With data centers becoming an increasingly trending topic amid the pandemic, it was fitting that the 17th annual CIP Industrial Summit was held at one under construction in Hammond, Indiana last week. Just across the border of Illinois, this lakefront facility offered an ideal environment to examine the current state of the industrial real estate market.
Over 160 CRE professionals attended the event, both in-person and virtually, to hear three panels of experts offer their takes on the state of the market. The expert panelists included Cawley Chicago’s Founder and President, Daniel Cawley, SIOR.
Thomas Dakich, managing member of Digital Crossroad, and Tom McDermott, Mayor of Hammond, Indiana, kicked off the event. They celebrated their united efforts on the data center and commended the ripple of positive outcomes it could lead to – both environmentally and economically. They left the attendees with the sentiment that they want industrial site selectors to understand Indiana is open for business, and the government is supporting them.
The first panel, “Financing, Investment and Development,” centered around trends and strategies in financing and investing as well as industrial real estate development and redevelopment. Moderater John Joyce, CCIM, managing director, SVN Chicago Commercial; Gina Fridberg, senior vice president, Wintrust Commercial Real Estate; Tim Hennelly, president, Great Lakes Region, Ryan Companies; Adam Moore, senior regional director, First Industrial and Peter Tsantillis, partner, Liston & Tsantilis sat on this panel.
With uncertainty and fear of backtracking looming, Fridberg provided reassurance by pointing out that lenders have been honoring financing for deals that were agreed to pre-COVID-19. Adding to this sentiment, Hennelly mentioned that he has not seen a lot of developers walking away from deals either.
Overall, the panelists agreed that although they expect the rest of 2020 to remain flat, they predict an encouraging 2021 when things get back to normal – such as rent growth in the Chicago market and a push of new development in the next construction season.
Cawley sat on the second panel which focused on “Segmented Solutions in Industrial Real Estate.” This panel discussed current and future trends and technology that are impacting the Chicago industrial real estate market. Moderator Heather Ennis, president and CEO, Northwest Indiana Forum; Robert Fimbianti, vice president, Linear Electric; Ryan Rademann, CRE technology leader, Wipfli; Matthew Reardon, partner, MCR Partners Ltd. and Joe Rook, principal, industrial division, ARCO/Murray joined Cawley on this panel.
From a tenant design standpoint, Rook observed the migration away from tightly-packed open offices back to pods and private offices. Within these spaces, he brought up anti-microbial surfaces and better ventilation as emerging technology. Rademann pointed out that even though many organizations were forced to quickly figure out how to manage remotely and use paperless digital tools, they are now largely enjoying the new efficiencies and operating with littler overhead. In addition to programs like zoom, there is even more advanced technology becoming available, such as cameras that allow people to virtually walk a job site.
The panelists agreed that the industrial sector is one that is still thriving, and positive repercussions will emerge from the unprecedented pandemic.
“It took about a 60-day period for people to breathe again before they start thinking about real estate, Cawley said. “Since that 60-day period, however, our industrial guys have been really busy. Activity has quickly elevated significantly and we have more deals in our pipeline that we’ve had in a year or so.”
“We exist in a space that is benefitting from everything going on,” Rook said. “We are in a market set to succeed for years to come.”
The final panel brought the event full circle with the topic of “Commercial Real Estate and Data Centers.” The panelists considered how data centers are affecting the industrial real estate market as well as new trends and technologies being utilized. Moderater Bill Shanahan, CDCP, principal, CT Group, Inc.; Andy Cvengros, senior vice president, JLL; Rob Daly, vice president and director of field operations, Executive Construction, Inc.; Doug Fulton, head of sales and business development, SBA Communications and Kirk Offel, CEO, OVERWATCH sat on this panel.
Panelists noted that even though there was a pause in activity immediately following COVID-19, that pause was followed up by a surge. With the “can’t stop, won’t stop” mentality of industry professionals along with aggressive cloud providers like Microsoft, the industry is constantly growing and evolving.
“The way that we build and deliver data centers today is different than it was six months ago,” Offel said. “It’s going to be that much more different six months from now.”
Cawley summed up everyone’s optimism and enduring hope for the industry when he said:
“Our industry has an unbelievable opportunity to make a difference in millions of people’s lives.”