Mark Moran, executive vice president and partner with NAI Hiffman in Oakbrook Terrace, and Choose DuPage board member, has seen plenty of industrial markets. So he knows a strong one when he sees it. Today, he sees an exceptionally strong industrial market in the Chicago area. Moran recently spoke with Midwest Real Estate News about the reasons behind the industrial activity taking place now in Chicago.
Alloya, a corporate federal credit union, signed a lease earlier this year for 25,930 square feet at 184 Shuman Blvd. in Naperville, Illinois. The five-story building totals 131,284 square feet of office space in the Park Lake Center.
Alloya’s lease includes the majority of the fourth floor. Other tenants include Centrad Healthcare, LLC and Staffmark. Jeffrey Mann of CBRE represented the landlord.
On May 3, 2016, Comptroller Leslie Munger shared solution-focused principles to address Illinois’ budget impasse before an audience of more than 750 of the region’s top business and civic leaders during the seventh annual DuPage County Regional Business Outlook event at the Drury Lane Conference Center. The annual event, hosted by Choose DuPage Economic Development Alliance, Mesirow Financial and Ice Miller, brings together local business owners and executives, government and education leaders and other members of DuPage County’s business community to learn insights about the current regional and national economic landscape, as well as to discuss best practices and growing potential in today’s economy.
During her keynote address, Comptroller Munger encouraged three principals the State and Illinois businesses must pursue to help navigate the current financial crisis: innovation, fostering an environment for economic growth and tackling the problems causing Illinois’ financial troubles, rather than the symptoms. “We can return Illinois to prosperity by encouraging our businesses to invest and grow, putting people back to work and expanding our tax base so we can balance the budget and fund our state’s critical priorities,” said Illinois Comptroller Leslie Munger. “Choose DuPage has helped foster a dynamic business climate in DuPage County, and I look forward to working with them as we move Illinois forward.”
As a prelude to Comptroller Munger’s remarks, Brian Belski, Chief Investment Strategist and leader of the Investment Strategy Group at BMO Capital Markets, shared his view on the national economy delivering a 2016 market outlook. His presentation advised the crowd to remain cautiously optimistic as the economy’s long-term picture remains bright. Following the keynote presentation, business journalist Lisa Leiter hosted a panel discussion on innovation and opportunity in DuPage County with Michael Vivoda, Senior VP & President, West Region, Northwestern Memorial HealthCare; Ray Ziganto, President, Bi-Link and Sean Chou, CEO, Catalytic. The panel’s remarks echoed the theme of the overall event which positioned DuPage County as a smart choice for business success.
“The current DuPage economic picture is positive,” said DuPage County Board Chairman Dan Cronin, who kicked off the event by highlighting recent economic development wins
within DuPage County. “Our unemployment rate remains stable and significantly lower than the rest of the state and the region at 5.3%. Through our economic development arm, Choose DuPage, we welcomed 107 new projects to our county creating 3,700 DuPage jobs.” Throughout the event, speakers highlighted DuPage County’s low unemployment, skilled workforce, high quality of life and growing industry sectors including manufacturing, business services, healthcare, retail and technology. The event confirmed DuPage County’s thriving business climate and reinforced the spirit of innovation and opportunities throughout the business community.
Choose DuPage is the regional economic development organization for DuPage County, Illinois. A public/private partnership, Choose DuPage is dedicated to advancing DuPage County as a premier global business location. Geographically desirable, with a highly skilled labor force, DuPage County offers a diverse economy, friendly business climate, and substantial transportation network. Choose DuPage leverages these benefits to retain and attract business, support local economic development efforts, and address policy issues critical to the needs of business.
Founded in 1910, Ice Miller LLP is an Am Law 200 Firm with a nationally recognized reputation in many of its practice areas. Ice Miller offers a broad array of capabilities in virtually all areas of legal practice including: corporate, patents and trademarks, bankruptcy, lobbying, labor and employment, litigation, employee benefits, environment, tax, trusts and estates, real estate, municipal finance and government law. With offices in Bloomington, Ill.; Chicago; Cleveland; Columbus; DuPage County, Ill.; Indianapolis; New York and Washington, D.C., the Firm has more than 300 lawyers and 40 paraprofessionals.
