased.

 

Moreover, the unemployment rate fell to a 10-year low of 4.5 percent in March, and consumer confidence rose to its highest level since 2000, spurring demand, CBRE said. Asking rents climbed to $18.65 a square foot from $18.54 in the fourth quarter. Asking rents were $18.75 a year ago.

But any optimism on the retail front is tempered by prospects for a record year of bankruptcies in 2017, as the industry adjusts to more online shopping and fewer visits to the mall. Already this year, bankruptcy filers include the Limited, RadioShack, hhgregg and Gander Mountain. Other retailers, like Sears Holdings and Macy's, are closing stores by the score.

The picture for retail landlords has improved since the third quarter, when vacancy hit a recent peak of 10.2 percent. A major factor was more than 1.3 million square feet flooding the market after Sports Authority's liquidation.

Although the biggest first-quarter leases were for a Mariano's supermarket in Crystal Lake and a Dick's Sporting Goods store in Gurnee, fitness facilities—whether big (LA Fitness) or small (Orangetheory Fitness)—are the hungriest space eaters, CBRE said.

Another bright sector was "power/community" developments, where first-quarter vacancy was 7.2 percent.

Mellody Farm, a  270,000-square-foot mixed-use development  in Vernon Hills announced this month, is due for completion by the end of next year. Anchors include a Whole Foods Market, Nordstrom Rack and REI.

Also in the category is Kildeer Village Square under development in north suburban Kildeer.

The lowest vacancy was in the city north of the Eisenhower Expressway, at 3 percent, while the west suburbs clocked in at 5.8 percent. Far west suburbs had the highest submarket vacancy (12.9 percent), while neighborhood vacancy overall was 13.5 percent.

"Anything that has 'far' in front of it has high vacancy," said McGuire, a result of overly optimistic developer projections for housing growth. (The far southwest suburbs were an exception, with 5 percent vacancy.)

Although fast-casual restaurants have propelled leasing, the category is not immune to competition. Two pizza chains retrenched: Toppers closed all five Chicago-area locations, and Pie Five shut eight of nine local restaurants.

On the South Side, Binny's Beverage Depot moved its Hyde Park location to 47th Street in the Kenwood neighborhood, increasing its store size to 11,000 square feet from 3,500.