Commercial Real Estate News Brief: March 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. 

City Skylines in Ohio, Michigan, Pennsylvania Experience Lively Activity 

JLL Mar-NBLocal cities, including Cincinnati, Cleveland, Columbus, Detroit and Pittsburgh, experienced dynamic commercial real estate activity during 2013, according to JLL’s annual Skyline Review. But what does it mean for local businesses and tenants? A few main takeaways include:

  • Cincinnati office space is among six markets nationally that have experienced a rent decrease since 2005.
  • Cleveland is improving workplace efficiencies, resulting in premium class A office space available in the CBD.
  • Columbus is experiencing new speculative construction because of the high demand for quality space.
  • Detroit’s office building vacancy rate dropped 7.7 percentage points from 2012.
  • Pittsburgh’s office market is experiencing single-digit vacancy rates.

In case you missed it, check out Spaces’ infographic, featuring the five most impactful themes from the local Skyline Reviews.

LEED Certification: Not Just for New Buildings

In a recent article in National Real Estate Investor, Sam Martin (@Sam_Martin_JLL), product manager at JLL, noted that obtaining LEED certification isn’t easy. However, according to Martin, “…the benefits are many.”

A common misconception about LEED certification is that the building must be newly constructed. Fortunately, this myth is incorrect. Martin outlined the phases to achieve LEED  certification—similar to the process Beaumont Health System is following in Detroit. Visit the full article to see what you need to do to get started. 

Columbus Industrial Market Continues to Improve

Following the economic recession, most major cities are still on the financial road to recovery. According to GlobeSt.com, Columbus is one area that “has been a bit slower to come around.”

Despite the apparent delay in revitalization, JLL Researchers found that the current industrial vacancy rate in the Columbus market is now at an all-time low of 7%. And, good news for Columbus, the upturn is expected to continue. GlobeSt.com predicts, “Columbus should continue to see an increase in the development of e-commerce, distribution and manufacturing projects.”

News Wrap-Up in Our Region

Cincinnati  

  • Eagle Realty Group, a subsidiary of Western & Southern Financial Group, is looking for investors for space at Queen City Square, but the company plans to maintain majority ownership.
  • UGN, an auto parts supplier is planning to build a $50 million auto plant in Monroe, Ohio. The project will begin in April 2014, and the facility will bring approximately 150 jobs to the region.

Cleveland

  • American Greetings Corp. will relocate its world headquarters to Crocker Park. “Creative Studios,” or the name of the construction project, also includes plans for new rental apartments, a hotel, retail space and restaurants.
  • The 2.2-million-square-foot space that is currently Randall Park Mall will soon be transformed into industrial space, housing manufacturers and distribution centers.

Columbus

  • The City Hall campus in downtown Columbus will undergo an $80 million renovation. The building located at 109 N. Front St. will be knocked down in 2015 and replaced with a new building that is slated for completion in 2017.
  • To advance its ecommerce operations, the Bon-Ton Stores, Inc. signed a lease for a 743,000-square-foot fulfillment center in West Jefferson, Ohio. The new facility will bring nearly 140 jobs to the region.

Detroit 

  • Southfield Town Center is under contract for purchase by New York City-based real estate investment firm 601W Cos. for $177.5 million. The company plans to spend $30 million to renovate the 2.2 million-square-foot office complex.
  • DDI Group, the Chinese development firm that purchased three properties in Detroit in 2013, plans to invest $50 million to renovate the first space on its agenda.

 Pittsburgh

  • The 60,000-square-foot building located at 1000 Town Centre Way at Southpointe II was purchased by the Kossman Co. for more than $11.1 million.
  • The U.S Steel Tower has seen a pattern of growth within the building, and has two open floors available for rent.

Newspaper image via NS Newsflash

 Subscribe-button

 

JLL Features Main Themes from Great Lakes Skyline [Infographic]

By: Robert Kramp, Vice President and Director of  Research, JLL, Midwest and Great Lakes Region

JLL research released this year’s annual Skyline Review, a showcase of “the luxury-end of the urban office sector” across 43 cities.

In the Great Lakes region, we observed dynamic, lively activity on our local city Skylines. Detroit is seeing renewed interested in downtown working and living, and Pittsburgh observed single-digit vacancy rates. But, what does it mean for our local businesses in Cincinnati, Columbus, Cleveland, Detroit and Pittsburgh moving forward?

Our team pulled 5 hard hitting themes from the individual Skyline Reviews to make sense of the data for owners, investors and tenants located, or interested in, downtown areas.

