Category Archives: Commercial Real Estate Investment Resources

Calling All Business Owners & Tenants: Should You Own or Lease?

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By: Rob Roe, Managing Director, JLL

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There is no blanket response to the question, “Which is better for business, owning or leasing property?” Every business’ unique structure and qualities must be assessed to determine the right path.

What’s more, the decision has potential to have a disastrous (or extraordinary) effect on bottom-line business success.

Traditionally, business executives, like CEOs, CFOs or treasurers, made the own/lease decision. In recent years, however, corporate real estate directors have played a larger role in the process. Regardless of point person, expert insight is a must when it comes to one of the largest expenses within your budget.

Are you at the crossroads of purchase or lease? Read on for more insight on smart decision-making.

Starting Point: 3 Business Benchmarks

As you begin the process, there are three key benchmarks to consider. Ignore your initial preference, and keep an open mind. The following factors may sway your line of thinking and lead to a smarter decision-making in the long run.

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Why Investors Look to Ohio for Industrial Real Estate (REPORTS)

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By: Robert Kramp, Senior Vice President and Director of Research, JLL, Midwest and Great Lakes Region

Ohio is a hot spot for industrial investors across the nation. In May 2014, a Minneapolis-based real estate investment group bought a $43 million, 767,000-square-foot portfolio in Northeast Ohio. Another example: A Chicago-based company purchased a 465,000-square-foot Columbus warehouse for $8.5 million in September.

The list of similar, out-of-state investors goes on. It’s more than a trend; Ohio has become an industrial hub. JLL research released three reports, spotlighting related activity in three of the nation’s most active cities—Cincinnati, Cleveland and Columbus.

Why Ohio?

  • The Heart of It All: Ohio is America’s heartland. When it comes to location, it has set up shop right on the nation’s metaphorical Main Street. With major airports, highways and rail lines intersecting throughout the state, Ohio is nationally and internationally accessible. Ohio’s transportation infrastructure is ideal for convenient and cost effective delivery.
  • Affordability: The Midwest, overall, dominates when it comes to cost-friendly living. A whopping five cities in Ohio made Forbes’ America’s Most Affordable Cities list, including Cincinnati and Columbus, as well as Dayton, Akron and Toledo. Housing affordability, cost-of-living index, and the methodology the Bureau of Labor Statistics uses for rankings of the Consumer Price Index were used to determine which cities made the cut.
  • Nurtures Business Success: From Cardinal Health and Google, to Kroger and The Limited Brands, many of America’s top Fortune 500 companies are already doing business in Ohio’s major cities.

In terms of industrial focus, three Ohio cities stand out among the rest, offering cost effective and opportunistic landscapes.

Cincinnati: Industrial and Logistics Hot Spot 

When it comes to local Fortune 500 companies (per million residents), Cincinnati beats out New York, Boston, Chicago and Los Angeles. Thanks to the low cost of business and favorable tax structure, Cincinnati’s environment is highly competitive, and therefore, has attracted both local and foreign investors. Currently, more than 50,000 Cincinnatians are employed by foreign-owned businesses.

Cincinnati_Cover

Over the past year, Cincinnati experienced increased commercial real estate activity from the e-commerce and manufacturing sectors. eBay is a key example, which recently pre-leased a 631,000-square-foot warehouse. Additional big-name manufacturing companies doing business in Cincinnati include GE and Proctor and Gamble.

  • More than 3 million square feet of space under construction.
  • 70% of space under construction is speculative.
  • More than 4 million square feet absorbed in 2014.

Check out JLL’s full report for more insight and statistics on Cincinnati’s emerging industrial scene.

Columbus-industiral

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Commercial Real Estate News Brief: January 2015

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Commercial real estate is a dynamic industry. Keep up with Spaces’ monthly recaps of the most valuable industry articles we’ve recently come across, focused on news in Ohio, Michigan and Pennsylvania.  

Global CRE Investment Volumes Signal Continued Uptick for 2015  

In the final quarter of last year, global commercial real estate capital markets reached new heights “at near-record levels,” according to JLL.

JLL CRE News Brief

Newspaper image via NS Newsflash.

  • Investment Volumes: +9% YOY
  • Office Vacancy Rates: 12.7%
  • Capital Value Growth: +8.3% YOY

In addition to movement in capital markets, occupier demand continues at a healthy pace, with more activity expected from traditional markets in 2015. Thanks to higher levels of demand and a shortage of supply, experts foresee new development.

