Commercial Real Estate News Brief: October 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 local markets where your paycheck goes the furthest, foreign investment in U.S. CRE and Gensler’s 2016 Workplace Survey findings.

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Paychecks Go the Furthest in Midwest Cities 

JLL CRE News Brief

Newspaper image via NS Newsflash.

Local markets including Cincinnati, Cleveland, Columbus, Detroit, Louisville and Pittsburgh all ranked in Glassdoor’s Top 25 Cities Where Pay Goes the Furthest. The study compared each city’s median salary to its median home value, and also included number of available jobs.

Detroit claimed first place with a median base salary of $61,500 and median home value of $123,100, followed by Pittsburgh (No. 3), Cleveland (No. 4), Cincinnati (No. 7), Louisville (No. 10) and Columbus (No. 14).

The pay isn’t the only thing driving interest into these cities. As much of today’s workforce is made up of millennials, more downtown areas are being reinvented to fit their needs and wants. Cities in these regions—including Cleveland, Detroit and Columbus—have redeveloped much of their urban centers to appeal to this population. Many young professionals are also choosing to live in these secondary markets to take advantage of all the downtown perks at a significantly lower cost as compared to other popular markets, like NYC or San Francisco.

Each city has seen a number of commercial real estate transactions and new commercial development that have accelerated talent retention and growth. For instance, Cincinnati has started construction on its $75 million Uptown redevelopment, which includes plans for a hotel, office and residential space.

U.S. Commercial Real Estate Continues to Be a Sweet Spot for Foreign Investors

As the impact of Brexit continues to affect international markets, many foreign investors are turning to U.S. commercial real estate. Currently, the U.S. has one of the most stable commercial real estate markets in the world, with steady increases in value and income-producing properties.

Popular metropolitan areas like New York City, Los Angeles and Chicago are among the cities gaining the most interest from investors, particularly in office and hospitality commercial real estate. Manhattan alone garnered $23.5 billion in real estate transactions in 2015, catching the eye of investors looking for a healthy, busy market.

Heading into 2017, experts anticipate the momentum to continue. By the end of 2015, foreign investments and purchases of U.S. properties reached more than $87 billion, which continued into much of 2016. As overseas growth slows down, particularly in China and European countries, foreign investors view the U.S. as a transparent market to invest.

Workplace Survey Shows Innovative Design Enhances Creativity

The U.S. saw its lowest unemployment rate in eight years this year; however, new research shows today’s workforce is stressed and disengaged from their work. How can companies drive productivity and growth, while also attracting new talent?

Gensler’s annual Workplace Survey recently found that innovative workplace design, such as the combination of individual and group workspaces, ultimately spark more creativity. The survey suggested that employees benefit from having a mix of varying spaces in the office, rather than choosing one type of office layout.

The study also analyzed workplace habits, specifically, how often employees collaborate to accomplish a task. From 2013 to 2016, time spent collaborating with others on the phone or through other meeting technology more than doubled from 7% to nearly 17%. This, combined with innovators spending only 74% of their work week in the office, shows the motivator behind flexible work options and the importance of supporting tech-enabled hubs.

Related Read >> Tech Enablement: The New Driver of Office Design.

Design features like adjustable layouts, outdoor spaces and access to resources and upper management all improved employee performance. Having an innovative workspace not only encouraged creativity, but also improved staff relationships, as employees had a more profound sense of purpose and meaning.

CRE News Wrap-Up in Our Region

Cincinnati

  • SharonView Corporate Center was sold to an out-of-town investor for $6 million. The new owner has plans to incorporate a new tenant lounge and parking lot upgrades.
  • Neyer Properties bought URS Tower for $8 million with plans to invest even more into interior and exterior improvements, such as renovated lobbies and restrooms.

Columbus  

  • PetPeople is moving its headquarters from Hilliard to Worthington in 2017. The company will lease nearly 22,000 square feet in its new location, up from its Hilliard HQ of about 6,400 square feet.
  • Battelle plans to put nearly 15 acres near its main campus up for sale. The company intends to sell to a developer who will build single and multi-family residential space.

Cleveland

  • Weston recently acquired 1/5 acres on St. Clair Avenue for $1.4 million. The company plans to use the space in the first phase of its large downtown development project, which intends to create an apartment tower and retail space.
  • Construction on the Link59 business park will start in Cleveland’s midtown this fall. The first building will create approximately 62,000 square feet of office space.

Detroit

  • Detroit’s market has made nearly 16 quarters of positive growth; however, among its strongest sectors is its industrial sector. Rent for industrial space grew more than 7%, attracting out-of-state investors.
  • The Third and Grand development received a $2 million loan from the Michigan Strategic Fund earlier last month. The development will bring residential and commercial space, which is expected to drive job growth in the region.

Grand Rapids

  • JLL recently expanded its services in Grand Rapids with the opening of a new office at 15 Ionia Avenue SW. The office welcomed two new brokers, Jeffrey Karger and Robert Horn.
  • A new 14-story office tower has been proposed for downtown Grand Rapids. The building would include two towers, including commercial offices, retail, parking and residential space.

Louisville

  • Louisville’s industrial market is growing at an historic pace, with more than three million square feet of new construction completed already in 2016. Much of the region’s attraction is centered around Louisville’s prime location, transportation options like the UPS Worldport and a number of successful enterprises nearby.
  • Concord Hospitality Enterprises announced plans to open AC Hotel Nulu, a six-story hotel in downtown Louisville. Construction is expected to begin early next year.

Pittsburgh

  • Pittsburgh’s office market has garnered more interest from outside investors. A recent report found 15 of 16 downtown office buildings have been bought in the last five years by investors outside the region.
  • After spending more than a year on the market, a purchase agreement is in the works for One Chatham Center. The potential sale would impact floors three through nine of the 20-story tower.

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