Market Data

Regional Outlook

Midwest

Chicago’s Big Deal

Hardly considered the Second City these days, Chicago has yet to reach the stratosphere of New York’s office prices where Five Times Square and the Time Warner Center sold for $1.5 billion and $1.3 billion respectively earlier this year. But the $850 million sale of 300 N. LaSalle comes within striking distance. The price tag for the 60-story, 97 percent leased, LEED-certified building in Chicago’s trendy River North area is the third largest U.S. office sale this year and sets a new record for Chicago office properties. KBS Real Estate Investment Trust II sold the riverfront tower to The Irvine Co. for about $654 psf, a 30 percent increase over the $503 psf it paid in 2010, according to Chicago Real Estate Daily.com. Investors obviously get more for their money in Chicago: 1Q14 cap rates averaged 7 percent compared to 4.3 percent in Manhattan and 5.2 percent in San Francisco, according to Real Capital Analytics.

Cleveland CBD Comeback

Cleveland’s downtown population has increased 50 percent in the past 10 years and is projected to reach 15,000 residents by 2015. That demand has tightened the multifamily vacancy rate in central Cleveland to a mere 2.3 percent and spawned a wave of new projects, according to Marcus & Millichap. At the high-end is the conversion of the East Ohio Gas building to a 223-unit property with rents topping out at $2,600. Other projects include the second phase of the Flats East Bank, adding 243 units. More than 1,850 units are under construction in the Cleveland area and 6,200 units are in the planning stages, both with a heavy CBD concentration. Attracted by Cleveland’s stabilized economy, institutional investors are targeting properties $10 million and above for purchase, looking for a 6 percent return on class A assets.

South

Juan Valdez Comes to Miami CBD

Procafecol, the company that represents Colombian coffee growers and manages the Juan Valdez brand, has opened its first downtown Miami location, the first of 60 planned outlets in Florida over the next five years. Operating the stores as franchises, Procafecol has plans to expand the brand to Texas and California as well to capture the growing U.S. Hispanic market. It builds on its international reputation, with 280 stores worldwide, the majority in Latin America, as well as outlets in New York and Washington, D.C.

Source: Bloomberg

National

East

Atlantic City Losing Casinos

Have casinos have reached their saturation point in the Northeast? Some 39 states have casinos, including Massachusetts, Connecticut, Delaware, New York, Pennsylvania, and Maryland. Atlantic City, which lost its status of second biggest casino market to Pennsylvania, saw its gambling revenue decline from more than $5 billion in 2006, when the first Pennsylvania casino opened, to less than $3 billion last year. The Atlantic Club, Showboat, Trump Plaza, and the two-year-old Revel will close by this fall. While the market for repurposing casinos is untested, conversion of the hotel portion is a possibility, but the large gaming rooms can be a challenge to use. A local college has suggested converting one casino into a college campus, with classroom, facilities, and student housing — diversifying the employment base, attracting another consumer base, and offering much-needed retraining for some 8,000 former casino employees.

Source: Philadelphia Inquirer

West

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