Commercial Real Estate Trends in the Midwest: Q3

By: Andrew Batson, Senior Research Analyst, Great Lakes Region, JLL

The third quarter of 2014 wrapped up on a positive note.

According to JLL, “Broad-based domestic economic expansion has fueled the tightest office market fundamentals in eight years across the United States.” And, thanks to strong economic forecasts nationwide, JLL expects 2014 absorption rates to exceed that of the last three years.

What does it mean for the U.S.? More confidant developers likely means more development for 2015.

Looking to the local cities across the Midwest, we also saw dynamic, lively activity in our local CRE markets. Below is a quick recap of Q3 highlights in Cincinnati, Cleveland, Columbus, Detroit and Pittsburgh. Download the full reports for details.

Market Activity in the Midwest

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Cincinnati

During Q3, there was an evident shift in demand for downtown space. We also observed an upturn in capital market activity during the third quarter. Increasing rental rates and declining vacancies have made Cincinnati an attractive investment spot. In fact, investors have spent more than $1 billion on Cincinnati CRE since the start of 2014.

In other news, construction teams stayed busy in Cincinnati. The majority of new projects are located in urban submarkets, with most interest in the CBD and Midtown. JLL predicts that this trend will continue, “…as development figures through the third quarter now equal that of pre-recession levels.”

By the numbers: 

  • Total vacancy: 20.3%
  • Total under construction: 1,389,000 square feet
  • YTD net absorption: 214,538 square feet

View the full Cincinnati Q3 analysis. (Office Insight Office Statistics)

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Your Next Move: A Guide To Your Corporate Office Relocation [FREE DOWNLOAD]

By: JC Pelusi, Market Leader, Managing Director, JLL 

JLL-YNM-CoverYour office space has the potential to drive employee productivity, retention, recruitment, and overall company performance.

Bottom line: Your space impacts your bottom line. 

But don’t take our word (or commercial real estate bias) for it. JLL recently helped Oswald Cos. secure new space in Cleveland. Oswald President and COO, David Jacobs, told us:

“Our new environment instills collaboration and has that open feeling; enabling all of us to do our jobs better. The new space has been an absolute godsend to our business.”

Finding and designing the perfect space in the right location at the right price is not easy. So, it’s more critical than ever that you take a strategic approach when executing a corporate move.

JLL follows a proven step-by-step process to help leading organizations find space that not only suits unique bottom-line objectives and requirements, but also sets the stage for future growth.

Are you approaching your next move, or is it time to put the building blocks in place to start a conversation about your current space? Below, I’ve included a snapshot of the 9-step journey to a corporate relocation.

9 Steps To Guide Your Company’s Next Move 

1. Build a team of trusted expert before you begin.
2. Set objectives and requirements.
3. Map out a custom timeline.
4. Determine a preliminary project budget.
5. Identify prospective spaces.
6. Tour the market.
7. Evaluate properties on your shortlist.
8. Finalize letter of intent and negotiate your lease.
9. Plan and implement your next move.

Download the Your Next Move eGuide for a snapshot of each step in JLL’s strategic approach. Keep in mind that this is a general guide, which is adjusted to accommodate your unique business needs.

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Commercial Real Estate News Brief: September 2014

Commercial real estate is a dynamic industry. Keep up with Spaces’ monthly recaps of the most valuable industry articles we’ve recently come across, focused on news in Ohio, Michigan and Pennsylvania.  

Commercial Crowdsourcing: Hotels Respond & Renovate JLL CRE News Brief

Good or bad, short-term or long-term, travelers are talking about their hotel experiences on forums and review websites. And, according to a recent article in The New York Times, hotels are finally listening.

Hotel brands are reading what travelers say about them — and their competitors — and planning their investments accordingly.” 

A recent example: When prepping for renovations, Omni Hotels and Resorts trolled reviews, specifically TripAdvisor, to see what their guests had to say. Why? Review and booking websites have more clout then ever before, and executives are taking interest in direct feedback when it comes to property investments.

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How To Create a Data-Centric CRE Strategy

By: JC Pelusi, Market Leader, Managing Director, JLL 

I’m sure you’ve heard the buzzword “big data” in your office, or read about it in your favorite blogs and publications. The popularity of the term “big data” continues its steep climb upward on Google Trends, even today (screenshot below).