Mesirow Financial is an independent, employee-owned firm founded in 1937. As specialists in investment, risk management and advisory services, we are committed to helping our institutional, corporate and individual clients achieve their objectives. Our professionals are inspired by an entrepreneurial desire to develop tailored solutions that deliver measurable results. Authentic communication, consistent accessibility and an unwavering commitment to achieve define the Mesirow approach.
Advancing the Village Board goal of addressing key redevelopment sites in the community, the Village of Lombard announces that Bradford Real Estate will be pursuing zoning and development approvals from the Village for a new 74,000 square foot grocery store at 345 W. Roosevelt Road, Lombard. The project will consist of the demolition of an existing vacant K-Mart store, which has been closed since January, 2013 and replacing it with a modern prototype store that is focused upon meeting the grocery and convenience needs of the community. Continue reading
DuPage County economy flourishing; unemployment rate remains lowest in region while industrial and office vacancies attract new business
The 2016 First Quarter Economic Indicators Report confirms DuPage County’s thriving business climate due to its low unemployment rate, growing business sector and declining office and industrial vacancy rates. The report findings further indicate an estimated $350 million opportunity for retail expansion to meet current consumer demand; a substantial growth opportunity for additional business development.
“This report highlights DuPage County as a premier business location with enormous retail development potential and space for commerce to grow,” said John Carpenter, president and CEO of Choose DuPage. “We have a population of almost a million people in DuPage—including a highly skilled workforce. New businesses continue to make DuPage their home, while local industries remain strong and continue to expand and grow their footprint. There is a great opportunity to be cultivated here.”
DuPage County has shown promising activity in the first quarter of 2016 with new developments coming to the area including Minneapolis-based developer Ryan Companies’ purchase of an 11-acre Oak Brook property with proximity to both I-88 and I-294 which it plans to transform into a major 300,000 to 400,000 square foot multi-building office development. Local leading accounting, advisory and technology firm Sikich increased its total footprint in Naperville by 50%, while other local companies including AMITA Health and ConPac Group signed new leases in the area. In just the first three months of the year, a combined total of more than 2.4 million net square feet of office and industrial space was absorbed indicating positive development and further growth for DuPage County.
The report was compiled from Choose DuPage member data and professional economic data provider EMSI.
Watch the video below to hear the address made by The Honorable Dan Cronin, Chairman of the DuPage County Board at the City Club of Chicago, Illinois’ premier public affairs forum.
30 Startups and Entrepreneurs Across U.S. Recognized for Innovative Use of Technology in their Business 
Comcast Business announced that 30 small business owners from across the U.S. have been named regional winners in the “Innovations 4 Entrepreneurs Contest” (I4E), a national competition that will award more than $440,000 to up-and-coming companies that are leveraging technology to enhance their business. Each of the regional winners, which included Villa Park-based Computer System International, Inc., receives a $10,000 cash award and the chance to compete for the opportunity to consult with more than a dozen business experts to fuel growth within their organization.
Winners were selected based on essays they submitted regarding how they would use technology to enhance their business. The full list of regional winners and their essays is available here.
The purpose of this innovation is to enhance healthcare utilization beyond hospital walls by inventing the technologies that would allow doctors, hospital staff, and patients to communicate and share information remotely and more efficiently. Our solution will utilize interactive terminals at patient bedsides to seamlessly connect doctors to patients remotely thus facilitating home healthcare and medical assistance all over the world. The solution will also utilize automated medication-distribution model to share medication order data to provide better visibility into patient care and more control of their workflow. The integrated solution will give patients and staff access to multimedia entertainment, communications tools, Skype technology, and electronic health records. The solution will include a touch-screen, web cam, single-sign-on access to an Internet protocol (IP) network, meal choice technology, and access to electronic health records (EHR). The system would need to integrate well with the hospital’s IT environment and provide a better environment for connecting with healthcare records, specialized applications and emerging technologies. The terminals connect to a worldwide IP network that provides access to the Internet, telephony, healthcare records, hospitality services, and multimedia content. The next round of the competition is the public vote, where six businesses will be selected as grand prize winners and receive an additional $20,000 cash award, as well as an all-expenses-paid trip to Comcast Business headquarters in Philadelphia. This year, Comcast Business has partnered with the Charles D. Close School of Entrepreneurship at Drexel University to provide a nationally recognized group of business experts like Robert Irvine, celebrity chef and entrepreneur; Brian Meece, co-founder & CEO of RocketHub; Chuck Sacco, MBA, Assistant Dean, Close School of Entrepreneurship and numerous Comcast executives and Close School professors. Public voting is being held through May 13, 2016. The six grand prize winners will be announced June 6, 2016, with the grand prize winner event in Philadelphia in August. “Since we first launched the Innovations 4 Entrepreneurs program, we have witnessed first-hand how technology can be the differentiator in accelerating customer satisfaction and growing revenue across many types of businesses,” said Denice Hasty, senior vice president of marketing and product management for Comcast Business. “These 30 startups and entrepreneurs serve as a model for other small businesses seeking to grow and expand their operations through the use of advanced technology.”
