Archive for the ‘Industrial’ Category
Wednesday, July 28th, 2010
A historic partnership between the states of Illinois and Indiana gave the green light to constructing the Illiana Expressway, a 56-mile superhighway whose goal is to ease traffic congestion, create jobs and promote economic growth. Illinois Governor Pat Quinn and Indiana Governor Mitch Daniels recently signed an agreement to construct a roadway that connects Interstate 55 in Illinois with Interstate 65 in Indiana. An “outer encircling highway” that bypasses Chicago to the south, which was originally proposed in Daniel Burnham’s Plan of Chicago more than 100 years ago, is now closer to becoming a reality.
“We are partners,” Quinn said as the two governors signed the agreement at a location on the Illinois/Indiana state line. “”They’re our allies, and we’ll work together for the betterment of both of our states and the whole region.” The Illiana Expressway is expected to create 14,000 new jobs in Illinois and enhance access to growing freight and trucking facilities in Will County.
Illinois’ and Indiana’s transportation departments will choose a consultant to begin environmental impact studies and evaluate the optimal routes later this year. A final plan should be recommended by 2015. Also under consideration are four-, six- and eight-lane configurations, including one that includes four truck-only lanes.
The Illiana Expressway will be convenient to two Will County land sites that Alter 360° represents in unincorporated Wilmington, IL. One is 30650 Route 53, a 7.98 acre parcel in unincorporated Will County at the corner of Route 53 and New River Road. Currently there is a 14,668 SF, 30-year-old industrial building on the south eastern corner. The asset is just five miles from Interstate 55 and the Centerpoint Intermodal center. The second is a three-parcel, 21.14-acre site on the northeast corner of Indian Trail Road and Peotone Road, just six miles from Interstate 55. Both sites are approximately 17 miles from the proposed South Suburban Airport.
With the ink barely dry on the bi-state agreement, no start date has been set for construction of the Illiana Expressway.
Tags: Alter 360, Centerpoint Intermodal, Chicago, Cook County, Daniel Burnham, IDOT, Illiana Expressway, Illinois, Indiana, Interstate 55, Interstate 65, Mitch Daniels, Pat Quinn, Will County
Posted in Development, Industrial, Office | No Comments »
Tuesday, July 27th, 2010
Commercial real estate is currently experiencing a perfect storm, one that will utterly change the way corporations utilize their office space in the future. This is the opinion of John Vivadelli, CEO and founder of AgilQuest Corporation and a well respected industry expert in the fields of alternative office environments; real estate metrics and cost management; and business continuity.
Prior to founding AgilQuest, Vivadelli was instrumental in developing IBM’s workplace management system in the 1990s to support the company’s transformational workforce mobility program, creating their “office of the future”. This new workplace strategy resulted in reconfiguring the technology giant’s real estate footprint by shedding millions of square feet that saved hundreds of millions of dollars annually. AgilQuest provides the services and systems necessary for companies and governments to achieve similar results.
According to Vivadelli, this perfect storm is impacting both the supply and demand sides of commercial real estate.
On the supply side, the United States has approximately 12.5 billion sq. ft. of commercial office space, which carry an estimated $1.2 to $1.4 billion in loans that will come due in the next two years. Many of these loans will not qualify under new reserve requirements. While the average base vacancy rate is currently 17 percent nationally; that statistic does not include shadow space – square feet that are paid for but not occupied – which adds another 5 to 20% to the overall vacancy rate. Additionally, with the upcoming implementation of FASB Rule 13, both owned and leased properties will have to be reported on corporations’ balance sheets. Off-balance-sheet leasing will no longer be an option.
On the demand side, he sees a fundamental shift downward in real estate absorption. The nation’s unemployment rate is approximately 10 percent, with an additional seven percent who have opted out of looking for a job. Some of these jobs will never return. Add to that the number of workers who perform their jobs remotely and stay connected to the office via PDA, cell phone and laptop, and the average actual occupancy rate between 8 a.m. and 5 p.m. is between 30 and 50%. That means over half of all office space across Corporate America is vacant on any given day. Considering that an average of $60 is allocated per sq.ft., that adds up to $360 billion that companies are paying to landlords for office space that is empty and they don’t need. This wastes 1.5 quads of energy and results in 40 million metric tons of unnecessary carbon released every year. As companies recognize the scale of the problem, the real estate industry will see a profound shift in how we use space.
