The Habitat Company has announced the start of construction of a 43-story, 450-unit luxury high rise in Chicago in a joint venture with Multi-Employer Property Trust and a major institutional investor.

The luxury multifamily community will be located at 360 W. Hubbard St. in Chicago’s River North neighborhood, across the street from the East Bank Club. This latest project adds to the more than 17,000 residential units developed by The Habitat Company in its 40-year history. Bentall Kennedy represents its clients, an institutional investor and MEPT, a $5.4 billion real estate equity fund, in the transaction...

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Chicago Real Estate News from Bisnow

As Golub & Co and Goldman Sachs’ Whitehall real estate fund scramble to refinance $400M in boom era debt on the iconic Hancock Tower that comes due this month, investors are circling. Is this a replay of the Boston Hancock takeover?

With an eye on the $100M mezz piece, the Blackstone Group may try to buy into the capital stack and eventually assume ownership of the trophy, Bloomberg reported recently. Calls to Blackstone and Golub were not returned. But that strategy worked with the John Hancock Tower in Boston for affiliates of Normandy Real Estate and Five Mile Capital (an owner of the IBM Building at 330 N. Wabash). Starting in '08, Normandy began to purchase the debt. In ‘09, it bought the JHT (then 20% vacant) for $630M. After renovating and leasing, it sold for $930M to Boston Properties in late '10.

Chicago will have its share of distress office sales as owners who financed richly priced properties prior to ‘08 face refinancing difficulties, says Morningstar director of REIT research Philip Martin. The CMBS market isn’t fully functioning and during underwriting, the tower will be marked to market. The Hancock, out of the Loop, may have some difficulty attracting new tenants. As an older tower, it may require substantial capital expenditures to lease competitively. But a large private equity fund like Blackstone, with full pockets and a focus on CRE, may like this trophy and its potential for consistent long-term cash flow. Only a few REITS could handle such a large deal. Then, there’s the still struggling office market.

As Hancock Tower leases roll over, new leases are likely to be signed at a lower rent, says CBRE Econometric Advisors’ senior managing economist Art Jones. The Chicago market is stabilizing from the recession, but isn’t back to where it was during the boom. It lost 4.3M SF of leases in ’09 and ’10. Rents declined at the end of ’11 and are now 11% lower than they were in late ’08. The vacancy rate (including sublease space) is up to 13.7%, compared to 10.8% in Q3 ’08. Overall, says Art, the office market is clearly weaker than it was four years ago.

Undistress: RATIO/DeStefano Mix

Finally, RATIO Architects’ founding principal Bill Browne will open a Chicago office this month. He found his long sought entry into Chicago when DeStefano disbanded a few months ago. Thirteen of its people joined Bill's Indianapolis-based firm. This month, they’ll set up shop at 401 E. Illinois St. Scott Sarver and Dae-Hong Minn, former DeStefano principals, will be managing principals for the new outfit known as SMDP. They’ll focus on international work and, as consulting principals for RATIO, will also snag Chicago commissions. Now, they’re designing a new downtown office building to be the HQ for a corporation Bill can’t name. He also hopes to do projects for higher ed, cultural institutions, and perhaps the convention sector.

Hopefully Scott, snapped at the Super Bowl Village on Georgia Street that Ratio designed and is debuting this week in advance of Sunday’s game, will have some time for All American fun. He deserves it after he and Dae-Hong worked for years to complete the 1,800-unit, triple tower luxury residence in Busan, S Korea. The first residents arrived in December at the Doosan Haeundae Zenith Towers. In Xian, China, RATIO is doing landscape design and infrastructure planning at the waterfront.

RATIO’s Gerogia Street design team: Brian Staresnick, Joe Fischer, John Jackson, Ben Ross, Tom Gallagher, Ken Boyce, Jennifer Higginbotham, and Jeremy Schwer. Georgia Street is a permanent attraction that links the Indianapolis’ convention center and Banker's Life Fieldhouse, the Pacers' home. It’s all about food, music, and drink.