From 2010 to 2015, approximately 2.5 million SF was absorbed in the CBD, reflecting 43 relocations from the suburbs. Some of the significant moves include Sara Lee, Motorola Mobility, GoGo, Kraft/Heinz, and ConAgra. These are undoubtedly headline suburban real estate relocations; however, during the same period, the suburbs had more than 16 times that transaction volume by square footage, with over 40 million SF completed, and 17 consecutive quarters of positive net absorption.
Conventional wisdom maintains that the reason for the urban migration is talent attraction, or access to high-skilled labor and a younger, more tech-oriented worker that thrives in an urban environment. True, companies are attracted to young, urban talent, but there is a larger phenomenon of urban migration at play, one that extends from coast to coast. Since the 1970s, many cities have gone through a revitalization, with government funds and private development pouring in to build up infrastructure, housing, and public health and safety programs. For many years leading up to this renewal, the cities were dramatically less safe or healthy, and corporations fled to the suburbs. Fast forward 30 years, and you’ll see many urban dwellers benefiting from access to high-wage jobs, educational opportunities, cultural amenities, walkability and mass transit options. With those changes, companies made a swing back to the cities. Chicago is no exception to this paradigm shift; that is why it is common to see so many young professionals, or Millennials, being attracted to the urban core. A breakdown by submarket shows the West Loop gained 46% of the total space taken by tenants who relocated from the suburbs, and River North absorbed 31%. The results are unsurprising given the access to public transportation and amenity-rich buildings these submarkets offer. Meanwhile, in terms of transactions by volume SF, 45% vacated the North Suburban submarket — in search of a more centralized location closer to younger “tech talent” — with River North absorbing a large portion of the square footage.
It is important to define “Millennials” and how this age group differs from other generations. According to the Urban Land Institute (ULI), Millennials (also known as Generation Y) are ages 18-36, the most culturally diverse generation and the most likely to live in cities. They are also the most likely to expect to move int he next five years. Generations Xers, ages 37-49, are predominately owners of single-family homes and the least likely to desire urban amenities. Many expect to move to larger quarters within five years. Baby Boomers, likely the Millennials’ parent generation, are ages 50-68 and the most likely to live in the suburbs. Unlike Generation X, boomers are more likely to move to a smaller home, and many are even moving to the city after they retire. Millennials are also more inclined to have large amounts of student loan debt. The Institute for College Access and Success estimates that the average U.S. student debt was $28,950 in 2014, rising 56% from 2004-2014. This increase is double the rate of inflation (25%) over the same 10-year period. In the state of Illinois, the change in average debt was much greater, increasing by 85% during that time frame to $29,984. The growing debt issue has undoubtedly influenced Millennial behavior such as delaying purchasing homes and starting families. According to the ULI survey, 37% of Millennials own, versus 68% and 78% for Generation X and Baby Boomers, respectively.
Considering the challenges Millennials face with student debt and lack of access to homeownership, many young people are sticking around in the city. In fact, Nielsen data forecast that the median age will be 36 years in Chicago in 2020, up from 32 years in 2000. The change in age in the city is 14.9% over the 20-year period, compared to 12.6% in the suburbs, suggesting that people will stay in the city longer and delay moving out to the suburbs. Access to talent is clearly one of the main concerns of any company looking to grow and remain competitive, so it is important to consider the labor pool in Chicago. it is evident that the West Loop labor pool is much more robust than the average suburban labor pool, 5,051,218 versus 2,582,875 overall. The size of the labor pool is more than double in the 18-34 age group, the likely target for entry- and mid-level positions.
