Developers and retailers are betting that Cleveland shoppers
are ready for a big-box shopping center. The 1 million-square-foot Steelyard
Commons shopping center will be home to the first Target and Wal-Mart Supercenter
in Cleveland proper. Both stores, 124,000 square feet and 217,000 sf respectively,
are part of the first development phase on the more than 120-acre former LTV
Other retail tenants include Home Depot, Marshalls, Old
Navy, and Best Buy. As the development’s first store to open, Home Depot’s
premiere illustrated the surrounding area’s pent-up retail demand. “The 600
people waiting at Home Depot the night before it opened is just a taste of the
volume of business and the level of interest,” said Mitchell Schneider,
president of First Interstate Properties, the project’s developer, to the
Cleveland Plain Dealer.
While some local retailers have reservations about Wal-Mart
entering the market, Schneider and other supporters are adamant that the 1,800
jobs and more than $3 million in tax revenues the development will generate —
in addition to the shopping convenience — will benefit the market. Supporters
also hope that the big-box center will draw additional shoppers to the area, rather
than cannibalize customers from local retailers.
The stores will open throughout the year with the Wal-Mart
Supercenter slated to open in September.
Highlights by State
Illinois -- Kinzie Station, a $750 million mixed-use project
that includes six multifamily towers with 2,451 luxury apartments and 40,000 sf
of retail, is planned for downtown Chicago. The project, which is a former railroad
yard, is expected to be complete by 2014, according to the Chicago Tribune.
Indiana -- In Terre Haute, Dora Brothers Hospitality Corp.
is developing an $8 million Candlewood Suites and a $12 million Hilton Garden
Inn as part of a downtown redevelopment project, according to the Terre Haute
Economic Development Corp.
Michigan -- More than $1 billion of new construction
currently is underway in Grand Rapids, as private capital from Chicago,
Detroit, New York, and California searches for quality investment properties in
the western Michigan market, according to Grubb & Ellis.
Missouri -- St. Louis retail construction has outpaced
absorption for the past four years, says Colliers Turley Martin Tucker.
Developers continue to build in growing areas and redevelop older properties
even though neighborhood and community center vacancy rose 0.3 percent last
year, according to Reis.
Minnesota --The Twin Cities are experiencing a drought in
bulk warehouse space with only 35 properties larger than 50,000 sf in the
market, according to United Properties.
Ohio -- In suburban Akron, office lease rates increased for
the third straight year to $16.08 psf during 4Q06. More inventory will become
available due to new construction and conversion of single-tenant buildings to
multitenant, which is expected to affect lease rates, according to CB Richard
Wisconsin -- Office vacancy rates in Green Bay should
decline to 15 percent from 20 percent this year as the city’s strong employment
growth continues, according to Grubb & Ellis.
Growing Market Experiments with R&D
A 70-acre bioscience research campus will be added to a
Fishers business park to help lure high paying jobs to the market, according to
the Noblesville Daily Times. The first phase of the Fishers Research and Technology
Campus is expected to create 200 to 300 jobs with salaries between $40,000 and
A suburb of Indianapolis, Fishers has experienced a 600
percent population increase in the last decade and was named Money magazine’s
33rd best place to live in the U.S. last year. The Indianapolis metropolitan
area is ranked the ninth largest bioscience market in the country by the
Battelle Memorial Institute, which ranks technology trends.
The research and technology campus will include both wet and
dry laboratories, office, and light-industrial production facilities. The first
building, which will encompass 50,000 sf and house up to 25 tenants, is expected
to break ground this spring, according to the Indianapolis Star.
Glasgow's International Financial Services District
Credit: Budge PR
Glasgow, Scotland, Gets Class A
A 10-year collaboration between Scottish Enterprise and the
Glasgow City Council has culminated in Glasgow’s thriving International
Financial Services District. The district has made significant progress toward
its goal of adding 20,000 jobs and 2 million square feet of class A office
space by 2010.
Since the project launched in 2001, the following
developments have been started:
• 1 million
sf of new class A office space with another 162,000 sf scheduled for completion
residential units with another 400 planned;
• 36,000 sf
of leisure accommodations including clubs, bars, and restaurants; and
• 65,000 sf
of retail space.
Scottish Development International and Glasgow’s Business
Location Service have collaborated to attract new companies to the district
including First Data and ACE. Other companies, such as Barclays Wealth, JP
Morgan, and Morgan Stanley, have increased their operations in the district
Apartments Rise From Ashes
Michigan has the highest unemployment rate of any state and
the multifamily market hit a low point in the past few years, according to
Multi-Housing News. Still, experts predict the outlook soon will improve. As
first-time home buyers are ebbing, apartment occupancy is rising. The multifamily
market absorbed 900 new apartment residents between June 2005 and June 2006, an
improvement from the previous year’s negative absorption of 1,125 residents.
Institutional investors have been exiting the market
throughout the past few years. But opportunity investors are finding it a good
time to enter, reasoning that the recent occupancy and concession slumps are
bound to give rise to improved fundamentals.
Multifamily Moving In
Springfield’s downtown is experiencing revitalization,
especially in the multifamily sector. During the past five years, more than 200
loft units have been developed and 100 more are expected to be completed this
year, according to Midwest Real Estate News. The redevelopment of the
150,000-sf Heer’s Building, owned by the city, will be a key component of the rehabbed
downtown district. The city currently is seeking developers for the mixed-use
Retail Construction Rush
Vacancy rates are falling and lease rates are rising in
Chicago’s retail market. With downtown properties such as Block 37 and suburban
Arlington Heights’ NorthPoint shopping center changing hands in 4Q06, and new
construction in the pipeline, this should be an exciting year for Chicago retail.
Block 37 at 108 N. State Street will feature office, retail, hotel, and residential space, as well as a new transit
station. Mills Corp. sold parts of the $450 million property to Joseph Freed
& Associates during 4Q06.
Credit: Mills Corp.
Caption: Older Milwaukee hotels, such as the Marcus Center Wyndham, will compete with several new hotels slated for completion this year.
Credit: Greater Milwaukee Convention & Visitors Bureau
There are several hospitality developments in the pipeline
for downtown and suburban Milwaukee, but probably too many for the market to
support according to local hospitality experts, Small Business Times reports.
With 11 hotels planned downtown and 11 more being developed in the suburbs, it
is unlikely that all 22 hotels will reach completion, experts predict. But as
hotel occupancy rates in the city reach nearly 70 percent, it is clear that at
least some demand exists.
The projects slated to break ground this year include:
• A 14-story mixed-use project with a 135-room Staybridge
Suites hotel, 30 condos, and 17,000 sf of retail is slated for completion in
• A 180-room upscale boutique hotel built by a local
developer should open in 2009.
• A 165-room Renaissance ClubSport by Marriott hotel will
rise in the historic Third Ward district.
Industrial Market Snapshot
Industrial development will take place in uncharted
territory as developers stretch farther into the suburbs in search of more
affordable land options. Absorption will continue to accelerate [this year],
putting further upward pressure on rental rates.
Rising rental rates will encourage developers to move forward on new projects.
Existing product is being absorbed quickly. Vacancy will
reach 10 percent within a year if the trend continues.
Developers are poised for new industrial projects — 3.9
of new space is on the drawing boards. Developers continue to seek additional
land positions, anticipating the start of a new phase of industrial
— Jonathon T. Rausch, CCIM, SIOR, senior associate, United Properties