Softball Season Somewhere

Crossing home after monster home run, Mid-America's Peter Caruso shows 'em how it's done at the Downtown Real Estate Softball League's winter classic last weekend. Contenders also included: JLL, MB Real Estate, CBRE, Bradford Allen, and Golub & Co. Perhaps in a sign of things to come, Golub came out on top with a 3-0 win. Also, in a tie, Golub unseated Klein Corporate Realty, says League commissioner and Klein principal, a gracious Richie Klein.

The volume of Small Business Administration 504 lending in Illinois continued to increase given a combination of attractive interest rates, a refinancing capability and opportunistic pricing across all categories of real estate.

According to statistics released by the government and compiled by SomerCor 504, an Illinois Certified Development Corporation, 412 loans totaling more than $275 million were approved for the fiscal year ended Sept. 30, 2011 allowing plenty of opportunity for small businesses to grow and expand their operations...

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Chicago Real Estate News from Bisnow

When it comes to retail, Inland vice chair Joe Cosenza says he’s investing lots and leasing lots. Hear more from Joe at Bisnow’s 2nd Annual Retail Summit, Feb. 14 at The Metropolitan Club. Register here!

Inland’s 13M SF of Chicagoland shopping centers are 93% occupied. With so much retail property, he says Inland acts as a one-stop-shop for big companies seeking to expand or establish a presence here. Inland can accomodate them in most major submarkets and offer massive amounts of space. For instance, Joe says they recently leased space to six Ross Dress for Less stores, nearly 200k SF in “one swoop.” As for the office super stores contracting, fine with Joe. He’s leasing up their unneeded space at higher rents.

Joe’s son Mark closed on Inland’s most recent area acquisition in November: the 175k SF, $25.8M Bradley Commons in Bradley, Ill. Joe says it’s just the kind of property Inland likes. It has a Walmart for groceries, a Dollar General store, Bed Bath & Beyond, Dick’s Sporting Goods, Petco, and others. The stores draw customers back every week. (It's a time-honored CRE rule: people always need towels, cleats, and fish.) For this, and every investment these days, Joe says underwriting is tough. Inland bought Bradley Commons at a price that gives them a good return even if Inland can’t lease the vacant 12k SF.

Pam Johansen, Joe, his son Mark, and Janet Cornell reviewing some retail transactions; they're finding rents flat, but Inland is giving fewer tenant concessions. Joe likes Chicago's national retail standing; it’s doing better than 65% of US markets. But, he tells us that Texas leads the pack of states, with cities like New York and DC always “golden.” In the retail realm, Joe says he loves dollar stores, which are here to stay. As for the most enticing asset type (cap rates being equal), Joe says he’d take “apartments in a heartbeat.” Real rents are rising and occupancy is marching up, month after month.

Lopsided Retail Recovery

Heitman’s Jennifer Boss, also a panelist at Bisnow’s upcoming Retail Summit, says Chicago is a good barometer for US retail trends because the big national players want to be here. In this “lopsided” recovery, the high-end retailers and discounters are doing especially well. Target and Walmart are expanding in the city, while Oak Street and the Magnificant Mile are greeting new tenants like All Saints and Topshop, and existing ones like Burberry are expanding. The Walgreens that just opened in the Loop has a nail salon, a brow department, and upscale liquor. (We prefer Johnny Walker Blue... not that we ever touch the stuff.)

Darcie Frankhauser, Emi Adachi, and Alan Dooley are on the Heitman team with Jennifer. (Normally we don't put in two pictures of the same thing, but that coffee mug was just too beautiful to ignore.) She says the small local shops in grocery-anchored centers are still troubled from the downturn. For instance, your neighborhood cleaner, boutique or franchisee may well be struggling to access credit. Also slogging through are metro fringe locations like Geneva and South Elgin. Even in some upscale locations like River Forest, landlords are having trouble filling some of the expensive big box spaces, left vacant by bankruptcies and other problems. Rents are down but taxes are still high, Jennifer tells us.