 

About the Author

robert_kramppAs Vice President and Director in the Midwest and Great Lakes Region at JLL, Robert has experience in the industrial, retail, multifamily and land sectors. Read up on Robert’s experience or connect with him on LinkedIn.

A Step-by-Step Guide to Your Next Office Renegotiation or Relocation: Part IV

By: Brian Conroy, Senior Vice President, Jones Lang LaSalle 

Office RelocationAs a lease expiration date approaches, many mark their calendars in dread of the administrative tasks ahead. And although moving is complicated, it’s also a unique opportunity to reinvent your culture, address your space utilization and ensure your strategy is aligned with organizational objectives.  

At Jones Lang LaSalle, my business partner, Scott Pick, and I follow a strategically crafted roadmap to guide our clients through the process. This is the fourth post in a blog series; each post will serve as a stop on the way to your destination – success. 

Next Stop: Evaluate Options and Drive Organizational Consensus  

It’s critical that all team members are involved during this stage. While conducting market tours of buildings on your shortlist, the right team will be able to pinpoint the risks or costs associated with each asset. From there, you can make eliminations and narrow your list of finalists.

Each and every detail is crucial at this stage, as it will play into the cost of the final deal. Below, I’ve outlined four steps to evaluate options, drive organizational consensus, and ultimately, select your space. 

As my business partner, Scott Pick, mentioned in the previous post, keep in mind that while these steps provide a preliminary framework, the process will evolve to accommodate and serve the needs of individual business objectives.

Step 1: Develop Request for Proposals (RFPs) from Your Shortlist 

Once you’ve developed your final, even shorter, shortlist, you can begin developing requests for proposals (RFPs). Each proposal is unique, based on building status and business drivers. However, RFPs present a prime opportunity to identify risks or expose areas that need attention from the landlord, prior to entering into negotiations. This is just another reason why touring with the right team, and having access to the right resources, is key while building your shortlist.

Ensure that you document the entire RFP process, from start to finish of negotiations. This will be a strong reference piece in building (and defending) your business case, and eventually, serves as a means to build organizational consensus.

At this point, we concurrently put together a fit plan, in which we ensure key business drivers and physical space objectives align with selected buildings or floor plans.

Step 2: Conduct a Technical (and Financial) Analysis of Each Property  

As feedback rolls in from landlords, assess all responses and concessions as they relate to your deal drivers. Ensure that you gain a holistic understanding of the total spend, which includes rent, construction cost, free rent, building improvements, moving related expenses, signage, etc.

It’s critical that you conduct a financial and technical analysis of the buildings on your shortlist. A real estate professional will drive a financial model that reflects all details that could impact the deal—including points that the potential landlord may have overlooked, including EBITDA impact. 

Step 3: Prepare a Subjective Property Comparison  

Next, rate the properties on your shortlist based on business objectives. Which drivers are being met? In what ways is the landlord willing to meet company needs? Prioritize deal drivers at this stage. Properties that meet your most crucial requests will rank higher on your shortlist.

While comparing properties, we also suggest involving other team members to continue to build internal consensus. Demonstrate which properties are best aligned with company culture or values using your building ratings. In my experience, team collaboration at this stage helps others to feel more confident in the final decision. It also helps to pinpoint group deal drivers (i.e. wants vs. needs), which can drive more strategic negotiations. 

Step 4: Select Your Space 

Once you’ve selected and negotiated with your top choice properties, you might find that several options are a perfect fit. If this is the case, use it as leverage during negotiations. But, in most cases, the holistic process drives a single property to the top of the list, making the choice a simple one.

Next, select your space and enter into final negotiations with the landlord. 

Stay tuned for the next post in the Roadmap to Success series­—Negotiate Your Lease and Prepare for Occupancy—to be presented by my business partner, Scott Pick.  

A real estate professional can help you align business drivers with your real estate choices. Please contact your local  JLL office, broker, or myself, if you’d like assistance with your office relocation or renegotiation at brian.conroy@am.jll.com.

Subscribe-button

About the Author 

Brian Conroy_HeadshotAs Senior Vice President in the Great Lakes Region Corporate Services Division, Brian specializes in tenant representation. He has more than ten years of experience in commercial real estate and currently represents clients in Northeast Ohio. View Brian’s full bio to read up on his experience.

The Sky’s The Limit: Real Estate Report Examines Top Local Skylines

By: Robert Kramp, Vice President and Director in the Midwest and Great Lakes Region at JLL

skyline-sketchEvery city’s skyline tells a story. Some might say that its character starts with the shape of its skyline. How has your city’s skyline evolved during 2013?

