Midwest Real Estate News recently spoke with Gregg Raus, executive vice president in Chicago with Jones Lang LaSalle about the state of commercial real estate in suburban Chicago. Here are some of his thoughts.
Midwest Real Estate News: How are things holding up in the Chicago suburban market as 2011 gets underway? Gregg Raus: Tenant demand has picked up when compared to this time last year. Businesses are more comfortable with where their business is and where they are heading. Everything had been sort of shelved for 12 months.
MWREN: Why has activity picked up? Raus: I think that many companies have seen that their businesses have stabilized. They see that the recession is over. We are on the uptick from an earnings and sales perspective. Companies are starting to think about hiring again. We are working with several clients who are expanding, which is a welcome sight that we hadn’t seen in a while. That will help absorption.
MWREN: Does it help to do business in Chicago, of all the Midwest locations? Raus: It’s a big help. A lot of companies want to be near the airport. We have a lot of regional sales offices and sales organizations based here in the Chicago area. We have the good highway system in Chicago. We have O’Hare Airport. The amount of direct flights that you can board to get to anywhere in the United States is one more factor that helps make this an attractive market.
MWREN: Chicago is blessed with a diverse employment market, too. Raus: Chicago is a very diversified market by industry. We are not like the East Coast with a high concentration of financial services. We’re not like the West Coast that relies so heavily on high-tech industries. Here, we have service industries, healthcare, manufacturing, so many segments. It’s a lot like holding a diversified stock portfolio. You can ride the storm easier when your risk is spread out across several asset classes.
MWREN: Are there any market segments performing particularly well these days? Raus: I think I’d rephrase that to say that some market segments are doing worse than others. I focus on the O’Hare and Northwest markets. Those markets are stable right now. From what I hear, the area’s North market is sort of at a stalemate right now. The East-West corridor has a lot of space, but it also has seen several large transactions that can dramatically impact prices.
MWREN: What about specific commercial real estate types? Are any of them doing better than others? Raus: Industrial it seems is picking up quite a bit. The office market is picking up. But tenants are being more selective. They are much more selective about what buildings they go into.