Eisenopoly's 3rd

Here's The Harold E. Eisenberg Foundation’s Sheila Eisenberg, Amy Eisenberg, Peter Eisenberg, and Katie Wales with JLL’s Guy Ponticello at Friday night’s Eisenopoly fundraiser for colon cancer research and real estate education. The foundation’s 3rd annual fundraiser (based on Monopoly) hosted a sold-out crowd of 400, who showed up for a chance to do good by having fun hopping around a gigantic game board. As for the real business of CRE, Peter, of Clark Street Development, tells us that his company recently sold a shopping center at 30th Street in North Riverside. It purchased it vacant, leased it to an HH Gregg, and sold it last week (no details available).

The SunTimes is reporting that the Kennedy family is partnering with architect Cesar Pellia and development firm Hines Interests LP to craft plans to build on its Wolf Point property along the Chicago River...

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Chicago Real Estate News from Bisnow

Latham & Watkins has signed for 137k SF at 330 N Wabash, the building's third massive lease in a month. Rather than choosing a naming tenant and losing another that wanted signage, the 1.1M SF monolith managed to hold on to them all.

Latham & Watkins agreed to relocate from Willis Tower in April '14, after the American Medical Association swooped in and took the naming rights with a 275k SF lease. SmithBucklin also recently signed for 111k, and a 316-key strong Langham Chicago hotel will open up in Q2 '13. The office portion is now 84% leased. Steven Baron of Prime Group Realty Trust repped the owners: his firm and Five Mile Capital Partners. CBRE's Scott Gamber, Todd Lippman, and Kyle Kamin repped Latham & Watkins in its 15-year lease.

WHY LOVE CHICAGO INDUSTRIAL?

Employment growth in manufacturing may be a hot topic, but at Bisnow’s Chicago industrial summit last week, First Industrial Realty chief investment officer Jojo Yap (his REIT owns 70M SF nationwide) says imports drive industrial RE more than manufacturing (gotta have a place to store those not-Made in America presidential campaign bumper stickers). Chicago may have only average economic growth and no port, but it’s still a winner based on infrastructure alone: Five Class-1 railroads meet here, ensuring its future as a huge intermodal hub. And Chicago garners amazing cap rates despite a lack of rental growth, Jojo says. LA average cap rates are only 150 bps lower, and its rents are expected to grow much faster than Chicago's.

As moderator, Cushman & Wakefield industrial head Jim Dieter was to our national industrial panel what Larry King is to stymied politicians. Here, our normally smiley moderator gives his best answer-the-question glare. He attended a SIOR event “150 years ago,” and attendees were quantifying their markets' inventories (note: These numbers are fictionalized—also, no numbers were hurt in the writing of this story). 18M SF in Memphis, 22M in St. Louis. The 60M in Atlanta drew “oohs” and “ahs.” Then came Jim’s turn: “Chicago has 80M SF… vacant.”

HSA Commercial Real Estate CEO Bob Smietana’s firm has 12M SF of industrial in 12 states. He likes Chicago because there’s always something going on. By contrast, HSA built a 200k SF building in St. Louis that sat vacant for years. A tour that left footprints in the dust every few months excited HSA, while competitors were leasing at Save-A-Lot-ish $1/SF rates. "Thankfully, it's finally leased," he reports.

Clayco CEO Bob Clark (with USAA’s David Reahl) says his firm wants to grow its Chicago biz, moving a good amount of operations to Downtown, including from its St. Louis HQ. But it's not skewing its building activity here. Of the 15M SF it delivered in the US last year, only 2M was in Chicago. The panelists say manufacturing is coming back to the US. In fact, 75% of Clayco’s biz is build-to-suits for manufacturers, including four big ones going up now for an Illinois-based equipment manufacturer (all coming back from abroad). David likes Central PA, and Jim says Liberty Property Trust just named C&W as agent on a 1.2M SF spec building in Bethlehem, Pa., perhaps the largest spec building rising in North America right now. David adds that e-commerce could even benefit some secondary and tertiary markets.

