Commercial Real Estate News Brief: February 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 CRE trends to watch in 2016, millennial brain gain in the Great Lakes and Detroit’s bright economic future.

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CRE Trends to Watch in 2016

CRE Industry UpdateAccording to National Real Estate Investor (NREI), 2016 will be an opportunistic year for investors “who can step out in front of ongoing, and in some cases intensifying, economic demographic and technical trends.”

Growth in the U.S. looks stable, while underlying inflation should remain tame. Rates will likely stay consistent, which may apply pressure on other economies. But, according to NREI, this could make U.S. assets more appealing throughout the year.

In a quick wrap-up, here are three of the six key trends ahead projected by NREI:

  1. Global Urbanization: Both boomers and millennials are looking for better access to jobs and amenities, so they’ll continue moving closer to cities this year.
  1. Changes in Retail: 2016 will see retail continue to embrace the virtual and physical shift, as well as entertainment-themed spaces. Last year’s Thanksgiving holiday saw online purchases outpacing in-store shopping for the first time ever. According to NREI, “analysts suspect that the more successful retailers will be those who can optimize a combination of online and in-store shopping experiences.”
  1. Lower Energy Prices: The cost of oil has dramatically decreased and major oil producing countries haven’t reduced production. In 2016, this will have a significant economic impact across industries—including commercial real estate. Most notably, the reduction in oil costs will “boost industrial production and reduce distribution costs,” according to NREI.

For the full outline of trends to watch this year, check out the latest article by National Real Estate Investor.

Millennials Migrate to the Great Lakes

Cleveland and Pittsburgh remain target cities for millennials.

New research concluded “Cleveland ranks 8th in the U.S. in the growth rate of college-educated millennial residents aged 25 to 34,” according to the Cleveland Plain Dealer. Cities in competition for this spot include Miami and Seattle, according to the report.

Bisnow also suggests Pittsburgh is a city where, “millennials can live on a beer budget with a champagne appetite.”

Both regional markets allow this generation of young professionals to enjoy the perks of urban living, like great nightlife, spacious apartments, and fast-paced career opportunities (all without the price tag). Both Cleveland and Pittsburgh have welcomed this influential population for their brain gain and increasing economic power.

Detroit’s Renaissance Continues

After years of economic struggle and uncertainty, Detroit’s future is looking bright. Most notably, the auto industry and industrial market are making waves.

JLL research suggests Detroit’s industrial market is stronger than ever. With skyrocketing demand for industrial space and dwindling supply, developers will likely take on large-scale speculative construction this year.

Furthermore, President Barack Obama’s eight-year term, “began with the U.S. bailout of General Motors and Chrysler and will end with what forecasters agree will be a second consecutive record-setting sales year,” according to mLive.

With 13% of the nation’s auto jobs in Michigan, this is great news for both Detroit and the entire state. While the industry is changing, experts are hopeful that 2016 will be another strong year.

CRE News Wrap-Up in Our Region  

Cincinnati

  • Historical neighborhood Over-the-Rhine has new housing, retail and restaurant spaces. Local real estate developers are now planning to add 200,000 square feet of office space to the area.
  • RoundTower Technologies, one of Cincinnati’s biggest tech companies, will move its headquarters to the Tower at Kenwood Collection. The consulting company signed a ten-year lease for the third floor and will move in this May. 

Columbus

  • CareWorks Family of Companies Central Ohio, one of Dublin’s largest employers, is planning to create 250 new jobs in the coming years. This increase will bring the company’s total to 1,435 employees.
  • A new proposal may add 213 acres of manufacturing and production space near New Albany’s Beauty & Personal Care Campus. No users have been announced for the seven-parcel site located at the southeast corner of Jug Street and Harrison Road.

Cleveland

  • NYC based private equity fund, Group RMC, acquired seven suburban Akron office buildings from Rubenstein Partners L.P. and Mark Munsell of Beachwood. The $30-million transaction puts the group in the top of Northeast Ohio’s strongest suburban office markets.
  • Photo renderings of up-and-coming apartments for the Cleveland Skyline were released last month. Each new property is projected for completion or construction by 2020.

Detroit

  • Northville-based subsidiary of ZF Friedrichshafen AG, ZF North America Inc., will move its headquarters to Livonia. This change comes after the auto supplier acquired Livonia-based TRW Automotive for $12.4 billion less than a year ago.
  • General Motors invested $500 million in the ride-sharing company Lyft, which will open new opportunities for both companies. Lyft may soon offer on-demand self-driving cars, while GM will have access to the company’s future in ride-sharing growth.

Pittsburgh

  • According to the Urban Redevelopment Authority of Pittsburgh agenda, Hitchhiker Brewing Co. plans to establish a 10,000-square-foot production facility. The authority will soon decide whether to grant the South Side Flats venture a loan.

Keep up with trends and relevant commercial real estate news throughout the Midwest on Twitter at @JLL_Spaces!

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