Each year, JLL’s research team takes inventory of the top skylines across the U.S. to uncover the highest-profile commercial buildings and office towers in our local cities. We have officially released this year’s Skyline Review, an annual wrap-up report of the best and most desired spaces across the country.

What is this year’s Skyline saying about your city? All local market Skylines were developed so that CRE professionals can easily assess their cities’ top statistics, compared to surrounding areas. Following are highlights from the Cincinnati, Cleveland, Columbus, Detroit and Pittsburgh Skyline Reviews, with links to download the complete research.

The Cincinnati Skyline

By: Cody Brooks, Research Analyst at JLL  

The Cincinnati Skyline showcases 18 of the metropolitan area’s premier office buildings.  Various industries drove demand throughout 2013, ranging from law firms and financial services to technology and healthcare companies. Leasing activity remained modest, but capital markets activity did see an upturn thanks to Convergys, which sold Atrium One to Smith / Hallemann Partners for $43.4 million.

2013 concluded with total vacancy at 25.3% in direct result of space give-backs, a trend that carried forward from 2012. Above average vacancy also led to increased concessions. In fact, the average number of months of free rent on a 10-year lease increased from four to six months.

Looking Ahead: Cincinnati is moving into landlord favorable territory. Overall, the Cincinnati market continues to slowly improve, characterized by plentiful Class A space options for those seeking space.

Cincinnati Skyline Statistics (as of year-end 2013):  

    • Direct vacancy: 23.5%
    • 2013 sales volume (s.f.): 565, 509
    • 2013 net absorption as % of inventory: -4.4%
    • % direct asking rent change: -1.6%

Download the complete Cincinnati Skyline Review.

The Cleveland Skyline

By: Andrew Batson, Senior Research Analyst at JLL

Some of the largest tenants in Cleveland’s Skyline made dramatic real estate decisions in 2013. During the first quarter, Eaton made the move from its space at 1111 Superior Ave. (300,000 square feet) to its new headquarters in the suburbs. But, shortly after, the Cleveland Metropolitan School District claimed 88,000 square feet of the vacancy left behind by Eaton. In the second quarter, KeyCorp signed a 15-year lease at Key Tower effective in 2015, dropping down to 487,000 square feet from the nearly 700,000 square feet that Key had leased since the early-1990s. But, a similar story, within months Baker Hostetler law firm leased 115,000 square feet of the space.

On top of the lively leasing activity downtown, the new 450,000-square-foot Ernst & Young Tower became the first new multi-tenant office building constructed in the Cleveland area in two decades. Today, the tower is more than 90% leased, with a tenant on every floor.

Looking Ahead: It was a dynamic, busy year on the Cleveland Skyline. With such leasing success at the new Ernst & Young tower, there is rumor of another tower soon to be constructed on Cleveland’s skyline. 

Cleveland Skyline Statistics (as of year-end 2013): 

    • Direct vacancy: 19.9%
    • 2013 sales volume (s.f.): 0
    • 2013 net absorption as % of inventory: 2.0%
    • % direct asking rent change: -0.1%

Download the complete Cleveland Skyline Review.

The Columbus Skyline

By: Cody Brooks, Research Analyst at JLL  

Absorption saw a slight hiccup in 2013 at -59,000 square feet. JLL expanded the Skyline set by four buildings, three existing properties (175 on the Park, Moline Plow 200 Civic Center Drive) and one under construction (250 S. High) to indicate a number of future available options following significant leasing activity. Speculative construction developments and lease transactions were major contenders for Columbus this past year. Rents fell just slightly, by 1.2%, signaling the end of three consecutive years of Skyline rent growth.

Investment sales also saw positive activity during 2013. In fact, two Skyline properties were involved in transactions during 2013, including Two Miranova Place and Columbia Gas’ former headquarters at 200 Civic Center Drive.

Looking Ahead: Following a busy year for commercial real estate, it’s clear that new demand for quality space is driving skyline construction, and will continue to do so.

Columbus Skyline Statistics (as of year-end 2013): 

    • Direct vacancy: 15.2%
    • 2013 sales volume (s.f.): 483,079
    • 2013 net absorption as % of inventory: -1.0%
    • % direct asking rent change: -1.2%

Download the complete Columbus Skyline Review

The Detroit Skyline

By: Andrew Batson, Senior Research Analyst at JLL

In the past 18 months, Detroit’s Skyline has transformed. New tenants moving downtown absorbed almost 1.5 million square feet. With the addition of four buildings, the Detroit Skyline now includes 20 buildings totaling 10 million square feet.