CenterPoint Properties chief investment officer Jim Clewlow, whose firm has 40M SF in the US, demonstrates the one-armed hug he would give Joliet. He thinks Chicago manufacturing growth will occur in the Joliet area because the infrastructure built for imports works for exports, too. If you’re Ford, why wouldn’t you put a 4M SF plant next to one of the country’s largest intermodals, he asks. His take on LA: It’s a market secret that it has a huge manufacturing base, made of tons of 10k SF-ish tenants. As for other port markets, he’s leery of worshipping a false god and going overboard.

SAM & DEBBIE

“Staying alive til ’95” was the mantra Sam Zell espoused in the early '90s. Now it's “stay clean til '13,” he said yesterday at the IREJ annual conference. (We've been keeping our ears squeaky clean and brush our teeth daily.) He reminded everyone that he was an advisor in the origination of one of the country's highest-performing REITs, Ventas, which Debbie Cafaro (left) just happens to lead. “What is the best advice anyone has ever given you?” she asked. His reply: “I am a great believer in the 11th commandment: Thou shalt not take oneself so seriously." We think he's onto something.

This past year has been marked by corporate and commercial real estate leaders who have increasingly embraced the principles of sustainability to reduce operating expenses, enhance enterprise value and align real estate/facility portfolios with their organization’s goals of financial performance and environmental excellence...

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Dayton Street Partners LLC has refinanced the 105,000-square-foot distribution center at 815 W. Pershing Road in Chicago. Over the past three months, Dayton Street executed three long-term leases, occupying roughly 80 percent of the building. A subset of the federal government signed a lease for approximately 25,000 square feet; 2020 Exhibits executed a lease for approximately 36,000 square feet; and Goodman Distribution Inc. leased approximately 19,000 square feet...

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Chicago Real Estate News from Bisnow

Happy Chinese New Year! (Also, Happy Pie Day.) According to the panelists at Bisnow’s Chicago Industrial Summit at the Donald E. Stephens Convention Center, this is the year when development will return. It sure feels like it's been a long time coming—until you realize it’s been 60 years since the last Year of the Water Dragon.

The Pizzuti Cos’ Mike Chivini says new space will come to the market in the second half of 2012. Attitudes changed among users in the back half of ’11 (with the exception of August and September), he says. Now, the questions are: Do landlords hold fast and push rents up? Do build-to-suits start and push rates up? Because once rents rise, then comes spec development.

McShane Development COO Mark Saturno (flanked by Reznick Group’s Jeff Dowd and ProLogis' Dave Riefe who are raising awareness about the recent plight of yellow ties) says lenders are more willing to bet on SoCal’s demand (and thus rent growth). Absorption there was close to peak in 2011, with no new building, he says. A big box like McShane’s planned 700k SF one there would have gotten $0.30/SF per month a year ago. Then Watson Land leased a 600k SF building a month after completion for $0.33/SF. And ProLogis recently signed a three-year lease for 700k SF at $0.39/SF. Now, five spec projects between 700k and 900k SF are going up in the Inland Empire. In Chicago, the rents aren’t there yet for lenders.

Dave says three small projects totaling 440k SF went up spec in Chicago last year. He expects a couple million SF of it this year (peak was 10M SF). Developers are analyzing submarkets and stock for niche opportunities now. I-55, for instance, has only one availability (a sublease) over 500k SF. I-88 has only one over 400k SF. They’re slicing O’Hare even further: just one building that has 28-foot-plus clearance, and that’s over 150k SF. O'Hare had 2M SF of net absorption last year and a healthier cross-section of deal sizes, Dave says. Plus, a good amount of functionally obsolete properties are ripe for redevelopment.

