Reasons to Invest in Chicago Commercial Real Estate

Invest in Chicago Commercial Real Estate 2020 - Cawley Chicago

Reasons to invest in Chicago Commercial Real Estate, according to the experts at Cawley Chicago:

BRENTEN BLAKEMAN | Senior Associate, Capital Markets

 

Brenten Blakemen-grayscale“The medical office building market in the Chicagoland area was the second most active market in 2018 as there continues to be a shift in medical tenants from traditional on-campus facilities to off-campus. We are seeing this trend continue for two reasons: technological advancements and outpatient facilities. Technological advancements allow many outpatient services to be done away from the main campus. Off-campus facilities allow easier access for both patients and doctors than the often large and difficult-to-navigate main campuses. The Chicagoland area further presents strong investment opportunities for medical office investors as the best investments are near strong healthcare systems. Chicago has an abundance of strong healthcare systems, including Northwestern University, Rush University and Advocate Health Care. In addition to this, the aging baby boomer population makes medical office investment in Chicago a strong and stable investment opportunity right now and into the future.”

 

DAVID CONROY | Principal, Industrial Services

 

David Conroy_new_grayscale

“Industrial product in Chicago is highly desirable. This is primarily due to the demand from end users that need to locate here because of logistical advantages. Despite a struggling economic outlook and high property taxes, Chicago perseveres with its access to strong transportation, manufacturing labor pools, multiple intermodals, Class I rail lines, and airports. Those factors, plus its proximity to a dense population center anchoring the Midwest, make Chicago an essential cog in most companies’ supply chains.”

 

CARRIE ZETHMAYR | Vice President, Consulting Division

 

Carrie Zethmayr-gray“The greater Chicago area continues to be ranked one of the best markets for real estate investment, particularly in warehouse, transportation and advanced manufacturing industries. Illinois is the only state in the nation with all seven class I railroads, bringing 25% of the nations’ freight through Chicago. Combined with the Illinois’ higher-education system, which graduates more engineers than MIT, Stanford and Caltech combined, Chicago continues to attract top talent that is bringing us into a next-generation economy.”

 

DANIEL CAWLEY | President, Managing Broker

 

Dan Cawley-12-Edit“I’ve been working the Chicago suburban industrial and office market since 1985.  I’ve seen lots of real estate companies come and go through mergers or failures – same with developers. The most amazing thing has been the overall consistency of the business over that period of time. Having been through three real estate crashes – 1977-80, 1999-2001 and 2008-2012 – this market has continued to expand and provide a place for both the mega and the one-man shop, all with reasonable amounts of success. The politics of the state, as hard as they try, have not been able to curb demand for our services. I think that mirrors the diversity of the users in this geography. One size does not fit all. On the contrary, it appears to me there is room for anyone willing to provide a better service to a specific niche. I have also observed the single biggest mistake of companies “not staying in their lane” (one of the best advertising lines ever) that end up failing or scale back to their core business. As it relates to our company, our belief in what we do and to whom we should be doing it for has allowed us to flourish no matter the market economics 2008-2012 excepted!  Having a plan & being disciplined in its execution has been the underlying difference-maker for us.”

 

RYAN FREED | Vice President, Office Services

 

Ryan freed-1-Edit“The current market provides opportunity for entrepreneurial buyers that are willing and able to make quick decisions and market ready buildings.

Investing in Chicago comes down to the sub market and which obstacles an owner is willing to work through in order to attract tenants. One example is the East West corridor: the bookends of the market, Naperville and Oak Brook, are the strongest within the corridor. There, a building’s amenities, access to public transportation, interstate-proximity, and price are primary factors that attract tenants.

Out of state investors looking at the Illinois and Chicagoland area may have concerns about the state in general, or they may have more specific concerns about Cook county taxes. Nevertheless, we are still seeing tremendous activity for large and midsize companies in Cook county, and many submarkets within Cook County, like O’Hare, continue to perform as well.”

 

STEVAN ARANDJELOVIC | Vice President, Industrial Services

 

Stevan A-bw“Real estate is an attractive investment because, as a hard asset, it is a hedge against inflation, and when leased to a long term, credit-worthy tenant, the fixed income stream is a hedge against deflation.  This is especially important today with the global uncertainty surrounding the coronavirus and what impact it will have on the economy of the United States and the rest of the world.  This uncertainty has already triggered a collapse in stock markets around the globe, and is causing investors to seek out safe haven investments to weather the storm and continue to build their wealth.

In this environment, commercial real estate, specifically industrial real estate (which is what I focus on), is an attractive investment.  While there might be slow downs in the services sector of the economy due to people staying inside and social distancing from the rest of the population, people still need to buy their essential household goods. Because of this, companies need industrial space to manufacture, warehouse, and store these goods.  Since more and more shopping is being done online these days, which will be accelerated by people start staying in to avoid the virus, this will be a boom for e-commerce providers, which have been a source of strong demand for distribution and logistics focused industrial space.  Some evidence of this increased demand is the fact that Amazon recently announced that it is looking to hire an additional 100,000 warehouse and delivery employees to deal with the increased demand from online orders due to the virus.

When all of the above factors are taken into account, industrial real estate in the Chicago market, and the City of Chicago (my specialized sub-market), becomes very attractive.  The Chicagoland area is the third most populous metro area in the United States.  In addition to this, Chicago has an abundance of transportation, freight, and logistic infrastructure.  Chicago has access to multiple interstate highways and approximately 25 percent of all U.S. freight traffic passes through Chicago, making it one of the largest rail corridors in the United States.  Chicago is also home to both O’Hare and Midway International airports.  This puts Chicago within a 4-hour flight of the entire United States, as well as making it a global city.  Last but not least, Chicago has incredible port access due to the Port of Chicago and CenterPoint Intermodal Center (the largest inland container port in North America), located in Joliet.

Due to the attractive investment properties of income producing real estate, the continued demand from e-commerce providers, Chicago’s abundant access to all major forms of transportation and logistic infrastructure, Chicago’s central location within the United States, and Chicaoland’s dense population, industrial real estate in Chicago is one of the most attractive, and safest options available to investors today.”

Chicago’s Population & Demographics

Chicago is the 3rd largest city in the United States by population

Illinois Demographic & Economic Statistics

Capital: Springfield
Area: 
57,914 square miles
Population: 12,802,023
GDP: $833.54 billion
Median Income: $34,196
College Educated: 42%

Part II – Series on Costs of Running an Industrial Facility
Chicago Commercial Real Estate News Roundup – Q1 2020

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