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Data has captivated the business world. The ability to track and capture data, regardless of industry, has transformed the way executives are reporting and capturing value.

JLL recently released the first white paper in a four-part series on developing Data-Centric CRE. According to JLL researchers:

“Companies that embrace internal and external data, manage its flow carefully but efficiently, and structure it to create actionable information and insight have a strong competitive advantage.”

This goes for CRE teams, too. The ability to make a smart move, determine a construction budget or advocate for more sustainability practices can all be driven by data-centric business cases. CRE teams have put new emphasis on the importance of data, but most still have a long way to go.

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JLL Investigates Open vs. Closed Office Space (Take the Survey Today!)

In the past year, there has been an evident shift nationwide in office space trends.

Businesses large and small have moved from private, traditional office spaces (i.e. your average cubicle) to more open, collaborative spaces. Some made the update for employee recruitment and retention, while others firmly believe that the office space is a reflection of business culture.

While the open office does encourage a more engaged community, not all organizations agree that open spaces are the winning method. One BBC reporter even called the controversy, “the great office space debate.”

Over the past two years, this “debate” has captured the attention of national publications. The New Yorker took a negative stance, saying the open office had negative implications on cognitive performance and health; Fast Company didn’t agree, reporting that employees want more “energy and buzz.”

Here at JLL, it got us to thinking: What office space structures are working best for our local clients and businesses?

So, we are investigating. Instead of assuming, we’d like to hear your firsthand opinion on the workplace debate. JLL’s regional office is conducting a survey for local business professionals in OH, PA & MI. 

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How To Determine Your Law Firm’s Real Estate Strategy [VIDEO]

By: Andrew Batson, Senior Research Analyst, JLL Great Lakes Region

Are you a leader in the legal field? Before making a decision about your law firm’s real estate, make sure you’re in the loop on the latest industry trends.

From office layout to city preference, the legal landscape is shifting. Below are a few top trends to consider before structuring your own real estate strategy.

  • Budget Allocation: Most U.S. markets are moving in favor of landlords. Rents continue to increase, and available space will continue to diminish. By 2015, only 7 percent of national markets will be in tenant-favorable territory.
  • Location Strategy: Despite a tight market, we’re still seeing growth for law firms. Hot spots for new offices include Houston, Palo Alto, Miami and Minneapolis. And, firms in gateway markets, like New York, Chicago, Washington DC and Los Angeles, are remaining stable.
  • Space Design: JLL also reported a trend toward more efficient workspaces. The average workspace has condensed—from as much as 900 square feet to as little as 550 square feet.

Check out JLL’s video for a full recap of the latest industry trends, originally reported in JLL’s Law Firm Perspective.

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About the Author

Andrew BatsonAndrew Batson is Senior Research Analyst for the Michigan and Ohio region of Jones Lang LaSalle and is responsible for the publication of quarterly and annual research. Mr. Batson ensures that our clients receive the most thorough, timely, and strategic market information in a way that guides decision making and identifies risks and opportunities. View Andrew’s bio or connect with Andrew on LinkedIn.

Commercial Real Estate News Brief: August 2014

Commercial real estate is a dynamic industry. Keep up with Spaces’ monthly recaps of the most valuable industry articles we’ve recently come across, focused on news in Ohio, Michigan and Pennsylvania.  

CRE Gets Techy with Hightower 

JLL CRE News BriefIt’s no secret that the commercial real estate (CRE) industry has generally taken a more traditional approach to day-to-day business operations. According to a recent Forbes article, that’s about to change: “It’s time for commercial real estate to get the tech startup treatment, ready or not.”

Enter, Hightower—a tool used by brokers and owners to “manage almost all of the aspects of leasing their buildings,” says TechCrunch.  The Hightower command center makes it easy to track all activity around current negotiations or deals. Plus, there’s an app for on-the-go brokers too.

JLL currently uses Hightower with its clients, among other tech tools.