John Vivadelli: The Real Estate Perfect Storm:
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Tags: AgilQuest, balance sheet, commercial real estate, IBM, John Vivadelli, synthetic leases, unemployment rate, vacancy rates
Posted in Development, General, Industrial, Office, Residential | 1 Comment »
Monday, July 26th, 2010
A once-abandoned 40-acre industrial site in Chicago’s West Pullman neighborhood has become home to 32,000 solar panels since December, part of the nation’s largest solar plant capable of generating 10 megawatts of clean power. That’s enough to power 1,500 homes. According to Kevin Lynch, who trains electricians to install solar panels for the International Brotherhood of Electrical Workers (IBEW), “We have been frustrated over the years that solar has not become more mainstream. We understand it’s still a relatively expensive technology, but the cost is much less than it was a few years ago.” The cost of photovoltaic solar panels – the biggest obstacle to the growth of solar energy – fell 40 percent last year, thanks to a supply glut, the Solar Energy Industry Association notes, creating increased interest in this clean energy source.
The solar plant’s owner, Exelon Corporation, financed the $62 million project by taking advantage of local real estate and federal tax incentives. The firm wants to recoup even more of the upfront expense by selling solar renewable energy credits. Across the country, there are more than 22,000 megawatts of large-scale solar plants under development – enough to power 4.4 million homes. The federal government is providing a 30 percent manufacturing tax credit that has spurred the development of 58 new solar plants, according to Jared Blanton of the Solar Energy Industries Association.
Even with this emphasis on solar power, the majority of Illinois’ clean energy still comes from the wind. By 2025, the state’s utilities must obtain at least 25 percent of their energy from green sources. According to Mark Burger, president of the Illinois Solar Energy Association,
75 percent of that must come from Illinois’ reliable wind; just six percent will be derived from solar power. Supporters believe that Illinois must change the rules that determine how solar producers are paid for net metering – the way in which they are paid for exporting clean electricity to the grid. If the legislature acts to clarify that, solar power has the potential to thrive in Illinois.
Tags: Chicago, solar power, solar-panel
Posted in Development, Green, Industrial | No Comments »
Monday, July 12th, 2010
Three years after an EF5 tornado tore apart tiny Greensburg, KS, the town of approximately 900 is making a conscious effort to rebuild itself as a green community.
City officials, residents and business owners are leading by example, making Greensburg a national model for environmentally conscious living.
For example, a wind farm five miles south of town now provides the majority of Greensburg’s energy. Newly rebuilt houses supplement the wind power with dedicated solar panels. Streetlights use LED lighting, which cuts energy use, operating and maintenance costs by approximately 70 percent. Cisterns capture rain, which is used to water the town’s plants and trees. The construction of zero energy homes and high-performance modular homes is encouraged to further Greensburg’s quest to become a green town.
This is the nation’s first project of its kind and is a key element in developing eco-tourism, a vital element in Greensburg’s successful comeback following the tornado’s devastation. By partnering with local builders, Greensburg is providing educational opportunities to contractors and homeowners alike who can spread the message of what they have learned in going green.
Tags: cisterns, eco-friendly, eco-homes, FEMA, Green Town, Greensburg, Kansas, LED lighting, modular homes, solar-panel, Steve Hewitt, tornado, wind farm
Posted in Development, Green, Industrial, Office, Residential | No Comments »
Thursday, July 8th, 2010
A new accounting standard could alter the way tenants lease space, a move that carries serious implications for commercial real estate. The Financial Accounting Standards Board (FASB) has been cooperating with the International Accounting Standards Board to combine its generally accepted accounting principles (GAAP) with international standards.
According to Russell G. Golden, the FASB’s technical director, the change is intended to put a halt to “significant off-balance-sheet activity for leases.” Barry M. Gosin of Newmark Knight Frank notes that “We are busy preparing clients to make them aware of the changes and help them analyze how it might impact them. There are so many complicating factors that will make this an administrative nightmare”. Because the new standards remove many of the differences in the way companies account for buildings that they own and lease, firms may move towards purchasing properties rather than leasing them. Shorter leases could be another byproduct. “If you have a 10-year lease, it will mean putting twice as much debt on the balance sheet as a five-year lease, so some companies may want to go short term,” said Dale F. Schlather, executive vice president of Cushman & Wakefield and chairman of CoreNet Global’s New York chapter.
Office and industrial building owners will see new accounting treatments as well. Golden notes that as the new rules were written, landlords would record the obligation to provide space as a liability and record the rents they receive as an asset. Because landlords currently book all of their revenue as rental income, the rents will be recorded partly as interest income and partly as a reduction in the obligation to provide space under the new standard.