Venture One Real Estate founding principal Mark Goode says labor rates in China have risen 20% for each of the past five years, and productivity per worker is 40% lower than in the US. His firm did a build-to-suit in Rockland for variable-speed drive manufacturer Danfoss, which expects to export 70% of what it makes. China just doesn’t offer the same quality, and European labor is too expensive, he says. Chivini adds that his company did a 600k SF build-to-suit in Columbus for a large retailer that wanted the States’ cost and quality control. Plus, it’s saving $6M just on cardboard for shipping by locating here. Mark also says the aging stock of cars on the road will drive demand from Midwest-based suppliers.

Jeff moderated our panel, which talked about just where the land is for new development, as well as the state of Class-B and C properties. Mark Goode’s take: That older space serves a purpose and has its own tenant base, so, as long as it’s leased, it won’t be torn down: “Just because something’s older doesn’t mean it’s bad. My wife tells me that all the time.”

310 attendees! These guys are pretty astounded, too. One other hot topic: the feasibility of solar arrays on industrial roofs: Dave says ProLogis has done that in New Jersey, Colorado, Oregon, and California, where the states and utilities provide rebates and utilities are priced high enough to make alternatives competitive. Otherwise, a solar investment takes 10 to 20 years to pay itself off, a problem if a landlord only has a building leased for five years. Mark Goode adds that the hardware price would certainly be lower if we had invested our tech in solar panels instead of HDTVs. "They'd be $300, but no one cared because you can’t watch a solar panel.” (Otherwise, the water will never come to a boil.)

We also snapped Newmark Knight Frank Epic principal Tom Boyle, who tells us he's marketing 30 acres near Eola Road and I-88 in Naperville that works for office, industrial, and data. He also repped buyers in an 84k SF acquisition in Waukegan and a 20k SF short sale in Buffalo Grove.

Chicago Real Estate News from Bisnow

Pizzuti EVP Michael Chivini is bullish on the recovery of the Midwest industrial market, especially Chicago, over the next two years. Learn why when he speaks at Bisnow’s Industrial Summit, Thursday, Jan. 19 at the Stephens Convention Center in Rosemont. Register here!

Michael tells us that demand for large blocks of space continues, but supply is markedly down. Last year, Pizzuti had 2.5M SF of transactions and started construction on 1.5M SF, mostly build-to-suits. The company is completing the last 300k SF. Among its notable deals: the 650k SF lease to Samsung on spec space Pizzuti built at its Pinnacle Business Center in Romeoville.

Full House for Apartments

Magellan Development co-CEO Jim Loewenberg, with co-CEO Joel Carlins, says its “unbelievable” that the recession has yet to dim leasing at Lakeshore East, a $4B, 28-acre mixed-use community downtown overlooking the lake, the river, and Millennium Park. About half built, its 1,500 luxury apartments are 95% leased. The master plan calls for 4,950 residences (hopefully half apartments, half condos), 2.2M SF of commercial space, up to 770k SF of retail, up to 1,500 hotel rooms, and a park. Jim tells us the city’s apartment market is strong; owners with good locations have markedly reduced concessions and Lakeshore East eliminated them last summer.

The $300M Coast, the community’s 10th building, is now under construction with the completion of its 499 rental apartments slated for February ’13. Jim says leasing will start in a year. The latest additions to Lakeshore East are the Radisson Blu at Aqua, which opened in November, and the 105k SF Village Market. It opened in October with a supermarket, restaurants and will have medical offices and a salon. Jim says that the next new attraction will be a long-awaited elementary school. Stay tuned for an announcement in the next few weeks.

The Coast is the first collaboration between Magellan and BKL Architects, a two-year-old firm started by Tom Kerwin, above with BKL architects Katelin Klepsch, Audry Grill, and Ahmed Constable. Jim (also an architect) and Magellan are part owners of BKL. Tom, formerly with SOM, says the new firm is working in Chicago on projects with Hines and the John Buck Co. Jim tells us that in China, BKL has a few commissions that are moving into construction. Magellan also is permitting a 340-unit apartment project in downtown Minneapolis. Yesterday, Jim flew off to the Mid-East, telling us cryptically, “We’ll see what happens.” (Sounds like the set up to an Indiana Jones sequel.)