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Detroit and Pittsburgh Selected Among JLL’s Top High-Tech Hubs [REPORT]

By: Robert Kramp, Vice President and Director of Research, JLL 

In the latest High-Technology Office Outlook, JLL researchers ranked the top 34 high-tech markets in the U.S. Researchers selected cities based on traditional metrics, such as wage growth, intellectual capital, and venture funding—as well as nontraditional metrics, like amenities.

It’s no surprise to see cities like Boston, New York, and Silicon Valley on the list. But, this year, JLL was able to uncover several new emerging tech frontiers—including Detroit.

What’s Happening in High-Tech?

The high-tech industry has played a starring role in the office recovery. Nearly 22 percent of the 65.4 million square feet currently under construction in the United States is in tech-focused markets. And, the industry continues to drive job creation. At the end of July, there were an astounding 3.3 million high-tech positions.

At the center of market recovery, the high-tech industry has—in the process—revolutionized the design of the modern office space. From JLL’s report: 

“Never before has an industry single-handedly shaped the way we work together and how we configure space more than the high-tech industry. This has had broad implications on location choice, investment strategies, and market performance.”

Location, in particular, is key for high-tech success. As companies compete for talent, they look beyond traditional real estate in the hopes of creating a certain lifestyle for employees. Surprisingly, popular high-tech markets aren’t always urban. JLL research found that most high-tech hubs offer a mix of urban and suburban qualities. The suburbs are not dead. In fact, the high-tech industry is bringing more opportunity to markets outside of downtown areas. (See page 14 of the report for details.)

With ongoing innovation, JLL expects the upturn in high-tech to continue throughout 2014.

Detroit & Pittsburgh Make the Cut 

In our region, both Detroit and Pittsburgh made JLL’s list of high-tech hubs. Detroit was given a market score of 28.5, while Pittsburgh was graded at 35.7. According to the report, “This score is not a ranking per se, but it does quantify market position relative to the others based on employment growth, high-tech office employment concentration, market dynamism, innovation, and investment trends.”

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When you think high-tech, you might not think Detroit. But, you’d be wrong.

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JLL Covers Employment Trends in Cincinnati, Cleveland & Columbus

By: Andrew Batson,  Senior Research Analyst, Great Lakes Region

Cleveland has been labeled an up-and-coming city by various national media outlets. Cincinnati’s market is gaining interest from outside investors, like Hines Interest LP. And, in Columbus, industrial space is a hot commodity.

Ohio’s three most popular cities are all making a comeback for different reasons. As a result, things are looking up for the local economies.

Below, I’ve included an overview of employment trends, based on JLL’s most recent Office Employment Updates released in July 2014.

Employment Update: Cincinnati

Cincinnati’s unemployment rate sits at a full percentage point below the national average. And, to put that into perspective, the national average (6.1%) is at “the lowest level since September 2008.

Economists are calling for a 1.4% increase in jobs through the rest of the year.

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Download the full report for details.

Employment Update: Cleveland

Cleveland’s unemployment rate decreased 0.6 percentage points year-over-year (sitting at 6.6%). Most new jobs have been added in the professional and business sector. However, because we are seeing a trend toward condensed spaces, “more job growth will be necessary to spur office demand and absorb the supply of vacant space.”

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Download the full report for details.

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Taking A New Approach To Workplace Productivity (SlideShare)

By: JC Pelusi, Market Leader, Managing Director, JLL 

Leading companies look to the workspace to accelerate employee productivity and happiness. Take Google for example: The tech company’s office in Pittsburgh includes sectioned off cubicles, group meeting areas, a cargo net hammock, an indoor garden and raised catwalks. (Check out all the tour on Business Insider).

While all offices can’t be quite that cool, we can look for ways to make the workplace an efficient, desired destination for employees.

It all starts with workplace strategy. And unfortunately, many businesses miss the mark when it comes to focusing on the right objectives for corporate offices. For example, executives are focusing on how much work is getting done, without necessarily measuring the amount of work that actually has an impact on bottom line success.

In a recent survey, JLL found that 74% said “thinking, talking and brainstorming create the most value,” but only 24% actually spend a majority of their time on these behaviors.

We suggest taking a new approach, which begins with determining what kind of work brings the most value for individual organizations, and then planning an office space to support those activities. 

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