A posse of industrial experts took to the stage at the Association of Industrial Real Estate Brokers November meeting at the Rosewood Restaurant in Rosemont to discuss current issues and trends in the industrial marketplace.
Based on the opinions expressed, AIRE members Tom Boyle, Newmark Grubb Knight Frank (AIRE president and panel moderator); Steve Connolly, NAI; Walter Murphy, Lee & Associates; David Friedland, Newmark Grubb Knight Frank; and Dave Prioletti, CBRE, look to the strong market to continue to build momentum in 2014. That momentum, according to a number of AIRE presenters, will come from the brokers elevating their game to ensure they are at the top of their game.
“The baseline of professionalism in our business is knowing every comp in the market,” Murphy said. “But knowing every comp is the least of our worries. We need to be the CFO of comps, providing interpretations of what they mean” and how they’ll impact decision making.
Connolly suggested that a real differentiator are the contacts/relationships each individual brings to the table. “You need to know the ins and outs, the trends, to show you are active in the market.” This is especially true, he said, in the representation of landlords and developers. Building owners with vacancy look to the brokers to know every deal, real or rumored, that’s in the market.
Being successful through the peaks and valleys of the market, as all AIRE members have seen over the last five years, requires flexibility and adaptability. Newmark’s Friedland, for example, made a conscious choice a number of years ago to increase his focus on tenant representation assignments. “They came back first, and so it has been fruitful,” Friedland said.
While the role of the broker and AIRE member is changing, moving more to advisor and counselor than street broker, Prioletti said some things won’t change, in spite of the advent of social media.
“I’m big on the social part of social media,” Prioletti said. He agreed that social media has validity and a purpose, but also believes nothing replaces face time or phone time.
“You need to get back to the core of what you do; get on the phones and talk to people,” he said.
Friedland said the role of the broker evolves every day. Yet the veteran broker and long-time AIRE member offered his opinion that while technology continues to add value to how a broker does his or her job, technology will never replace the broker.
AIRE President Tom Boyle asked Prioletti what advice he’d give to owners looking to enter the Chicago market. Prioletti offered, “To be in this market you have to make a splashy entrance and then sweep up; buy a few buildings or an entire portfolio.” He pointed to notable examples such as KTR and Liberty.
Walter Murphy said that “100 percent, manufacturing is back.” He pointed to attractive financing options including revenue bonds under 2 percent among the reasons. He specifically noted that there have been eight furniture deals over 200,000 square feet completed in the market. Connolly agreed and said that users in the 100,000- to 200,000-square-foot range have been very active.
In another characterization of the market, Murphy pointed to the Bolingbrook market and said that after 20 years, rental rates finally have “come back to what they were.”
The AIRE panelists said that market conditions vary submarket to submarket. Friedland noted that core product in the I-88 market is very tight, reinforced by high demand for big-box Class A space. The smaller user, he said, is not back in the I-88 corridor.
Connolly pointed to activity taking place in McCook, a market that is more labor driven and said that while velocity won’t be as strong as what is being seen in Bolingbrook, it is still quite strong for that area. Activity is being fueled, in part, by some new construction activity and a demand for space 70,000 square feet or less.
The AIRE panel discussion concluded with discussions about conditions in the State of Illinois, compared with the offerings of adjacent states Indiana and Wisconsin.
Prioletti succinctly characterized the state as being “its own worst enemy.” But he did go on to say that it is difficult to pick up and move established infrastructure.
Boyle suggested that if things don’t improve in Illinois, “You’re going to need a slide to handle the departure.”
Murphy and Friedland were more tempered in their remarks with Friedland saying he’s not yet had a client that elected to move out of the state. Murphy said that while it is difficult to ignore the incentives and pricing in Northwest Indiana, “the work ethic in Indiana isn’t what it is here in Illinois.”