As the new Chairman of Mainstreet Organization of REALTORS® (MORe) Commercial Committee I attended the 2014 annual Illinois Association of REALTORS® (IAR) convention in Chicago. The main reason I was there was to attend the Commercial Panel. From my understanding that IAR hosting a commercial real estate panel is not a very common occurrence.
The panel was made up of very active and very respectable commercial real estate (CRE) practitioners; Todd Cabanban of Cabanban, Rubin & Mayberry, LLC, Chris Irwin of Jamison Commercial Real Estate, JoAnn McGuinness of Inland Real Estate Income Trust, Inc. and Scott Weinstein of Kovitz ShifrinNesbit Law Firm - moderated by Wayne Caplan of Sperry Van Ness Chicago Commercial.
I thought this was a great event and enjoyed listening to the insight of the professionals on the panel. Many topics were covered and I will provide the highlights below. The disappointing part of the entire panel session was there was only around 20-25 people in attendance. As I am only 2 years in of being a REALTOR® and now the Chair for MORe's Commercial Committee I am learning there is a strong need to push Commercial REALTORS® to be more active with IAR, National Association of REALTORS® (NAR) and their local associations. The other aspect is the associations themselves and organizations need to do more to help their REALTOR® commercial real estate brokers. But that is a whole other conversation!
- Discount retailers staying strong
- Rents fell in suburbs - has not seen a fast rise in rental rates over the past year
- Main and Main retail locations are experiencing rents at 2005 levels, though 1 mile away locations are still at 2008/2009 levels
- Positive: recession weeded out the weak; shops consolidated; closed under-performing stores; leaving the best of the best.
- Currently Landlords are feeling confident in the market and not agreeing to stipulations of retailers; Landlord motto: "Just say NO"
- Supply/Demand: 2007: 8 million SF under construction | 2011: 1 million SF under construction | Past 18 months: 2.3-2.6 million SF under construction
Strong Tenants in Market
- Food - quick paced restaurants (like Chipotle)
- Native food
- Urgent Care/Immediate Care within Retail Space
- Health life style businesses
- High credit Tenants are negotiating lower rents due to owners able to sell asset with a 5% CAP Rate (Ex. McDonald's)
- Grocer locations such as Mariano's is trading at 5% CAP Rates
Pop Up Stores
- Stores such as Halloween stores, national owners like as they negotiate one lease for their portfolio across the country. Down time of the leasing season.
- Seeing more and more licensing agreements in place of leases for short term deals - start up concepts/seasonal