Commercial Corner
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Veteran commercial broker, Alex Ruggieri, interviews leading comercial agents from across the state.
Polly Oczak Parchem, CCIM
Vice President, Winner’s Edge
Oak Brook, IL – POParchem@winnersedgeinc.com
Q. Polly you have something of a boutique commercial office what advice do you have to someone getting started in commercial real estate?
A. Early in my career, I was fortunate to have a great mentor. A great mentor will expose you to all sorts of opportunities that you may not otherwise get when you start out your career in real estate. The other advice is to be confident. Don’t be afraid to speak up, and admit that you may not know off hand certain answers to your clients’ questions.
Q. What are some barriers that you have faced being a female in a predominately male field?
A. Regardless of gender, I believe everyone at some point in their career will have to deal with being stereotyped or having some type of bias against them. As a woman, I often get overlooked for assignments so I have to constantly work to prove myself. If you work diligently, have a strong work ethic, pursue the right opportunities, and luck certainly helps, you will succeed!
Q. What do you see happening in commercial real estate in your market?
A. My typical clients are based in the west/southwest suburban Chicago market. They look for or have space
ranging from 1,500 to 30,000 square feet. Office landlords continue to have challenges as high vacancy rates remain high. Demand for retail space seems to be picking up some steam. However, the term “traditional retail” doesn’t have the relevance as it had in previous years. Traditional retail space owners are open to alternative uses such as medical, recreational, religious and other professional
related businesses. As for land, land owners continue to struggle with declining property values.
If you work diligently, have a strong work ethic, pursue the right opportunities, and luck certainly helps, you will succeed!
Lloyd Berry, CCIM, RPA
Vice President, Director of Operations, Colliers International
Chicago, IL – lloyd.berry@colliers.com
Q. Lloyd you specialize in office and leasing how would you describe current market conditions in Chicago in the office leasing market?
A. The Chicago downtown market (CBD) is recovering with the recent announcements of corporate relocations
by Hillshire Brands (234,000 square feet) and Motorola Mobility (500,000 square feet) from the suburban market to the CBD. This is emblematic of an ongoing trend as employers seek younger workers who prefer living downtown for the amenities and services offered there.
The Suburban market continues to struggle with an overall vacancy rate ranging from 20-24% depending upon the submarket. Absorbing this vacancy will take years given the relocation trend mentioned above and very slow job growth in the metropolitan area. Overall asking rental rates remain flat in the $ 19.80 per square foot range.
Q. How are investment sales in the office market?
A. The Trophy Class A buildings are at the top of the list with local investors like Sterling Bay working the West Loop market and repurposing older buildings. For example, the property Hillshire Brands leased from Sterling Bay was formerly a printing and distribution building. One of the Class C buildings owned by one of my clients is under contract and will be converted to student housing.
John Joyce CCIM
Managing Principal, Newmark Knight Frank Epic
Rosemont, IL – jjoyce@newmarkkfe.com
Q. John you work a lot with corporations; why do corporations need to make real estate decisions?
A. On an ongoing basis, corporate users of real estate must evaluate when and where it will occupy space. Sometimes they are expanding, sometimes it’s a contraction, and there are times where acquisition or disposition will be contemplated.
Q. What are the steps to create an Initial Evaluation?
A. A typical company will consider its facility alternatives based on geography, skilled labor pools, cost of living, education, transportation costs, the quality of life, state sponsored incentives and cost of real estate. A property requirement defining specified criteria will be developed. The next step is to prepare a strategy including how to compare alternatives. In most cases the strategy will be created by the company’s real estate director or a licensed real estate professional.
Q. How does Illinois make it on the list of alternatives?
A. Illinois’ central location, international transportation network, rail line access, cultural diversity, state of the art health care system, World Class education including Northwestern and University of Chicago, and University of Illinois and high population density leads real estate decision makers to consider this area.
Illinois’ central location…leads decision makers to consider the area.
In Champaign, opportunities were quickly taken advantage of as values and rents fell and the market has been steadily improving.
Matt Wavering
Director of Commercial Brokerage, Coldwell-Banker/Devonshire Commercial Realty
Champaign, IL – mjw@cbcdr.com
Q. Matt your specialty is retail, why would a CRE investor consider purchasing investment grade retail property in a tertiary market such as Champaign County?
A. Primary markets tend to have higher prices thus lower returns on investments. In addition, not all investors have seven digits to spend on property. Therefore, secondary or tertiary markets like those in downstate Illinois can offer higher returns with a lower cost of entry. Another factor is competition. Larger markets have more competition for retail space simply due to the size of the market. Therefore, smaller markets generally offer more stability for the simple fact that a tenant has limited options to
move and will likely stay in one property for a longer period of time.
Q. What is the current state of the retail real estate segment in Champaign County?
A. As with most of the commercial real estate (CRE) market, the effects of the recession weighed heavily on local and national retailers alike. We saw a lot of mid-box stores go dark, leave the market, or go bankrupt. In addition, any marginal restaurants or high-end retailers closed which left several smaller freestanding and inline vacancies. Those vacancies left us with a big hill to climb and put retail development at a stand-still. However, being that Champaign is a college town, opportunities were quickly taken advantage of as values and rents fell and the market has been steadily improving for the past two years.
Q. What is different about the retail segment now than before the recession?
A. Retailers have adapted to changing consumer habits; therefore, we see a lower demand for mid and big box megastores. Developers are being very cautious about what and where they build.
