Commercial Real Estate News Brief: August 2016

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In the latest edition of our monthly news brief, JLL’s regional team curates the top industry articles to keep you in-the-know. In this month’s edition, JLL spotlights energy efficient buildings, open office spaces and small business success.

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Energy Efficiency Becomes Top Priority for U.S. Office Buildings

JLL CRE News Brief

Newspaper image via NS Newsflash.

In 2015, residential and commercial buildings (including indoor and outdoor lighting, water and sewage treatment, and heated air costs) consumed nearly 40% of total U.S. energy.

A number of value studies conducted by BuildingRating analyzed the impact of energy efficient, U.S. LEED-certified buildings compared to non-certified buildings. The study revealed that energy efficiency not only pays off in a smaller environmental footprint, but also contributes to higher occupancy and rental rates.

So, how will domestic office buildings cash in on these added benefits of going green?

In efforts to boost building efficiency and reduce environmental damage, the U.S. Energy Department’s investment of $19 million to improve the overall efficiency in homes, offices, hospitals, stores and hospitals is underway. To lower consumption, buildings across the country are also doubling efforts and investing in energy efficient solutions that reduce their environmental impact. Some of these buildings include the David L. Lawrence Convention Center in Pittsburgh, the Cleveland Environmental Center, and JLL’s recently renovated Chicago office.

Open, Collaborative Spaces Replace Cubicles

Traditional office space (think cubicles and closed doors) is no longer desirable when it comes to company culture and employee recruitment. It’s not surprising that the modern professional prefers open, informal spaces that enable collaboration with coworkers throughout the day.

Now, more and more offices across the U.S. have incorporated a variety of workspaces to accommodate different work styles. These new spaces include tools and amenities to boost health and wellness, such as standing desks, yoga studios and recreational centers, among other features.

New research also shows that employees that are able to sit where they choose—and with whom they choose—may have boosted productivity. Similarly, many office employees favor open concepts because it enables them to communicate better with their coworkers.

JLL’s Pittsburgh team designed its new office at JLL Center all based on shifting workplace trends and employee preference. The new space includes a variety of formal and informal workspace, including common areas, break out rooms, open offices and more. By incorporating informal, open concepts, companies can retain and accommodate each employee’s work style.

Small Businesses Are Expected to Grow

A recent study from the National Small Business Association shows significant levels of optimism around the current state of small business growth. The study included responses from 884 U.S. small businesses, which indicated how much growth—if any—they expect in the coming months.

Nearly half of small business owners foresee growth opportunities throughout the remainder of 2016, and about 75% of the owners surveyed said they were confident in their business. A study by Harris Poll and Bank of the West showed small businesses are in ‘growth-mode,’ and just over half expect to see significant expansion in their companies within the next year.

The optimism continues to spread closer to home, especially in Detroit where 11 small businesses were awarded $500,000 in grants to kick off funding and expand their businesses. Similarly, Columbus, Cleveland and Cincinnati are seeing a number of small businesses move to urban cores and suburban submarkets.

CRE News Wrap-Up in Our Region

Cincinnati

  • Liberty Center signed two new office tenants to its mixed-use retail property at 7100 Foundry Row, including Dr. Erik Snell of Dentistry Evolved and real estate brokerage RE/MAX Victory.
  • Centre Pointe, a five-building suburban office complex located in West Chester, Ohio has a total of 300,000 square feet of Class A office space available for lease.

Columbus

  • CRE industry titan Brian Marsh recently joined JLL’s Columbus office as Executive Vice President, Industrial Markets. Throughout his career, Marsh has leased more than 70 million square feet of industrial space across the globe.
  • While Columbus’ office market is in high demand, rental rates continue to climb. The momentum has sparked downtown development and construction to meet the need for office space.

Cleveland

  • The 2016 RNC provided the City of Cleveland with many opportunities, including an entrance into the convention industry as well as positioning for long-term growth.
  • Cleveland has been named a hotspot for new professionals and millennials as they enter the workforce. However, to retain top talent, the city will need to consider new construction to meet the needs of millennials as they consider the market for a family.

Detroit

  • While specifics are still unknown, there is speculative talk of adding a Target in Detroit. Adding a popular retailer in a walkable downtown area is expected to resonate with the increased number of millennials.
  • Harmonie Park has been renamed Paradise Valley Entertainment and Cultural District. The project drives an effort to renovate the area with new restaurants, retailers and businesses, while maintaining culture and art throughout the area.

Louisville

  • After nearly eight months for sale, the Former Ichiban Japanese steakhouse has been sold to a hotelier for $550,000. The 7,964 square-foot property’s upcoming use is uncertain.
  • Construction begins soon on a new Kroger Marketplace in New Albany. The approximate $20-million development will be located in the New Albany Plaza.

Pittsburgh

  • Pittsburgh Governor Tom Wolf hosted a roundtable discussion on the economic benefits of Shell’s ethane cracker plant in Beaver County. The plant is expected to create 6,000 full-time construction jobs and 600 full-time permanent jobs, as well as a $6 billion economic boost.
  • There is talk that software corporation SAP is seeking an office space in the Pittsburgh area. While details are yet to be confirmed, leasing for the tech giant is expected to close up more than 100,000 square feet of space.

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