Thanks to Dan Gilbert, who has now purchased more than 3 million square feet of commercial real estate in the CBD, total vacancy dropped by nearly 14.5% (from 26% in Q4 2010 to 11.5% currently). New demand and growth also stems from suburban tenants seeking to relocate to downtown spaces. Big businesses moved to the CBD during the past year, including Title Source, Quicken Loans and Lowe Campbell Ewald.

Looking Ahead: Detroit made JLL’s national list of top 5 (secondary) cities with the “sharpest drops in vacancy.” We expect the upward trend to continue through 2014, as well as increased interest in the city itself.

Detroit Skyline Statistics (as of year-end 2013): 

    • Direct vacancy: 11%
    • 2013 sales volume (s.f.): 0
    • 2013 net absorption as % of inventory: 4.2%
    • % direct asking rent change: 7.8%

Download the complete Detroit Skyline Review.

The Pittsburgh Skyline

By: Andrew Batson, Senior Research Analyst at JLL

There is a 4.5% direct vacancy in the Pittsburgh Skyline, making it one of the tightest office markets in the country. Consequently, landlords have a firm control over negotiations, driving rents to increase by 11.5% over the past two years. The tightened vacancy has, however, sparked some office construction downtown, like The Gardens at Market Square (new to the Skyline Review this year). Mixed-use development at The Gardens, forecasted to be complete in 2015, will include Class A office space, a parking garage, retail and restaurant space, and a Hilton Garden Inn.

For the third consecutive year, we observed a transaction within the Skyline set. Starwood Capital Group purchased the 27-story Liberty Center, a mixed-use hotel and office complex.

Looking Ahead: Landlords in Pittsburgh have negotiating leverage in this tight market. But, with new construction on the horizon, those seeking space will have new options in the near future.

Pittsburgh Skyline Statistics (as of year-end 2013): 

    • Direct vacancy: 4.5%
    • 2013 sales volume (s.f.): 526,000
    • 2013 net absorption as % of inventory: 0.2%
    • % direct asking rent change: 5.6%

Download the complete Pittsburgh Skyline Review.

 Subscribe-button

About the Author

robert_kramppAs Vice President and Director in the Midwest and Great Lakes Region at JLL, Robert has experience in the industrial, retail, multifamily and land sectors. Read up on Robert’s experience or connect with him on LinkedIn.

Commercial Real Estate News Brief: February 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. 

Real Estate is Top Investment for Millionaires in 2014

According to Morgan Stanley, millionaires in the U.S. claim that residential and commercial properties are the top “alternative-asset class” to own in 2014.

JLL_Feb-NBBloomberg reports that, “wealthy investors are turning to a rebounding real estate market as fixed-income yields remain historically low and equities surge.” This trend attracts U.S. millionaires as well as foreign investors, who are purchasing high-profile U.S. buildings as a safety net because of the dollar denomination. 

Secondary Markets Driving New Industrial Demand

Modern space with proximity to population centers and a robust logistics infrastructure will dominate the industrial real estate sector in 2014,” said Craig Meyer, President of Industrial Brokerage at JLL, in a recent article in REJournals.com.

According to JLL researchers, for more than four years, industrial markets across the U.S. have been trying to revive. In 2013, the industrial market experienced a slight upswing with 168 million square feet of net absorption. Secondary markets are also seeing increased demand for industrial space, while developers and investors turn to markets, such as Columbus, that have solid intermodal infrastructure in place,” according to REJournals.com.

Detroit Job Market Continues to Recover

Detroit has experienced a continuously high unemployment rate for the past last decade. Fortunately, thanks to more jobs in the manufacturing, office and high-tech markets, the region’s economy is slowing becoming stronger.

In a recent article in GlobeSt.com, Robert Kramp, Vice President and Director of Research for the Midwest and Great Lakes regions for JLL, said, “The auto industry, as well as its suppliers, is now operating at near-full capacity.” This employment pickup has also allowed the industrial vacancy rate in the area shrink to 11.2%, “putting Detroit in the top quartile of U.S. cities.

News Wrap-Up in Our Region

Cincinnati 

  • Cincinnati Bell, Inc. may be in the market for a larger office. According to sources, the company is searching for a space that is roughly 200,000 to 250,000-square-feet.
  • Beckman Coulter, Inc. plans to expand its distribution center in Northern Kentucky. The 73,000-square-foot expansion will cost roughly $10 million, and bring 43 jobs to the area.