Tags: CoreNet Global, Cresa Partners, Cushman & Wakefield, Financial Accounting Standards Board, GAAP, Grant Thornton, International Accounting Standards Board, Jones Lang LaSalle, Newmark Knight Frank
Posted in Development, Economics, Financing, Industrial, Office | No Comments »
Wednesday, June 30th, 2010
After nearly two years of waiting, watching and hoping, American commercial real estate is finally regaining strength. This is one conclusion of the Reuters Global Real Estate and Infrastructure Summit held recently in New York City. Starting in the fall of 2008, real estate investors feared there would be a wide-ranging sell-off of debt-laden commercial properties after Lehman Brothers collapsed. And while office building and other commercial property values have fallen since the capital markets froze, the anticipated spate of foreclosures has not come to pass. According to James Koster, president of Jones Lang LaSalle’s capital markets group, that is now unlikely to happen.
“We should be in a relatively good position to not have this other shoe drop,” according to Koster. Banks have extended, restructured and modified loans to give the real estate industry the opportunity to regroup. Values also are on the rise once again, although some properties whose loans were securitized are troubled. The percentage of CMBS loans that are a month late in making payments climbed to 8.42 percent in May, according to Trepp, which follows CMBS performance. Koster notes that special servicers who oversee troubled loans are not selling the properties at bargain basement prices. Rather, they are holding onto them and being paid for managing them.
Institutional investors and REITs have the money to purchase good but debt-laden real estate. When those properties hit the market, their price tags will be higher than two years ago. “There is fresh capital coming in. It’s a better market now,” Koster concluded.
Tags: capital, CMBS, commercial real estate, financial crisis, Jones Lang LaSalle, Lehman Brothers, REITS, special services
Posted in Development, Economics, Financing, Industrial, Office | No Comments »
Thursday, June 24th, 2010
Is there something special in the water in Texas? After surviving the Great Recession in relatively good shape, the Lone Star State can claim that it has more jobs than it did two years ago, as well as the lowest unemployment rate of the 10 largest states at just 8.3 percent. According to the Texas Workforce Commission, the state has created more jobs in the private sector – 724,300 in December of 2009 alone — than any other state in the last 10 years. Boasting the world’s 11th largest economy, Texas reported a gross state product (GSP) of roughly $1.25 trillion during 2009 as it expanded its presence in knowledge-based industries. Additionally, Texas leads the nation in export revenues for the last eight years, shipping $163 billion in product last year.
“Texas, so far, is the big winner,” said William Frey, a demographer with the Brookings Institution. “Big Texas metros are doing well because they avoided a lot of the pitfalls of the housing boom and bust.” Frey specifically points to Austin, Dallas, San Antonio and Houston as high-growth cities with expanding economies, particularly in energy, technology, government and education. Austin, Dallas and Houston are expected to experience a seven percent job growth rate over three years. San Antonio, which is close to four military bases, is expected to experience an 8.32 percent increase in employment over the next few years. What sustained Texas through the recession? Civic leaders think it was the diversified economy, low taxes, reasonable regulatory rules, government incentives and funding, as well as a skilled, highly educated workforce.
Austin, for example, has long been a magnet for entrepreneurial businesses that thrive in Texas’ capital. “There’s an old saying in Austin: If you come here and can’t find a job, start a new business,” notes Rebecca Melancon, executive director of the Austin Independent Business Alliance. Austin’s Small Business Development Program is extremely supportive of would-be entrepreneurs with databases to research demographics, free counseling and even classes on how to operate a business. Additionally, the “Keep Austin Weird” support for unique cultural events supports local businesses. “The biggest thing our city does to promote local business is not something that city hall does. It’s our culture. We don’t want to be Anywhere, U.S.A, and we work hard not to be,” Melancon said.
Tags: Austin, Brookings Institution, chemicals, coal, computers, Dallas, electronics, Great Recession, GSP, Houston, Lone Star State, petroleum, San Antonio, Small Business Development Program, Texas, Texas Emerging Technology Fund, Texas Enterprise Fund, Texas Workforce Commission
Posted in Development, Economics, Industrial, Office | No Comments »
Tuesday, June 22nd, 2010
Home Depot, NCR are greening their companies. Fortune 500 companies are increasingly using energy-saving measures in their corporate real estate. Some firms are retrofitting warehouses to conserve energy or are applying Japanese principles to building design and operation.
Home Depot, for example, has 2,245 retail stores comprising 235 million SF nationally, owns 89 percent of its real estate and is working to reduce its energy consumption. In 2004, energy use for stores was approximately 25 kWh per square foot. Today, energy consumption is just 21 kWh per square foot, a 16 percent reduction.
Since 2004, energy use has been cut by 2.6 billion kilowatt-hours (kWh), enough to power 203,000 homes for a full year. Home Depot’s objective is to reach a 20 percent reduction in kWh per square foot in U.S. locations by 2015. The company also plans to cut its domestic supply chain greenhouse gas emissions (GHG) by 20 percent by 2015.