$140M for 500 W. Monroe

After the recent CRE turmoil took 500 W. Monroe on a bumpy ride through foreclosure, the trophy tower’s back on solid financial ground. Last week, Piedmont Realty paid off the building’s remaining debt, $140M. That led some to wonder if the Atlanta-based REIT was preparing to sell the West Loop building, which is 50% vacant. It recently sold its 96.5% interest in 35 W. Wacker for $387M to redeploy capital to coastal markets, according to Piedmont’s VP of capital markets Ray Owens. But that’s not the case, he told us this morning. Piedmont’s strategy is also to diversify and be in large leasing cities like Chicago, Houston, and Minneapolis. Furthermore, Ray says, Piedmont wants to maximize the number of unencumbered assets and have the option to perhaps use unsecured debt, i.e. bank loans and credit facilities.

DRIVING AUSTIN

A problem everywhere: traffic congestion. For Austin and San Antonio, the problem compounds with 70% of the NAFTA truck traffic making its way up I-35. But, that also means opportunities, too, according to the experts at the Bisnow Future of the I-35 Corridor in Austin yesterday. Only 80 miles apart, the two major metro areas may one day mesh into one greater MSA with a population of about four million. Major universities, international airports, and the NAFTA superhighway are a recipe for growth between the two cities. (And from there they will continue to grow, overtaking all of the American Southwest, getting hungrier with each major metro they consume.) Read more Thursday in the Austin issue.

From RE Journals

ARCO/Murray National Construction Co. Inc. has been awarded the contract from CenterPoint Properties to construct the new 306,805-square-foot distribution center for Lawson Products in McCook. Construction is underway and set for a June 2012 completion.

ARCO/Murray was contracted by the developer to complete the full design and construction consisting of a warehouse distribution facility and office build-out. Founded in 1952, Lawson Products, a business of Lawson Products Inc., is an industrial distributor of maintenance and repair supplies.

ARCO/Murray was represented in the transaction by Brad Dannegger, vice president, Christian Evangelista, the senior project manager, and Mark Houser. Jack Rosenberg, Fred Regnery and Mike Senner of Colliers International represented Lawson Products in the lease transaction.

Chicago Real Estate News from Bisnow

Chicago industrial is more absorbent than a Bounty paper towel. Cushman & Wakefield national industrial head Jim Dieter tells us absorption is higher than it's been in years—and spec development is starting. He's moderating the national panel at this Thursday's Bisnow Chicago Industrial Summit at the Donald E. Stephens Convention Center. Sign up now to hear from him and 10 other pros!

As in all Tier 1 industrial markets, 500k SF-plus blocks have all but disappeared as corporations used the recession as an excuse to up their efficiency (building quality, supply chain, and proximity to workforce, transportation, and customer base), he says. The short supply means higher lease rates, though they've stayed in check since tenants are still driving hard bargains. "For every one company that pulled a trigger, three are still there on the sideline," he adds. But spec development is starting in some markets, and those shiny new buildings will prompt higher rates.

CASH IS KING

Paragon Real Estate's Tom Williams (in his Oak Brook office with colleague Greg Van Landingham) tells us his development company works from a fund, meaning they can move quick on land buys and start building right away. Paragon focuses on smaller deals: $5M to $15M seniors housing developments and $1M to $5M build-to-suits for single tenants like banks, restaurants, and auto shops (the retailers that grease the wheels of daily life). Since Paragon launched two years ago, it's raised $200M from high-net-worth individuals. So far, it's built a childcare center in Crystal Lake and an assisted-living home in Iowa (for all those former GOP candidates who got so used to spending their time there).

Being liquid, Tom says, also means Paragon can offer clients competitive lease rates and, on the seniors projects, exclusive purchase options in the first five years of operation. In the works now: four seniors facilities and five more retail projects. He says the company is also looking for value-add warehouse acquisitions up to $10M each. By leveraging up, that target will cost the fund just $20M this year. His decorating aesthetic boils down to blown-up pictures of his two- and six-year-old sons. Greg, on the other hand, justified his more minimalist look by the fact that he's out pounding the pavement and thus spends little time desk bound.

