Middle Market Digest-The Midwest

CHICAGO—GlenStar Properties purchase of Schaumburg Corporate Center makes this a good time to take a look at the latest developments in the suburban market. Although always overshadowed by the activity taking place in the CBD and its surrounding neighborhoods, suburban assets remain the preference for many firms. It’s true that vacancy in class A properties rose in 2016, ending at 21.1%, up from 19.4% at the end of 2015, according to Colliers International. But there may be a change on the way. Colliers also found that there were 66 tenants with needs ranging from 10,000 to 50,000 square feet actively seeking space in the suburban office market. Furthermore, tenants such as Paylocity, Brunswick, Valent Biosciences, Vyaire Medical, and Combined Insurance will soon move into new spaces, and this activity should begin to push down that vacancy rate.

But even with the rather mixed picture, investors seem to have some confidence in the suburbs. Forty-five assets traded hands in 2016, according to Colliers. In the fourth quarter alone, for example, notable transactions included the Blackstone Group’s 699,120-square-foot, three-building portfolio sale in Rosemont to Adventus Realty Services; TIAA-CREF’s 264,162-square-foot sale in Oakbrook Terrace to Hamilton Partners; and Colony Realty Partners’ 232,152-square-foot sale to Helios Property Management, also in Oakbrook Terrace.

Colliers also expects that well-capitalized owners throughout the suburbs will continue to update their properties by adding the type of modern amenities now expected by class A tenants, especially ones with younger workforces. That means GlenStar’s plan reinforces a trend that will continue in 2017, and shows the suburbs are anything but stagnant.

NEWS & NOTABLES

INDIANAPOLIS—A new Revista and Healthcare Real Estate Insights magazine survey has listed Duke Realty as the top developer by square footage of outpatient facilities started in 2016. The Indianapolis-based commercial real estate developer began developing five healthcare medical office buildings totaling 308,013 square feet last year. Revista, an Arnold, MD-based firm, provides property data to the healthcare industry, and Minneapolis-based HREI dedicates itself to healthcare real estate development, financing and investment. One of Duke’s new developments was the five-story, 78,000-square-foot Baptist Oxford MOB on the campus of the new replacement Baptist Memorial Hospital-North Mississippi near Tupelo, MS. Another was the four-story, 80,000-square-foot Centegra Health MOB in Huntley, IL, about one hour northwest of Chicago.

OAK BROOK, IL—Robert Burke and Chad Whatley have just joined Inland Securities Corp. as vice presidents – external wholesalers. The company is the exclusive dealer-manager and placement agent for real estate investment programs sponsored by Inland Real Estate Investment Corp. and Inland Private Capital Corp. Both Burke and Whatley will serve as external wholesalers working to build relationships with current and new financial advisors. Burke will build networks in NY and NJ. Whatley will oversee relationships in GA, NC, SC and AL. Burke comes to Inland Securities from Avian Capital Markets, LLC, where he served as executive vice president and founding partner. Prior to joining Inland Securities, Whatley served as regional sales director of Highland Capital Management.

DEALTRACKER

CHICAGO—David Prioletti, Chicago-based senior vice president with CBRE, represented Salco Products Inc. in two lease renewals for 128,339 square feet in Lemont, IL. At 1385 101st St. Salco renewed for 96,360 square feet and at 20W267 101st St. the firm renewed for 31,979 square feet. The leases were coterminus, and Salco uses the smaller location as overflow space. “The I-55 market continues to be a strategic location for industrial users and manufacturers,” says Prioletti. “Salco realized the long-term benefit of remaining in this location and these leases will position the firm well for future growth.” He has completed more than 350,000 square feet of deals in the I-55 Corridor in the first quarter.

BUILDING BLOCKS

ST. LOUIS—Hampton Inn St. Louis Wentzville recently opened at 150 Wentzville Bluffs Dr. in suburban Wentzville, in a new development called Wentzville Bluffs. The $12 million 64,000-square-foot hotel has 109 rooms and suites. Midas Hospitality, a hotel management group, has agreed to manage the hotel. The property features a fitness center, indoor pool, meeting rooms, and backyard seating areas with a grill and gazebo. Midas Hospitality’s sister company MC Hotel Construction, a general contractor specializing in new hotel construction and renovations, built the hotel. “The development features a B & B Movie Theatre, Planet Fitness, Stone Summit Steak House, and Hot Shots Sports Bar that are all within walking distance for our hotel guests,” says Midas Hospitality president Rob Willard. “Wentzville is a growing area, and we are excited to be a part of this vibrant community.”