Commercial Real Estate News Brief: February 2017

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In the latest edition of our monthly news brief, JLL’s regional team curates the top commercial real estate industry articles to keep you in-the-know. In this month’s edition, JLL spotlights executives’ optimism within the industry, varying supply rates and the changing retail landscape.

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New Survey Highlights CRE Executives’ Optimism on Industry Outlook

JLL CRE News Brief

Newspaper image via NS Newsflash.

New research released by KPMG LLP finds just over half—52%—of commercial real estate (CRE) executives believe improving real estate fundamentals will be the largest driver of their firm’s revenue growth this year.

A number of factors contribute to the overall positive outlook for executives, including an expanding economy and consistent interest in Class A properties in the U.S. Following the 2016 presidential election, financial markets are also expected to loosen, which will likely improve capital flow.

With improving financial markets, many companies are also expecting their real estate investment to increase. Approximately 22% of companies anticipate an increase between 5 and 10%. Due to an overall positive outlook in foreign investment, new investment in real estate will come from both existing investors and new market players.

New Supply Rates Vary by Industry

While the overall outlook on CRE is positive, new supply will vary by sector with only a few seeing real growth. Those expected to grow include multifamily housing, senior housing and single-tenant industrial. There is also some minimal growth expected in the office sector.

New supply is slowing down in part due to lending sources becoming more hesitant to commit to funding new construction, as well as restrictions posed by new bank requirements. Experts say that even if some of these regulations were rolled back it would take years for the banking system to return to its original funding standards.

Even as supply rates slow down, nontraditional alternative industries—like student housing and medical office properties—are attracting the interests of investors. These industries are subject to some unpredictability when it comes to supply with changing legislation.

How Retail Real Estate Is Adjusting to the Modern Shopper

Although there has been a string of mall closures around the U.S., many of the existing brick-and-mortar stores and shopping centers are adapting to the times. Cities like Cleveland, Detroit and more around the country are quickly adjusting their retail scenes to better serve today’s modern consumer.

Many brands are harnessing the power of pop-up stores—short-term, temporary retail hubs. Some businesses have found they leave a longer lasting impression on shoppers and create the effect of urgency to get consumers to make purchases sooner than later.

Cleveland took advantage of this trend during the Republican National Convention last July with the opening of seven pop-up stores in the downtown Fifth Street Arcade.

Other cities in the region are exploring ways to improve their retail scene. Detroit is in the process of redeveloping Detroit’s New Center area in the hopes of attracting retail tenants.

Even as more brands turn to digital solutions like mobile apps, research shows consumers still value the presence of physical stores during especially busy times, like the holiday season. This past holiday season, shoppers from every generation said they’d be doing the majority of their shopping at physical stores, including department stores and discount department stores.

CRE News Wrap-Up in Our Region

Ann Arbor

  • A dozen buildings recently went up for sale in communities surrounding Metro Detroit, including Ann Arbor. Two buildings with a total of 120,000 square feet in the State Street Executive Park are up for sale for $24.5 million.
  • Ann Arbor’s Maple Village will welcome two new retail tenants—Carter’s and Five Below—to the mix. Carter’s is taking over a 4,966 square foot space, while Five Below will be opening an 8,447 square foot space on the north end of the village.


  • com Inc. is building a $1.49 billion air services hub at the Cincinnati/Northern Kentucky International Airport. The development will add nearly 2,700 jobs to the region.
  • A new metro transit hub is in the works for the intersection of Ibsen and Marburg in Oakley. More developments will add to the project, including a Cinemark movie theater and a Kroger grocery store.


  • Millennia Housing Development purchased Key Tower and the Marriott Hotel in downtown Cleveland for $267.5 million from previous owner Columbia Property Trust.
  • Forest City Realty Trust signed a new headquarter lease for seven floors at Key Tower and intends to move in spring of 2018. The lease also allows some flexibility for the company to opt to expand in the future.


  • Nearly $80 million is slated for a mixed-use development in Harrison West. Developers Wagenbrenner Development and Fortress Real Estate Cos. are leading the project, which will include office, retail and multifamily space.
  • Easton Town Center’s developer is planning a $250 million expansion of residential space near and around the shopping center. The project is expected to take place over the course of 10 years, bringing 500 jobs to the area.


  • Microsoft Corp. is planning to open a downtown office in the One Campus Martius building in early 2018. Microsoft will occupy more than 40,000 square feet.
  • Comerica Bank will invest $3 million in downtown Detroit by opening new locations and prioritizing new development in the region. The company is also working with Henry Ford Health System to develop a new cancer center.

Grand Rapids

  • Officials broke ground on Grand Rapids’ Diamond Place, a $42 million mixed-use development. The site will include retail and residential space, a grocery store, as well as a parking lot.
  • The city is seeking a developer for the 16-acre mixed-use redevelopment property at 201 Market Avenue SW. The city hopes the future developer leverages the riverfront feature by creating a large-scale open space.


  • Nonprofit organization OneWest presented a strategic plan to fuel more commercial and mixed-use development in the region. The organization also proposed the creation of a YMCA facility and an entrepreneurial tech hub, among other projects.
  • Plans for residential space near Mercy Academy have since been revised to 48 acres of land with plans to construct a 496-unit apartment complex. The units would be spread out across 40 two-story buildings.