CHICAGOLAND

Last week, we posited that real estate brokers or developers were behind the term Chicagoland. Bisnow reader and Re/Max broker Michael Lunn suggested another likely culprit: car dealers and their TV commercials. And Foresite Realty Partners Leonard Richards says the drive times on the map in last week's issue are just a dream unless they were referring to the 4am hour. To his understanding, Chicagoland refers to the City and six collar counties: Cook, DuPage, Lake, Will, Kane, and McHenry—roughly where the Metra trains go. On the other hand, those "Your Chicagoland Ford dealer" commercials made it across the airwaves to Michael over in Indiana. So the mystery continues.

THE MAGIC #

In that same issue last week, Bisnow reporter Amanda Metcalf decried Denver Broncos QB Tim Tebow's 316 passing yards against her beloved Steelers. Alan Horticultural Enterprises' David Thomas tells us he heard Tebow wasn't allowed to wear the eye black you see above for that game, "but how blessed we are to see he passed for not 314, not 315, but 316 yards and his passing average was 31.6! Can someone say, 'He got his point across anyway'?" Point taken, and our sincerest sympathies to any of you Denver fans out there in Chicagoland after this past Sunday's loss.

THANK YOU, DR. KING

Like many of you, we took yesterday to acknowledge the service of Dr. Martin Luther King Jr. We admire his courage and continuing impact on American cities. This picture is from 1964, and if 95% of the Bisnow staff had been alive then, we'd certainly have been there to take it. But from what we can glean, it looks like Dr. King's response to someone asking, "How big an impact will transit-oriented development have on city centers in the year 2012?" Whether he's saying, "A lot," or, "Why are you asking me this?" it's an appropriate response.

Cassidy Turley has recently released a report regarding fourth-quarter statistics on the 2011 U.S. industrial sector. In the report, Cassidy Turley’s Chief Economist Kevin Thorpe discusses the stats. A few key highlights discussed in the document include:

The U.S. industrial sector had a robust 2011, and ended the year with momentum. Demand for industrial space registered 97.6 million square feet in 2011 – a level of absorption that rivals pre-recession levels recorded in 2005 and 2006...

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“The Chicago market continues to show strong recovery, especially with the lack of new construction expected to be delivered to the market in the near future,” said Miller. “This core-plus property will offer significant in-place cash flow to the new owners with additional value provided upon further lease up...”

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Chicago Real Estate News from Bisnow

Chicago industrial is poised for growth over the next five to seven years, says Venture One Real Estate principal Mark Goode, who developed two industrial buildings here in ’11. (So book your catering halls now before the rush.) He plans to talk all about it at Bisnow’s Chicago Industrial Summit Jan. 19 at the Stephens Convention Center. Register here!

Mark expects strong performance from US manufacturing as more companies realize the advantage of producing close to America’s consumer market: no oceans to cross and lower transportation costs. For example, Danfoss—the Danish maker of drives for compressors, machinery, and engines—could have expanded last year in Denmark, China, or Chicago. Last quarter, it chose to expand into 100k SF developed by Venture One adjacent to its existing Loves Park facility. (Then again, Denmark and China are not known for their pizza.)

Suburban Core for Sale

With plenty of capital seeking quality core assets, JLL managing director Jim Postweiler (here with associate Nooshin Felsenthal, part of his team with Bruce Miller and Jascint Vukelich) expects attractive pricing on the stabilized 1.2M SF, Class-A suburban office portfolio the team brought to market this week. Jim says there’s no asking price for Deerfield's Corporate 500 Centre and One Parkway North and Rosemont's Pointe O’Hare, all once owned by EOP. (Jim declined to mention the seller.) But Crain’s reported that the current owner is a unit of GE seeking to sell an equity interest of at least 49%, valuing the portfolio at $280M.