Another trend: investors are noticing secondary markets. In fact, JLL experts say, “There is a notable growing interest in higher-yielding assets in smaller and second-tier locations, particularly in the U.S. and Europe…”

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JLL Experts: Rust Belt Critical to Future U.S. Economy

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By: John Sikaitis, Managing Director and Christian Beaudoin, Senior Vice President – JLL

John Sikaitis at a recent speaking engagement.

John Sikaitis at a recent speaking engagement.

While there’s fluctuation across the globe, the overall outlook for the U.S. economy remains strong. Thanks to an economic environment characterized by the continued elevation of corporate profits, the strongest job market since the late 90s and economic growth that is roughly 15 to 20 percent above levels in 2013, the U.S. dollar is at its highest level in years.

That momentum, coupled with a substantial drop in oil prices, is energizing consumers, fueling the highest consumer confidence level in eight years, which will drive enhanced growth to economic prospects over the next 24 months.

The same optimism exists for the commercial real estate industry in the U.S.

Net absorption topped 50 million square feet in 2014, a 38 percent increase from 2013; vacancy fell below 16 percent for the first time since 2008 and the American corporate is demonstrating increased signs of growing their real estate footprint. In the third and fourth quarter of 2014, 46 percent of tenants greater than 20,000 square feet completed leases with a growing real estate footprint—double the rate of any other point in this cycle. Across the vast majority of markets, the recovery has gained substantial momentum, fueling enhanced confidence from landlords and rent growth across 85 percent of the markets JLL tracks in the United States.

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Jobs Come Back to Ohio (JLL Employment Reports)

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By: Andrew Batson, Senior Research Analyst, JLL 

Following a painful recession between 2008 and 2010, during which 8.7 million jobs were lost, the American job market is thriving once again.

In fact, CNNMoney reported, “…there are now more jobs in the country than ever before.” But, we still have work to do. According to the same source, the job market still needs two to three years to fully recover.

In the Midwest, economic and employment growth are following the national upward trend. With new job opportunities and maturing industries, Ohio’s three big cities are contributing to the nation’s ongoing economic health.

Read on for an overview of employment trends, based on JLL’s most recent Office Employment Updates released in January 2015.

Employment News: Cincinnati

Cincinnati reported its highest addition in job growth since June 2012, with 23,000 new jobs year-over-year. Office employment, in particular, helped to accelerate the region’s job growth. Out of the 5,700 new jobs added to the city last year, approximately 65 percent were professional and business services positions, according to the Bureau of Labor Statistics (BLS).

Download the full report for details.

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Commercial Real Estate Trends in the Midwest: Q3

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By: Andrew Batson, Senior Research Analyst, Great Lakes Region, JLL

The third quarter of 2014 wrapped up on a positive note.

According to JLL, “Broad-based domestic economic expansion has fueled the tightest office market fundamentals in eight years across the United States.” And, thanks to strong economic forecasts nationwide, JLL expects 2014 absorption rates to exceed that of the last three years.

What does it mean for the U.S.? More confidant developers likely means more development for 2015.

Looking to the local cities across the Midwest, we also saw dynamic, lively activity in our local CRE markets. Below is a quick recap of Q3 highlights in Cincinnati, Cleveland, Columbus, Detroit and Pittsburgh. Download the full reports for details.

Market Activity in the Midwest

JLL-Research

Cincinnati

During Q3, there was an evident shift in demand for downtown space. We also observed an upturn in capital market activity during the third quarter. Increasing rental rates and declining vacancies have made Cincinnati an attractive investment spot. In fact, investors have spent more than $1 billion on Cincinnati CRE since the start of 2014.

In other news, construction teams stayed busy in Cincinnati. The majority of new projects are located in urban submarkets, with most interest in the CBD and Midtown. JLL predicts that this trend will continue, “…as development figures through the third quarter now equal that of pre-recession levels.”

By the numbers: 

  • Total vacancy: 20.3%
  • Total under construction: 1,389,000 square feet
  • YTD net absorption: 214,538 square feet

View the full Cincinnati Q3 analysis. (Office Insight Office Statistics)

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Your Next Move: A Guide To Your Corporate Office Relocation [FREE DOWNLOAD]

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 By: JC Pelusi, Market Leader, Managing Director, JLL 

Your office space has the potential to drive employee productivity, retention, recruitment, and overall company performance.

Bottom line: Your space impacts your bottom line. 

But don’t take our word (or commercial real estate bias) for it. JLL recently helped Oswald Cos. secure new space in Cleveland. Oswald President and COO, David Jacobs, told us:

“Our new environment instills collaboration and has that open feeling; enabling all of us to do our jobs better. The new space has been an absolute godsend to our business.”

