Middle Market Digest-The Midwest

CHICAGO—This week’s election may have caused an astonishing shift in national politics, but for now, on the state level it’s difficult to see any change in the budgetary stalemate between Republican Gov. Bruce Rauner and Democratic House Speaker Mike Madigan. The governor spent tens of millions on a group of state House races, aiming to shake Madigan’s hold on the legislature. The effort resulted in a net gain of four seats for the Republicans, but the Democratic majority remains, and campaign television ads which painted Madigan as a villain are likely to further poison what was already a historically dysfunctional relationship. In fact, it now seems at least possible that the state will go without an official budget for the entirety of Rauner’s first term in office. Madigan also had a victory on Tuesday night in this proxy war when Democrat Susana Mendoza beat incumbent State Comptroller Leslie Munger. But that win, however satisfying for the speaker, does not do anything to break the logjam. Rauner wants support for his Turnaround Illinois agenda, which includes workers’ compensation reform and limits on collective bargaining, among other items, and Madigan wants to balance the budget with a tax hike. Neither has shown any willingness to budge. Rauner has proposed that legislative leaders, including Senate President John Cullerton, meet with him Monday to talk things over. Cullerton has agreed to attend, but Madigan, perhaps still smarting over all those ads, has not sent word.

BY THE NUMBERS

CHICAGO—Developers in the Chicago region added 15.3 million square feet to their inventory in the last four quarters as the need for industrial space surged, according to a new report from Marcus & Millichap. Still, vacancy at midyear declined 70 bps year-over-year to 6.9%, the lowest rate in 10 years. Despite an inventory expansion, demand is especially robust in the O’Hare submarket where vacancy plummeted 200 bps in the last 12 months to 4.6%. The metro’s average asking rent sat at $5.34 per square foot in June, 4% above the previous peak reached in 2008.

NEWS & NOTABLES

INDIANAPOLIS—Jared L. Stark, who has served in executive leadership positions with several leading healthcare organizations, has been named senior vice president of healthcare development at Duke Realty, an Indianapolis-based company that specializes in medical properties. Stark will oversee all phases of healthcare facility development and acquisition. “Jared Stark has extensive experience in the healthcare sector, including successfully growing and transforming several leading hospitals,” says Keith Konkoli, Duke Realty executive vice president, healthcare. “He is definitely an accomplished leader in the industry.” Most recently, Stark served as chief executive officer of University Hospital & Clinics, a full-service, acute-care hospital that serves South Central Louisiana and more than 400,000 patients annually. In this role, he led the campus-wide strategic development and operational execution of system-wide initiatives.

DEALTRACKER

DETROIT—Friedman Integrated Real Estate Solutions recently sold a 33,560 square foot multi-tenant mixed-use building located at 1017-1021 S. Washington Ave. in Royal Oak, MI. The seller, Washington Street Holdings, LLC, sold the building to Royal Oak Ventures SW1017, LLC. The property combines condos, office, medical and retail in the heart of downtown Royal Oak, and was purchased for investment purposes. Peter Jankowski, vice president, brokerage services at Farmington Hills, MI-based Friedman represented the seller in this transaction.

CHICAGO—Cushman & Wakefield has represented Universal Beauty Products Inc. in the purchase of a 94,682-square-foot industrial facility located at 221 Covington Dr. in the western Chicago suburb of Bloomingdale. The recently-renovated facility is near Universal Beauty Products’ headquarters in Glendale Heights, and will accommodate the company’s continued growth in the Chicago market. Universal Beauty Products was represented in the transaction by Cushman & Wakefield senior director Eric Fischer and executive directors Keith Puritz and Brett Kroner. The seller, High Street Realty Co., LLC, was represented by Jeff Fischer and Adam Naparsteck of NAI Hiffman. According to Cushman & Wakefield research, the Central DuPage industrial submarket currently has an overall vacancy rate of 6.7%, dropping from 7.2% in the second quarter of 2016. 

CARY, IL—The Boulder Group, a net leased investment brokerage firm, has completed the sale of a newly-constructed single tenant Starbucks property located at 630 Northwest Hwy. in Cary, IL for $1.65 million. The Starbucks is positioned as an outparcel to a Jewel-Osco grocery anchored center. Randy Blankstein and Jimmy Goodman of Boulder represented the seller in the transaction; a Midwest based private partnership. The purchaser was a private west coast based real estate partnership. The new Starbucks lease is for ten years and commenced in October 2016.

CHICAGO—Chicago-based Kiser Group, a boutique multifamily brokerage firm specializing in mid-market properties, has just brokered the acquisition of a fully leased six-unit apartment building at 6900 N. Sheridan Rd. in Chicago’s Rogers Park neighborhood. A private investor represented by broker Aaron Sklar purchased the property for $3.15 million. At $525,000 per unit, the sale price is the highest on record for Rogers Park on both a per-unit and per-square-foot basis, Sklar says. “The buyer seized the opportunity to capitalize on the area’s rising rents and to purchase a building with the type of highly appointed units that today’s discerning renters demand.”

LOUISVILLE—Randall Waddell, senior vice president of NorthMarq Capital’s Louisville-based regional office arranged the $12 million refinance of Sheraton Louisville Riverside Hotel, a 180-room property located at 700 West Riverside Dr.  in Jeffersonville, IN. The transaction was structured with a 10-year term on a 25-year amortization schedule. NorthMarq arranged financing for the borrower, Sotherly Hotels, a lodging REIT with a portfolio of full-service hotels in the Southern US. “In a highly selective financing environment for hospitality properties, NorthMarq was successful in providing us a preferred life company structure and insured that we met a tight timeline necessary to take out our existing debt at maturity,” says Scott Kucinski, vice president of operations and investor relationships with Sotherly.

BUILDING BLOCKS

GRAND RAPIDS, MI—NAI Wisinski of West Michigan broker Stan Wisinski recently represented The Woda Group in the purchase of land at the former Ryder Truck terminal at 936 Front St. along the Grand River in downtown Grand Rapids. Woda intends to use the land for Grand View Place, a 68-unit residential building, and recently held a groundbreaking ceremony to commemorate the occasion. It will be the first major residential development in the sector of the Grand River between the 6th St. Bridge and Leonard Ave. 

CHICAGO—Continuing a relationship that began in August, when 10 volunteers from Related Realtyhelped construct a home in Chicago’s West Pullman neighborhood, the Chicago-based brokerage today announced it is providing each of its 50 agents with a one-year membership inGiveback Homes, a group of philanthropic real estate professionals that partners with nonprofit organizations like Habitat for Humanity Chicago to build homes for families in need. The affiliation makes Related Realty the first Midwest brokerage to partner with the Manhattan Beach, CA-based organization. “As brokers, much of our day is spent out in the field working in the neighborhoods that make Chicago such a vibrant and diverse city, so we encourage our agents to support those communities in any way possible,” says Patrick Ryan, senior vice president and managing broker of Related Realty.