Cleveland

  • Westlake City Council passed legislation to move forward with the expansion project in Crocker Park, which includes a new space for American Greetings Corp. The mixed-use complex will also have three parking garages to fit more than 1,500 cars.
  • Remedi SeniorCare of Ohio-Northeast LLC is the first tenant in the Bluestone Business Center 1 building. The pharmaceutical distribution company will occupy nearly 31% of the building. 

Columbus

  • New tenants are calling the 175 on the Park office tower home. The office complex next to Columbus Commons signed leases with Finance Fund and Tucker Ellis.
  • Daimler Group, Inc. will build its premier speculative project at Port Columbus International Airport for $6 million. The 100,000-square-foot flex office and warehouse project will be next to a 130,000-square-foot light industrial building.

Detroit 

  • Southfield’s Towne Square complex may be receiving a third tower. The new tower would make the existing 670,000-square-foot complex among the largest office complexes in Detroit.
  • Schostak Bros. & Co. bought the 1.2 million-square-foot General Motors Co. Powertrain Engine Plant in Livonia. Bay Logistics, Inc. is the complex’s only tenant, and occupies roughly 130,000 square feet.

Pittsburgh 

  • The Union Trust building is now owned by Boston-based Davis Cos. The building, which is one of downtown’s most architecturally significant buildings, was purchased for $14 million.
  • The oil and gas industry face limited real estate space options in the area. Despite this, other industries, mainly the technology industry, is showing signs of growth.

Newspaper image via NS Newsflash

 Subscribe-button

Beaumont Health System Named Among the “50 Greenest Hospitals in America”

By: Ted Spicer, Account Director, Jones Lang LaSalle 

Today’s leading businesses are working toward more environmentally friendly operations. Here at JLL, we are advocates of a “green” workplace. In fact, JLL was recognized among the “World’s Most Ethical Companies” by the Ethisphere Institute in 2013. By educating and advocating for sustainable practices, companies can positively impact the environment, while simultaneously attracting and retaining quality employees.

This post is the final post in a series, based on Perspectives on Sustainability and Healthcare. It spotlights how Beaumont Health Systems in Detroit was named one of the “50 Greenest Hospitals in America” by Becker’s Hospital Review

Beaumont’s Investments Generate More Than One Million in Savings

For the past few years, Energy and Sustainability Services experts from JLL have worked closely with Beaumont Health System professionals in Detroit to help develop a holistic, environmentally sustainable environment for patients and staff. Beaumont has racked up a number of prestigious awards along its journey to LEED certification, including the Greenhealth Partner for Change award. Most recently, however, Beaumont was honored by Becker’s Hospital Review as one of the 50 Greenest Hospitals in America in 2013.

BeaumontRoyalOakHosipitalTo earn this recognition, the Becker’s Hospital Review team analyzed sustainability information from leading healthcare sustainability organizations and experts. Most other hospitals included are housed in newer and smaller facilities, so Beaumont was especially pleased to have its Royal Oak facility recognized. Since the building dates back to 1955, Beaumont had to look for creative ways to make greener building updates.

The hospital’s “green” initiatives are already paying off. Beaumont’s capital improvement projects now generate more than $1.3 million in energy savings annually. To make such substantial progress in such a short time, Beaumont engaged in several key green projects. Below are just a few that have contributed to its transformation.

Beaumont’s Steps Towards More Sustainable Operations  

Beaumont first conducted a LEED gap assessment to evaluate the building’s current status, as well as steps needed to achieve certification. From there, the health system made more than 20 substantial capital investments in greener technologies. (They will see the return on these investments in as little as four months.) These investments include, among others:

1. Replaced lighting fixtures to a more efficient alternative
2. Upgraded parking decks, parking lot lighting and building signage to LED lighting.
3. Installed low flow restroom fixtures.
4. Connected a once-through recycled water system to the closed chilled water loop.

Beaumont also makes a point to engage and involve employees whenever possible. For instance, it keeps employees involved in everyday recycling programs.

To read more about how Beaumont Health System qualified as one of the “50 Greenest Hospitals in America,” download the free report. 

Have questions on how your office can improve its sustainability practices? Contact me for more information at spaces@am.jll.com.

Subscribe-button

 About the Author

TedSpicer_headshotTed Spicer is a Senior Vice President in the Healthcare Solutions group for JLL. He is also the account director and client relationship manager for the Beaumont Hospitals account. With more than 11 years of healthcare real estate experience, Ted is responsible for delivering world-class facilities and real estate services to Beaumont’s acute care hospital portfolio of 9.1M square feet.