Yet another example is NCR Corporation, which used Japanese “lean” practices at its new 350,000 SF plant in Norcross, GA, where it manufactures ATMs. The technique eliminates waste and streamlines production processes. Because NCR recycled cinder blocks and carpeting at the facility, it is seeking LEED certification on the retrofitted building. Additionally, NCR produces cash registers that use two-sided receipt printers that cut paper usage by as much as 45 percent and use less power.
Converting the plant to make it energy efficient was not easy, according to Beth McClurg, NCR’s director of corporate real estate, who notes that “It is taking extra cost to do, which may not have immediate payback in terms of our financials, but because of the importance, we’re proceeding and hope to have LEED certification soon.”
Tags: distribution centers, Fortune 500, greenhouse gas emissions, Home Depot, LEED, LEED certification, manufacturing plants, NCR Corporation, warehouses
Posted in Development, Green, Industrial | No Comments »
Thursday, June 3rd, 2010
Wells Fargo & Company and LNR Property Corporation are hunting for buyers for $1 billion each of distressed commercial real estate assets and loans. San Francisco-based Wells Fargo, the nation’s largest commercial real estate lender, is soliciting bids on $500 million to $1 billion worth of office and hotels. LNR, the nation’s largest CBMS special servicer, is looking for buyers for approximately $1 billion worth of defaulted loans.
“The availability of capital and better prices than a year ago are driving sellers to move things off their balance sheets,” says Matthew Anderson, managing director at research firm Foresight Analytics. “Depending on how the auction goes, you may see more of this.” According to Anderson, banks and special servicers currently are holding approximately $185 billion in distressed loans. Of those, Wells Fargo had $12.9 billion in non-performing loans in the 1st quarter. LNR is the special servicer for $24 billion in delinquent assets, according to Bloomberg.
Wells Fargo and LNR were left holding real estate debt once the global credit crisis and recession sent commercial values down a whopping 42 percent from their October of 2007 high. The majority – as much as 60 percent — of the assets that Wells Fargo is selling were inherited when the bank purchased Wachovia Corporation in October 2008. If Wells Fargo and LNR can sell the properties, the move would represent an improved market for distressed assets, according to Ben Thypin, an analyst with Real Capital Analytics, Inc.
“We’re certainly aggressive in terms of liquidating the portfolio,” said David Hoyt, who heads Wells Fargo’s wholesale banking arm. “At the moment, there is a lot of liquidity in the market to resolve problems.”
Tags: Bloomberg, Cerberus Capital Management LP, CMBS, distressed assets, Eastdil, Foreshight Analytics, global credit crisis, LNR Property Corporation, Real Capital Analytics, Wachovia Corporation, Wells Fargo
Posted in Development, Economics, Financing, General, Green, Industrial, Office, Residential | No Comments »
Tuesday, June 1st, 2010
The long-abandoned United States Steel South Works on Chicago’s South Side moved closer to undergoing transformation to a mixed-use development when the Community Development Commission unanimously approved a $96 million tax-increment financing (TIF) district to fund the project’s initial phase. The Chicago City Council still must approve the TIF district, which would give the green light for the construction of a major shopping center and approximately 1,000 homes on a section of the 530 acres of lakefront property between 79th Street and the Calumet River. When completed, the South Works project would have 13,575 homes, 17.5 million SF of commercial space and a 1,500-boat marina. The ultimate price tag for the massive project could top $4 billion and take 45 years to complete.
The developer is McCaffery Interests, Inc., which has been planning to redevelop the deserted steel mill for five years. If the City Council approves, the TIF district will be the largest subsidy ever given to a private developer in Chicago. McCaffery is planning the redevelopment as a joint venture with U.S. Steel Corporation, which owns the land. The TIF funding will partially finance the construction of streets, sewers and other infrastructure improvements that the industrial site currently lacks. The firm has announced plans to spend $397 million on the initial 76-acre phase, which would include 848 residences and 844,000 SF of retail and other commercial uses.
“It’s really going to be a new downtown for the South Side of Chicago,” according to Edmund Woodbury, a McCaffery partner. “All that we’re asking for is what it takes to make the site buildable. If any place needs it, this is the place. What’s the role of public investment? It’s infrastructure.” Construction is expected to begin in 2013, with the first stores opening their doors in 2014.
Tags: Calumet River, Chicago City Council, Community Development Commission, McCaffery Interests Inc, South Shore, South Works, The Market Common, TIF district, US Steel Corporation
Posted in Development, Industrial, Residential | No Comments »