LIVE BLOG: IREJ 2013 Commercial Real Estate Forecast Conference
NAI Hiffman’s Chief Operating Officer – Brokerage, John Picchiotti, is part of IREJ’s “The Big Picture in Chicago Real Estate” panel discussion during the 11th Annual Commercial Real Estate Forecast Conference. Other panelists include Steve Schnur of Duke Realty, Dan Arends of Colliers International, Bruce Miller of Jones Lang LaSalle, Joe Cosenza of The Inland Group and Andrew Davidson of MB Real Estate. Shawn Mobley of Cushman & Wakefield will be the panel moderator.
9:15 a.m. — Miller: Office sales volumes up 40% in 2012 vs. 2011. A solid year, given a questionable economy and worry about the European situation.
9:18 a.m. — Arends: Starting in 2011, landlords finally saw positive momentum in market. Despite optimism, world events and uncertainty continue to hold rents down.
9:20 a.m. — Davidson: Downtown has been saved by companies coming in from tertiary markets and the suburbs. The suburbs are a whole different animal than the downtown market.
9:24 a.m. — Picchiotti: Industrial has had a very good year; About 14.6 million SF was absorbed, vacancy has dipped below 10%, and although 6.2 million SF is under construction in the market, 70% of that is build-to-suit, but spec is starting to break ground again.
9:26 a.m. — Schnur: Chicago’s industrial market is a healthy one, rental rates are starting to increase, particularly among renewals. The first two big spec buildings since the downturn are underway – the verdict is out how those will do.
9:30 a.m. — Arends: Mayor Emanuel continues to push technology companies to move to Chicago – the West Loop is driving the overall downtown market. The A+ product continues to thrive, representing more than half of the downtown absorption in 2012.
9:35 a.m. — Miller: This is one of the longest periods the Chicago market has gone without new office construction. Realistically there won’t be new office development until 2016 or 2017.
9:40 a.m. — Picchiotti: Despite news of companies moving downtown, the suburbs posted more positive net absorption in 2012 than the downtown office market.
9:42 a.m. — Davidson: Although class “A” product in the suburbs is showing positive signs, at the current rate of absorption, the suburbs has enough vacant product to support nearly 40 years of absorption.
9:45 a.m. — Picchiotti: A lot of the jobs coming back to the U.S. through the “reshoring initiative” are requiring a higher level of skill. The country is making a move towards rail – last year the railroads spent $14 billion on a market that isn’t yet fully recovered.
9:47 a.m. — Schnur: As industrial construction continues to come back in earnest, we will see significant upward pressure on rents.
9:50 a.m. — Miller: We haven’t seen cap rates this low since the peak of the market. As long as interest rates remain low, there will be plenty of investor interest in the local market.
9:53 a.m. — Davidson: Class “B” and “C” office product will continue to be converted to different uses, including hotels. The healthcare industry continues to grow, and they are leasing space in class “A” buildings.
9:56 a.m. — Picchiotti: The market is moving in the right direction and will be stronger in 2013 than 2012 if the economy continues to improve. Expect more spec development in 2013. Cap rates will continue to compress and rent growth will pick up.