The 4-Step Approach to Future-Proof Your Workplace

By: Rob Roe, Managing Director of Jones Lang LaSalle, Great Lakes Region

Today’s leading businesses are rethinking their workplace strategies. Companies are looking to design and occupy spaces that better reflect and serve end goals. This post is the fifth in a series based on research from JLL’s Workplace Strategy team, focusing on preparing your office space for the future.

 

It’s no secret that today’s workplace is rapidly changing, fueled by forward-thinking office space trends. Successful companies need the agility to future-proof their workplace, but what is “future-proofing” and how can it propel your business’ competitive advantage? JLL’s research team defines future-proofing as: “The process of anticipating future developments and activating solutions in order to seize opportunities and minimize possible negative consequences.”

This concept enables companies to proactively change with industry advances, rather than reactively trying to keep up. Planning ahead and tailoring your business model accordingly is a cost effective and efficient way to maintain business success.

While you can’t predict the future, there are steps you can take to help you prepare for it. Below, I’ve outlined four basic steps to consider when future-proofing your workplace.

4 Ways to Start Future-Proofing

Step 1. Identify and prioritize the most likely drivers for workplace change in your immediate future 

JLL identified the top drivers for workplace change:

  • Demand for cost reduction
  • The need to engage employees
  • Attracting and retaining talent
  • The debate on in-office attendance vs. telecommuting

Business drivers often remain the same; however, finding new and innovative solutions to these issues is critical for your business to withstand a dynamic environment. For example, new technologies have allowed employees to work from home, but many employers prefer face-to-face, in-person teamwork. JLL’s workplace strategy experts noted, “This renewed focus on being present leads to different workplace solutions.”

Step 2. Consider how the workplace can set companies up for success during changing times 

Does your company have flexibility within your existing workplace? If not, it’s something to consider when establishing your future-proof plan. If more (or less) space is needed at short notice, a dynamic space will allow companies to better adapt to demands with less money, and in less time. For helpful tips on ways to transform your workspace, check out my previous post, Build a Workplace That Nurtures Corporate Culture & Employee Productivity.

Step 3. Leverage industry best practices to get ahead in the game

Identify the best practices within your specific industry, and find ways to maintain a competitive advantage. Consider what other leading companies are doing to get ahead. What’s working (and what’s not)?

Those who successfully proof for future success often focus on (among others):

  • Ways to keep employees engaged and productive.
  • Aligning space with company goals, culture and vision.
  • Offering employees flexibility in their workspaces (mobility).

Step 4. Start today

If you don’t have your future-proofing plan in place, you’re already behind. Don’t get left in the wake of the rapidly changing workplace—start planning for the future today.

In the words of JLL’s workplace strategy experts:

“The physical work environment affects just about every part of an organization: finances, culture, work process, productivity, human capital, the ability to meet the expectations of the workforce and the ability to adapt to change.”

Consider the consequences of not being prepared to meet future developments creatively and efficiently. What happens when businesses, or sometimes even entire industries, cannot maintain a business model because it has not been adapted for the future? They are not sustainable, and often fail. To ensure that your employees, space and technological capabilities align with your business goals and the evolving business world, you need to consider a plan to future-proof your workspace.

For more information on future-proofing, download JLL’s Future-Proof Your Workplace whitepaper.

Have questions on how to future-proof your workplace? Contact me for more information at spaces@am.jll.com.

Subscribe-button
About the Author 

Rob_RoeAs managing director, Rob’s responsibilities include real estate transaction representation and consulting services for Jones Lang LaSalle. View Rob’s full bio to read up on his experience and recent transactions, or connect with him on LinkedIn.

Commercial Real Estate News Brief: January 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. 

Midwest Millennials Fuel Workforce Urbanization  

JLL_Feb-NBIn a recent article for REBusiness Online, JLL’s Great Lakes Market Director JC Pelusi discusses how Midwest millennials are driving big changes in the commercial real estate sector. According to Pelusi, “…millennial lifestyle preferences and work habits will continue to transform economic activity and, more specifically, shape commercial real estate demand.” 

In result of millennial lifestyle preferences, experts are seeing a trend toward workforce urbanization. As the demand for downtown office space increases, the demand for downtown living is also growing. According to Pelusi, millennials will continue to look to downtown spaces for working, living and shopping. He said, “With limited space available across the region, we expect to see elevated interest in new development this year.” 

Visit the full editorial for details. 