Finding and designing the perfect space in the right location at the right price is not easy. So, it’s more critical than ever that you take a strategic approach when executing a corporate move.

JLL follows a proven step-by-step process to help leading organizations find space that not only suits unique bottom-line objectives and requirements, but also sets the stage for future growth.

Are you approaching your next move, or is it time to put the building blocks in place to start a conversation about your current space? Below, I’ve included a snapshot of the 9-step journey to a corporate relocation.

9 Steps To Guide Your Company’s Next Move 

1. Build a team of trusted expert before you begin.
2. Set objectives and requirements.
3. Map out a custom timeline.
4. Determine a preliminary project budget.
5. Identify prospective spaces.
6. Tour the market.
7. Evaluate properties on your shortlist.
8. Finalize letter of intent and negotiate your lease.
9. Plan and implement your next move.

Download the Your Next Move eGuide for a snapshot of each step in JLL’s strategic approach. Keep in mind that this is a general guide, which is adjusted to accommodate your unique business needs.

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JLL Covers Employment Trends in Cincinnati, Cleveland & Columbus

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By: Andrew Batson,  Senior Research Analyst, Great Lakes Region

Cleveland has been labeled an up-and-coming city by various national media outlets. Cincinnati’s market is gaining interest from outside investors, like Hines Interest LP. And, in Columbus, industrial space is a hot commodity.

Ohio’s three most popular cities are all making a comeback for different reasons. As a result, things are looking up for the local economies.

Below, I’ve included an overview of employment trends, based on JLL’s most recent Office Employment Updates released in July 2014.

Employment Update: Cincinnati

Cincinnati’s unemployment rate sits at a full percentage point below the national average. And, to put that into perspective, the national average (6.1%) is at “the lowest level since September 2008.

Economists are calling for a 1.4% increase in jobs through the rest of the year.

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Download the full report for details.

Employment Update: Cleveland

Cleveland’s unemployment rate decreased 0.6 percentage points year-over-year (sitting at 6.6%). Most new jobs have been added in the professional and business sector. However, because we are seeing a trend toward condensed spaces, “more job growth will be necessary to spur office demand and absorb the supply of vacant space.”

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Download the full report for details.

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A Step-by-Step Guide to Your Next Office Renegotiation or Relocation: Part VI

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By: Tim Kay, Senior Vice President, Project and Development Services at JLL 

A Step-By-Step Guide To Your Next Office Relocation or Renegotiation  As a lease expiration date approaches, many mark their calendars in dread of the administrative tasks ahead. And although moving is complicated, it’s also a unique opportunity to reinvent your culture, address your space utilization and ensure your strategy is aligned with organizational objectives.  

At JLL, we follow a strategically crafted roadmap to guide our clients through the process. This is the final post in a blog series; each post will serve as a stop on the way to your destination – success.  

Next Stop: Plan and Implement Your Next Move 

So, you have an architect on board and your space is officially in the works. You can finally see the finish line. The lease is signed, the base building analysis is complete, and construction estimates are complete.

But, don’t uncork the champagne just yet. Before you can celebrate, there are a few final steps you and your team must observe to ensure the move is properly executed.

Step 1: Determine Design Details 

Before launching construction, you must first add a general contractor (GC) to your team. Ensure that the GC you select understands your deal drivers and company vision because he or she will facilitate build of your end space. The GC plays a critical role during design and construction.

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A Step-by-Step Guide to Your Next Office Renegotiation or Relocation: Part V

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By: Scott Pick, Executive Vice President, JLL

Office RelocationAs a lease expiration date approaches, many mark their calendars in dread of the administrative tasks ahead. And although moving is complicated, it’s also a unique opportunity to reinvent your culture, address your space utilization and ensure your strategy is aligned with organizational objectives.  

At JLL, my business partner, Brian Conroy, and I follow a strategically crafted roadmap to guide our clients through the process. This is the fifth post in a blog series; each post will serve as a stop on the way to your destination – success. 

Next Stop: Negotiate Your Lease To Prepare for Occupancy 

You’ve identified your preferred new office space, but the journey doesn’t end there.

Before you can start picking out furniture, you have the fun of negotiating a lease document. This is where a good attorney provides tremendous value. (Again, this is just another reason why building the right team of trusted experts before you begin is so critical to end with a successful transaction.)

After you’ve chosen your space, strategic, well-calculated negotiations are a must. Below are the next two steps to officially make your next corporate move. 

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