Inland’s Cosenza: Tech Troubling Offices

Inland Group vice chair Joe Cosenza says it’s a good time to sell suburban offices. With lots of money seeking income, values are strong and landlords with good properties can make up what they lost in ’09 and ’10. (Inland owns about 90 US office buildings, 26 here, and they’re all suburban.) Joe says he’d even consider buying another one if it was leased for the long term to a healthy tenant. (And if the building asks him nicely.) His criteria: a below-market price and rents with some vacancy. Within ten years, he’d lease it up at rents lower than today’s rates, but appropriate for 2022.

Inland buyers Mark Cosenza and Lou Quilic know that as a suburban owner, Joe also worries about technology possibly overtaking office use. Joe says that he sees it in his own life. With his iPad, he can do anything he can do at this desk, except motivate his staff. So he wonders: How many office workers won’t be around in ten years? “The horrible answer,” Joe says, is perhaps 10% to 15%. Also going forward, post-recession managers will be judged by how much they cut expenses, which would include eliminating underused offices.

Due diligence officers Bob Brinkman and Sharon Anderson-Cox are part of the Inland team, which is trying to buck the trend by lowering rents a little and/or increasing TI by a lot. That’s what Inland did two weeks ago, when it renewed Sharp’s 100k SF lease in Oak Brook. Another way to spur leasing is to offer more amenities than the next guy: parking, restaurants, and perhaps a  health club. But Joe still worries. He says delinquencies on US office mortgages were 8.29% last October versus 6.62% a year earlier. While office vacancy rates may be declining somewhat, Joe wonders if rates reflect actual demand. He asks: How many tenants are subleasing or have vacated space but still pay rent? Joe's word of the day: caution.

Chicago Real Estate News from Bisnow

Institutional investors, it seems, are finally giving Chicago its due. Credit Suisse's rumored acquisition of 250 S Wacker Dr has closed for $90M, and as we reported in our national edition on Friday, Shorenstein has purchased 350 W Mart Center for $228M.

Lacy Ltd.'s Debra Lacy (whom we snapped with her husband and partner Ben in their DC office) tells us the same Credit Suisse fund that bought DC's 1099 New York Ave and Boston's Independence Wharf in '09 bought 250 S Wacker from AEW Capital Management. Her firm advised the buyer, and CBRE repped the seller. Lacy advises foreign investors, which favor the coasts, especially the East Coast; though the firm has been watching Chicago for a cool decade. Despite its standing as a primary market and a 24-hour city, there aren't many barriers to entry, and so there's a lot of building and then a lot of tenant musical chairs. So her firm's entry into Chicago, she says, was always going to have to be pegged to the right building at the right location in the right submarket.

And so, once 250 S Wacker became available just before Thanksgiving, Lacy fast-tracked the deal, while others perhaps were debating fruit vs. sausage stuffing and focusing on closing in-process deals before the end of Q4. It didn't hurt that the Credit Suisse fund still had some allocations to place before year's end.

The building is MillerCoors' HQ, with a reception area that doubles as the company's best recruiting tool.

MULTIFAMILY GLEE

Marquette's Jim Cunningham tells us Chicago multifamily returns are simply "euphoric" right now. Sure, some areas like the Northwest quadrant have a bit of softness, but he expects rents to go up another 4% to 8% in 2012. Investors' passion for multifamily is changing the picture, though. Downtown prices hit $500k/unit sometimes last year, and that's when returns start to get questionable and you start to walk away from deals, he adds.

Marquette and Davis Cos bought The Apartments at Woodfield Crossing in Rolling Meadows out of foreclosure a year ago. After a $9M repositioning, rents have bumped up 15% to 20%.

WHAT'S IN A NAME?

Jim Cunningham joined Marquette in the past few months from Columbus' Casto. We share an Ohio background with him and found ourselves wondering where the term Chicagoland comes from. We decided it must have been the work of a broker or developer. Tell us your stories about Chicago's nomenclature. What do you know about where Chicagoland came from? What about other neighborhood, town, or building names? We'd love to hear your stories and thoughts and we've included our email addresses below for your convenience.