New Opportunities for Economic Growth in Shale Zone Communities

Energy companies, local decision makers and real estate developers need to work together to maximize economic growth in shale regions, according to JLL in a recent Area Development article. Energy companies, for example, are partnering with third-party consultants to address community concerns, such as roads, schools and utilities, and connect with local decision makers and developers to cultivate a resolution.

Case in point: the Pittsburgh real estate market recently experienced a revival driven by energy companies. According to the article author, Bruce Rutherford, “several million square feet of additional space has been leased since 2009 and is directly attributable to the energy industry.”

Demand for Industrial Space Boosted by Lower Natural Gas Costs 

National Real Estate Investor (NREI) reported that the industrial market can expect to benefit from fracking, “as access to natural gas will make it cheaper to make products.” Industry experts at JLL agree, citing that natural gas is cheaper than gasoline fuel, so it “…should save enough capital to boost demand for manufacturing jobs and new distribution hubs throughout the country.

According to NREI, spending less on energy will ultimately lead to the U.S. increasing its market share in the world economy. Real estate markets in the Midwest are expected to benefit from this overall growth.

News Wrap-Up in Our Region

Cincinnati 

  • Land owned by the historic U.S. Playing Card was purchased by a group of national and local developers in January. Construction to renovate 470,000 square feet of industrial space into Class A office space is projected to cost between $45 and  $60 million.
  • Paul Hemmer Co. is busy constructing a 650,000-square-foot industrial distribution facility in Monroe, known as Park North Building 4. The project is slated for completion in April 2014.

Cleveland

  • The former Cleveland Metropolitan School District building, located at 1380 E. Sixth St, will eventually be home to a new Drury Plaza Hotel. Construction for the project has already started, and completion date is slated for the summer of 2015.
  • Euclid Hotel Associates, LLC, plans to convert the former Cleveland Athletic Club building in downtown Cleveland into a Crowne Plaza Hotel and apartments. The project will bring 195 hotel rooms and nearly 30 apartments to the area. 

Columbus

  • Daimler Group, Inc., an office developer in Columbus, plans to build a four-story, 110,000-square-foot building in Westerville. The building will be the company’s fifth speculative office property and is slated for completion in late 2014.
  • Three companies seeking tax incentives through the Ohio Tax Credit Authority, Gwynnie Bee, Inc., Bon-Ton Stores, Inc. and S&T Motiv Company Ltd., could bring as many as 620 jobs to the Columbus area within a few years.

Detroit 

  • After two acquisitions in early January, auto supplier Federal-Mogul Corp. announced plans to move into the former Blue Cross Blue Shield of Michigan headquarters in Southfield.
  • Denso International America, Inc. purchased an 81,000-square-foot building to expand its North American headquarters in Southfield. The new expansion will bring more than 170 new jobs to the region.

Pittsburgh

  • As part of its expansion of Bakery Square 2.0, Walnut Capital Partners plans to begin building a new 216,000-square-foot office space. The project will begin in March 2014 and is expected to be the first of two, 200,000-plus-square-foot structures on the site.
  • Noise Solutions, Inc. opened a new 55,000-square-foot manufacturing facility in Sharon, Pa., marking the company’s first expansion into the U.S. The expansion has already brought 30 jobs to the region, and the company expects to hire between 125 and 200 additional employees.

Newspaper image via NS Newsflash

 Subscribe-button

Beaumont Health Systems Received Prestigious ‘Partner for Change’ Award

By: Ted Spicer, Account Director, Jones Lang LaSalle

Today’s leading businesses are working toward more environmentally friendly operations. Here at JLL, we are advocates of a “green” workplace. In fact, JLL was recognized among the “World’s Most Ethical Companies” by the Ethisphere Institute in 2013. By educating and advocating for sustainable practices, companies can positively impact the environment, while simultaneously attracting and retaining quality employees.

This post is the third in a series, based on Perspectives on Sustainability and Healthcare, which spotlights how Beaumont Health System in Detroit won the prestigious Greenhealth Partner for Change Award in 2013.

Partner for Change

In the past few years, experts at JLL have worked with Beaumont to help the hospital reach its sustainability goals. Among its green objectives, Beaumont set out to build rapport with well-respected environmental advocacy groups, like Practice Greenhealth.

PracticeGreenhealthLogoA nonprofit organization that supports healthcare facilities, Practice Greenhealth’s mission states that it “is the nation’s leading health care community that empowers its members to increase their efficiencies and environmental stewardship while improving patient safety and care through tools, best practices and knowledge.” It was the perfect fit, so Beaumont joined Practice Greenhealth in 2012. As a member, Beaumont had access to an abundance of helpful resources, like webinars, expert consultation, meetings and more.

