Middle Market Digest-The Midwest

CHICAGO—Developers will soon add thousands of new apartment units to the city's inventory, and that has some people wondering if this supply will outstrip demand. Steven Fifield of Fifield Cos. told GlobeSt.com this week that he was not deterred by worries about whether demand in the metro area matched up with supply. His firm will soon break ground on 727 W. Madison St., a 46-story tower in the rising Fulton Market area, and open it for leasing in early 2019. By that time, he strongly believes that tenants will have filled up the many units set for completion this year, and have absorbed many of the ones set for 2018. Furthermore, Fifield has a conservative and patient approach to leasing, and if it takes a little extra time, the company has already planned for that. But most importantly, he believes the market, at least when it comes to luxury units in hot neighborhoods like Fulton Market, may have more strength than some think. It's true the market has been absorbing about 3,500 units a year, and with about 9,000 getting delivered in the next two, it will be a challenge to absorb it all quickly. But Fifield has developed thousands of units since the downturn, many in the West Loop, and has noticed some changes. Ten years ago, for example, only about 2% of their renters were empty nesters, he says. But today, this much-prized, high-income group signs about 15% of Fifield's new leases. This trend does not seem to be slowing down, and it's possible this group will soon constitute 20% to 25% of those settling in luxury towers like 727 W. Madison. If so, that would mean current estimates of the market's ability to absorb new luxury units are perhaps conservative. In any case, the number of people living within two miles of downtown has increased from about 42,000 15 years ago to around 150,000. And Fifield believes that increase has created an unstoppable momentum that will last for years. More companies like Google, now located a few blocks from where Fifield's new tower will rise, will want to locate in such a vibrant, modern neighborhood. And that, in turn, will continue to fuel demand for top-of-the-line, class A luxury units, even if demand falls off in less desirable areas.

NEWS & NOTABLES

MINNEAPOLIS—THOR Cos. has completed a number of new personnel moves and hires to facilitate its expanded role as a turnkey real estate management company with major offices in Minneapolis and Las Vegas. The company has become a major presence in the N. Minneapolis community, and has reorganized and expanded under the THOR Cos. banner, adding development, design plus and consulting to the mix. The company's construction, general contracting and self-performing concrete has been consolidated under the general title of construction. Damaris Hollingsworth was hired as vice president of THOR Design Plus, the company's new full-service architectural design and facilities management subsidiary. She worked as an architect and team leader in the Minneapolis office of Overland, KS-based DLR Group, prior to joining THOR. The company also named D'Angelos Svenkeson to head its newly created THOR Development affiliate. Also moving into an executive position at THOR Design Plus is Marlin King, who will serve as director of pre-construction, design and sustainability – a position he held previously at the old THOR Construction Inc.

OAKBROOK TERRACE, IL—Marcus & Millichap (NYSE: MMI), has just brought Rick Gordon into its Chicago Oak Brook office as a senior associate and a director of the national land group, according to Steven Weinstock, first vice president / regional manager / managing broker. “We initially welcomed Rich Kozarits, also a veteran land broker, based on the belief that land in Chicago was under represented,” says Weinstock, who also serves as the national director of the land group. “With Rich's enormous amount of activity, when presented with the opportunity to add another land veteran such as Rick Gordon, it was an easy decision.” Previously, Gordon worked with Larry Mayer & Co. before forming his own company, LandQuest, LLC.

DEALTRACKER

FT. WAYNE, IN—Manufactured housing communities in northeast IN have attracted the attention of both lenders and investors, especially since the local economies started to do better. Cleveland-based KeyBank Real Estate Capital, for example, has provided a total of $12.6 million in Freddie Mac first mortgage loans for a two-property manufactured housing portfolio. Key provided $6.4 million for Countryside Village at Fort Wayne, a 295-pad community located in Fort Wayne, IN. An additional $6.2 million was provided for Countryside Village at South Bend, a 276-pad community located in South Bend, IN. Both properties were constructed in 1977. Timothy Weldon of Key's commercial mortgage group arranged the nonrecourse financing with 10-year terms, five years of interest only and 30-year amortization schedules. Proceeds of the loans were used to facilitate the acquisition of the properties.

CHICAGO—The continued strength of the city's rental market has opened up a new opportunity for condo owners. Some have realized that they can get significant per unit premiums with the bulk sale of an entire property to a single investor. Tyler Hague, vice president and Jack Maloney, associate, both with the Colliers Chicago's multifamily advisory team, recently completed just such a bulk sale. Chicago-based ICM Properties, Inc, closed on the $5.7 million purchase of 628-634 W. Roscoe St., a 22-unit condominium building in the notable Lakeview submarket of Chicago, and plans to de-convert the units to rentals.

SCHAUMBURG, IL—Quantum Real Estate Advisors, Inc. has brokered the sale of a multi-tenant building located at 1414-1424 E. Algonquin Rd. in Schaumburg, IL. The 9,949 square foot property sold for $2,333,000. The building sits at the high traffic intersection of Algonquin Rd. and Meacham Rd. The buyer was a private real estate investor based in Chicago, according to Chad Firsel, president of Quantum, who represented the seller, a prominent property owner from the Chicagoland area. “The property has excellent curb appeal and excellent design, plus there is a lot of retail synergy with neighboring retailers,” Firsel says. “This property will provide solid cash flow for years to come.”

CHICAGO—Jon Springer, Paul Diederich and Andrew Kaplan of the Chicago office of CBRE assisted Riddell, Inc., in the new lease of an approximately 27,000-square foot office and lab space at 1700 W. Higgins Rd. in Des Plaines, IL. Riddell will vacate its space at 9801 W. Higgins Ave. in nearby Rosemont later this year and develop a state-of-the-art office space in its new location to showcase the company's history in the sport of football. Its new space will serve as Riddell's corporate headquarters and include a best-in-class testing lab and connected work space to advance the design and development of football headgear and other protective equipment. Riddell considered several areas for its relocation and found that the Des Plaines market best served its employees and visitors with proximate access to Chicago and to O'Hare airport.

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Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.