The West Loop offers a large office building stock, with 44.2 million SF of rentable building area comprising 19% of the overall metro Chicago market. The submarket also offers proximity to major transportation hubs, including Ogilvie Transportation Center and Union Station. Therefore, it makes sense that this would be a target area for business activity. It is true that the West Loop has a much higher draw for talent; however, suburban labor pools should not be disregarded. To put it into perspective, the suburban labor pools are on par with numerous mid-sized metro areas– such as Denver, St. Louis, Baltimore, Charlotte, and Pittsburgh-all of which have populations (MSA) ranging from 2.4-2.8 million, according to the US Census Bureau. When looking at the overall workforce in Chicago, though, most people work outside the city center. The suburban workforce is nearly four times that of the city, with a total of 2,939,714, according to the US Census Bureau. Also, it is clear that significantly more people live in the suburbs than in the urban core. According to Nielsen data, the total suburban population ages 25-65 is 3,586,985, while the city contains less than half that, housing just 1,535,995. 
Furthermore, some business sectors in the suburbs have a larger footprint in the office market, including pharmaceutical, healthcare and telecommunications. The industry breakdown in figure 7 shows the popular industries among occupiers in the suburbs versus the CBD. It is evident that pharmaceutical and healthcare companies as well as telecom tenants have a strong presence in the suburbs, something not seen downtown given the current office stock, which caters to more legal, financial and technology tenants with less-specific building requirements. Thus, companies associated with the pharmaceutical, healthcare and telecom industry sectors would be apt to choose the suburbs over the CBD. 
When looking at wage rates, it is evident that people earn more in the CBD. For example, IT operators with seven years’ experience earn 3.5% more downtown than they would in Deerfield; however, the workforce is generally younger and less experienced in the CBD. If work experience is a high priority for a company, then moving downtown may not be the best option. The cost of real estate is much more expensive in the CBD than in the suburban real estate market – 68% higher for the average asking gross rent. Should space requirements remain the same or grow, staying in the suburbs would be a viable option to save money on real estate costs. 
When occupiers choose the CBD over the suburbs, they are paying a premium for a higher-quality office product. With that choice comes access to younger talent; denser space options; a dynamic business environment; proximity to downtown amenities, clients, and competitors; public transit options; LEED-certified buildings; and the potential to alter the corporate culture or branding.
Downtown has much to offer companies targeting a younger workforce, or interested in leasing space in trophy buildings, but the suburban real estate market is still a viable option for companies that need to access a more experienced labor pool while managing real estate costs. Other reasons a company would benefit from occupying space in the suburbs include:
CBRE Research conducted a survey of 229 corporate real estate executives in the Americas from a broad range of industry sectors, notably banking and finance, and tech and telecom, which account for 23% and 22% of survey respondents, respectively. The survey found strong consistency among executive mandates in three focus areas: enabling talent, managing costs and expanding influence. Of the survey respondents, 57% see employee attraction and retention driving workplace strategy, while 44% see cost escalation as a leading challenge. Throughout the survey, executives repeatedly noted a need to address ‘skilled labor shortages’, ‘cost escalation’ and ‘economic uncertainty’. Furthermore, demographic shifts have introduced a workforce that is more generationally, culturally and ethnically diverse than ever before. As a result occupiers often make people-centric decisions when selecting markets. While the issues above are common for most companies located in the suburbs, it is important to acknowledge that needs vary, and companies should weigh their options when deciding to stay in the suburbs or relocate. For example, if attracting younger tech talent is in the best interest of the company, then CBD might be the right choice, but if the desired employees need to be more experienced and less costly, then it may be in the best interest of the firm to stay in the suburbs. Ultimately, the choice depends on the needs of the company with regard to cost, labor and office requirements. The following are common deciding factors for and against a suburban to CBD relocation: 
White Paper Published by CBRE | Matthew Walaszek, Senior Research Analyst Click here to download a PDF of this white paper.