Through JLL’s guidance, Beaumont’s Royal Oak hospital applied for and received the Greenhealth Partner for Change Award in 2013. The award, presented to less than 150 hospitals, recognizes hospitals and healthcare systems that are continuously working to improve programs and expand sustainability efforts.

How to Receive Partner Recognition

Not every health system is eligible for the Partner for Change Award—so what set Beaumont apart? To help answer this question, I’ve outlined a few of the qualifications that enabled Beaumont to secure the award.

Implement several successful pollution prevention projects and sustainability programs.

Since 2011, sustainability experts at JLL have worked with Beaumont representatives to develop an energy strategy that saved nearly $300,000 per year in power and maintenance costs. Beaumont also took extra measures to conserve water. Through JLL’s guidance, Beaumont installed low-flow sinks and toilets, and began reducing water consumption for sterilizing equipment and use for outdoor landscape irrigation.

Execute a mercury elimination program.

Beaumont’s hazardous waste reduction program addresses a variety of harmful chemicals, like mercury. This also includes DEHP, or “a potentially harmful plasticizer often used as a component in medical equipment.”

Establish a “green team.”

In partnership with JLL, Beaumont established a campus-wide green committee of influencers to identify green opportunities within the company. Established in 2012, the “green team” now has 500 officers from all departments within each hospital.

Promote an environmentally friendly purchasing policy.

With the help of JLL, Beaumont sought out a list of vendors that offer green alternatives to medical equipment and cleaning products. JLL has also helped Beaumont establish guidelines for environmentally friendly furniture, flooring and other office products.

Beaumont is determined to continue its mission of establishing a healthy environment for patients, staff and the community. To read more about how Beaumont Health System qualified for the Partner for Change Award, download the free report.

Have questions on how your office can improve its sustainability practices? Contact me for more information at spaces@am.jll.com.

Subscribe-button

 About the Author

TedSpicer_headshotTed Spicer is a Senior Vice President in the Healthcare Solutions group for JLL. He is also the account director and client relationship manager for the Beaumont Hospitals account. With more than 11 years of healthcare real estate experience, Ted is responsible for delivering world-class facilities and real estate services to Beaumont’s acute care hospital portfolio of 9.1M square feet.

 

JLL and Staubach Bet on Broncos

This post originally appeared on JLL’s Boston blog. We’ve published it again on our own blog in the spirit of Sunday’s championship. Please share your comments, or predictions for the big game in the comments below!

—-

After picking last year’s winner, JLL once again turns to commercial real estate stats to pick the winner of the big game.

Our Americas Executive Chairman Roger Staubach, is making a bold prognostication for Sunday’s championship in New York. He’s picking the Denver Broncos to defeat the Seattle Seahawks.

StaubachPicforSuperBowlPRFeb2,2011

While the talking heads and Vegas odds makers look to point differentials, QB ratings and other on-the-field stats, Staubach and JLL Research are once again sticking with what they know best — commercial real estate — to make their pick.  Watch as Staubach reveals his winner of this Sunday’s Big Game.

According to the firm’s analysis of the last 13 season finale games, teams based in cities with the higher office vacancy rate (i.e. more space available for lease) have won the Lombardi Trophy 62 percent of the time. This includes last February when Baltimore edged San Francisco.

This year, according to the latest JLL Research, the overall vacancy rate in the Mile High city stands at 13.9 percent compared with 12.5 percent in the Emerald City, making the Broncos our favorite to win the crown.

JLL’s Roger Staubach, who was MVP of the 1972 game, said that his pick also takes into account Broncos quarterback Peyton Manning, whose play has been on the upswing all season, much like the LoDo micro-market in downtown Denver.

“Peyton Manning is one of the greatest NFL quarterbacks of all time,” Staubach said. “I believe in our JLL formula, but more importantly, I also believe in Peyton and I know he’s going to get the job done for the Broncos and the great people of Denver on Sunday night.”

Staubach also has high praise for the Seahawks’ defense, which has held its opponents to an average of just 11.6 points per game over their last five contests, and is almost as hot as Seattle’s South Lake Union submarket  with its vacancy rate of just 4.0 percent.

“I love Seattle’s ‘D,’ I love [quarterback] Russell Wilson, and I love ‘The 12th Man,’” he said. “But this is Denver’s year.”

Subscribe-button