RE/MAX Brokers Report Commercial Real Estate Recovery Continues in Chicago and Suburbs
August 08, 2013 // Franchising.com // CHICAGO - RE/MAX commercial real estate brokers in northern Illinois report seeing an increase in the number of commercial real estate sales, leases and developments in Chicago and its suburbs.
“The market is stabilizing,” said Kamlesh Shah, CCIM, managing broker of RE/MAX Preferred Properties in Addison, Ill. “Consumer confidence is up, and commercial banks and other lenders are more flexible. Because of this, we have more inquiries about commercial properties. Things are definitely looking brighter in the commercial real estate sector.”
The 2013 second quarter Commercial Real Estate Market survey from the National Association of Realtors® provides the statistical evidence to back up Shah. According to the survey, commercial sales volume in the second quarter of this year – sales of everything from office buildings and retail centers to medical office complexes and multi-family apartment communities -- rose 12 percent when compared to the second quarter of 2012. At the same time, sales prices jumped 2 percent when compared to a year earlier.
In more good news, the survey found that the number of commercial leases closed during the second quarter rose 5 percent when compared to the first quarter of the year. Commercial rents jumped, too, rising 2 percent when compared to the first quarter.
The outlook for commercial real estate in the Chicago area is also upbeat. For example, the vacancy rate for industrial properties in the Chicago market dropped to 9.1 percent for the second quarter of the year, down from 9.5 percent during the first quarter of this year and 10.1 percent in the third quarter of 2012, according to CoStar Group, a leading national provider of information about the commercial real estate market.
More than 3.7 million square feet of industrial space was leased in the Chicago industrial market during the second quarter, according to CoStar, and industrial rental rates averaged $5.06 a square foot.
Basel Tarabein, a commercial specialist with RE/MAX At Home in Rolling Meadows, Ill., said he is closing more commercial deals today. He recently sold a gas station that sat on the market for just a month, a quick commercial sale. Tarabein said that apartment buildings and office buildings, too, are seeing strong sales in the Chicago suburbs.
Tarabein counts a large hedge fund among his clients. The fund is buying commercial properties sight unseen, as long as Tarabein and his staff can show them that the buildings boast a long history of solid returns on investment.
“Some of these properties are flying off the shelf,” Tarabein said.
Part of the reason for the uptick in the commercial real estate sector is the steady recovery of the national economy, but Tarabein said that commercial real estate also is priced right today. Many buyers who are looking for bargains can certainly find affordably priced office, apartment and retail properties to purchase.
This is why Tarabein is seeing more sales and leases than new construction in the commercial arena.
“There are a lot of good deals out there right now,” he said. “I can sell you a building for a lot less than it costs to build a new one.”
Bill Jansen, a broker associate with RE/MAX Central in Roselle, Ill., said that while commercial sales have improved, he and his colleagues are working in an industry that is changing, especially the retail segment.
Jansen points to the growing dominance of Amazon.com. Customers are buying everything from books and CDs to clothing, toys and grocery items online. This is causing major retailers to change the way they do business, with many shutting down big-box stores and instead shifting money to their Web sites and reopening smaller retail locations.
Because of such changes, Jansen said, he doesn’t see the commercial real estate market returning to the heady days of 2006 and 2007 when commercial properties sold rapidly and for high prices. But this doesn’t mean that there aren’t opportunities in the commercial real estate market, in the Chicago area and across the country, according to Jansen.
“There is still money to be made,” he said. “You just have to adapt to the way the market is changing.”
Jansen pointed to multi-family properties as an example of one sector of the commercial real estate market that has seen strong activity in the Chicago area.
“You are seeing a lot of multi-family buildings going up today,” Jansen said.
Looking ahead, Tarabein sees commercial real estate sales, leases and new construction all continuing to increase.
“It’s not easy to predict the future. It’s like with the weather, the farther out you go the less accurate you get,” he said. “But I think we’ll see commercial activity continue to rise in the next year or so. I think the recovery in the economy will only continue, and that will result in more commercial activity.”
RE/MAX has been the leader in the northern Illinois real estate market since 1989. The RE/MAX Northern Illinois network, with headquarters in Elgin, Ill., consists of 2,000 sales associates and 100 individually owned and operated RE/MAX offices that provide a full range of residential and commercial brokerage services. Its www.illinoisproperty.com and www.remax.com websites are leaders in consumer visits among real estate franchise brands. The www.global.remax.com website allows consumers to search properties around the globe; www.theremaxcollection.com is a specialized portal of luxury properties across the U.S., and www.remaxcommercial.com displays commercial properties available nationwide and abroad. The northern Illinois network is part of RE/MAX LLC, a global real estate organization with 91,000 sales associates in 90+ nations. The RE/MAX organization has been recognized for numerous industry honors for excellence, and its Associates continue to lead the industry in professional designations, experience and production. Nobody in the world sells more real estate than RE/MAX. RE/MAX is the official real estate partner of Children’s Miracle Network Hospitals and the national sponsor of Susan G. Komen for the Cure®.