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Midwest Office Market Trends at a Glance

The 3Q 2019 office market data reveal it’s been an active year in the Midwest. Due to new developments and expansions and market size changes, availability city-to-city continues to change. Here are details on current conditions for three major cities in the region: Detroit, Indianapolis, and St. Louis:

Detroit: At 15 percent office vacancy this quarter (down 0.4 percent compared with Q3 2018), the region absorbed nearly 110,000 square feet of space. Metro Detroit remained steady, while other submarkets are experiencing more vacancies due to factors such as the downsizing educational market. Notable new developments and expansions include IBM, Microsoft and LinkedIn downtown, and, in Farmington Hills, Trinity Health.

Indianapolis: The office market in Indy posted its first quarter of occupancy growth for the year as well as its highest net absorption in several quarters. Although the vacancy rate increased by one percent (Q319: 19 percent; Q318: 18 percent) due to new developments entering the market – and more coming – the active third quarter made up nearly half of all leasing volume for 2019. Main drivers for market growth include KAR’s 250,000-square-foot headquarters and CBIZ’s relocation.

St. Louis: Asking rental rates in the St. Louis office market reached the highest ever, to $20.59/SF, indicating the increasing demand. Vacancies increased 0.3 percent year-over-year. Looking ahead, St. Louis is set to have several large employers occupying office space in the area, including Square, Inc., Bunge Limited and Build-A-Bear Workshop.

The Changing Retail Landscape

Today’s retail landscape is not the same it was five or 10 years ago. And according to Sean Valentino, REDICO’s director of retail operations, it will continue to change and adapt based on how properties are marketed and space is utilized. Sean Valentino, director of retail operations, explains consumer and e-commerce trends impacting the commercial retail market.

Retailers are finding ways to be more efficient with their spaces. Global and national retailers, such as Best Buy and Apple, have restructured their spaces to be smaller, boutique-like and customer experience focused. Companies also made investments in employee training to increase product knowledge and service. The financial result? A more service-based profit with the opportunity to have more add-on sales rather than a traditional product-based revenue.

While the constant battle of in-store versus e-commerce experience continues, Valentino believes one cannot survive without the other. “Companies successfully finding the balance between the retail in-store experience and e-commerce have also made significant investments in online and in-person marketing,” said Valentino. “They need to be able to adapt to market demands.”

Valentino mentioned flexible, niche use is a leading commercial retail real estate trend and to not ‘build too big or too deep.’ REDICO is in the final stages of redeveloping the Village at Bloomfield, a sprawling 87-acre mixed use space that will include retail, office, multi-family and a senior living community, among other local amenities.

“REDICO is proud of its relationships with retailers and their communities,” said Valentino. “We have taken on some high-risk projects, such as the Village at Bloomfield where others have failed and we have helped them succeed.”

Beyond Place-Making, Detroit’s Design Roots Take Hold

Detroit has always been a creative and designer’s playground. The city offers the juxtaposition of great classic architectural bones with street murals, active streets and modern urban vibes. Recent building renovations have combined with Motown mainstays to forge a design vibe that continues to attract national media attention. It’s no surprise a Detroit jeweler, Rebel Nell, is creating art using parts of the recently demolished Joe Louis Arena, or that the placemaking that has occurred in recent years along the Detroit River or in key city parks is working. Detroit is a story about how intentionality -- and patience -- can work, which is evident in the creative mix of office buildings, food destinations, fashion fabrication operations and more.

Combine Detroit’s existing and growing credibility for its creative bandwidth and it’s a recipe for business investment -- and explains the positive response from visitors, business travelers and “ex-pats” (former Detroiters) who make their way back home.  

Detroit’s eclectic makeup of creative types, and the “comeback city” narrative, are among the reasons renowned fashion designer Tracy Reese recently moved back home, declaring “This all can’t be happening without me,” in this enlightening New York Times piece.

Financial firms. Fashion boutiques. Fast-casual dining. Dive bars. Detroit is a mix of all those things. Detroit is where entrepreneurs mix with corporate and foundation types, where architects, engineers, social media mavens and financial executives co-mingle.  Detroit is where thoughtfully designed and people-centered spaces and experiences are increasingly the norm, not the exception. What’s more, REDICO’s signature office properties, 150 West Jefferson and One Kennedy Square, are in the center of the action, flanking the financial district and Campus Martius Park, respectively.  

Hoover & Greene: Ann Arbor’s New Hub for Healthy & Social Living

Landing Page Copy: Construction is well underway on a 167-unit innovative multifamily community development in Ann Arbor, Hoover & Greene, which will be geared toward healthy lifestyles and social programming.

REDICO broke ground on the development during the summer, and the apartment community is expected to open by spring 2021.

Unique design and service features include a demonstration kitchen, a courtyard available for activities like yoga, flexible space for residents who are remote workers to use, an outdoor entertainment area including barbeque stations, and more.

Southfield, Mich.-based Village Green will manage the property. Chicago-based Myefski Architects is the architect. The apartments will range from 500-square-foot studio-size units up to 1,100-square-foot two-bedroom units.

“We are excited to offer this unique multifamily product, which as the added convenience of a stellar location with easy access to the freeway system,” said Samantha Eckhout, senior vice president of development. “Hoover & Greene will have thoughtful amenities and services, and with the proximity to the University of Michigan Health System and University of Michigan, the development is already creating a buzz in the market.”

A tenant oriented toward healthy lifestyles will be secured for the retail component of Hoover & Greene. More information can be found here.

Indy’s Bmo Plaza Adds Amenity to Downtown Office Market

On the heels of Jimmy John's Sandwiches recent sale to Inspire Brands, owner of Arby's, Buffalo Wild Wings and Sonic, BMO Plaza in downtown Indianapolis will soon become home to the popular sandwich franchise Jimmy John’s.

Franchise owner Scott Finner is opening a 3,600 square foot Jimmy John’s at 135 N. Pennsylvania, with seating for 86, on the building’s first floor. The fast, casual restaurant is scheduled to open in early 2020 and will employ approximately 50 people. BMO Plaza is owned and managed by Southfield, Mich.-based REDICO.

“The variety of tenants at BMO Plaza, and the tenants in nearby office buildings, will bring a lot of foot traffic to our Jimmy John’s,” Finner said.

Not only will there soon be a new food option for the downtown Indy business crowd, but incredible city views are also among the assets of the 28-story BMO Plaza. The building, which has Class A office space available for lease to tenants of all sizes, is ideally configured to accommodate growth firms.

"The Jimmy John's addition is a strong choice for BMO Plaza, as it will serve as a connector to the central business district and is a strong amenity for our tenants and the community," said Property Manager Nicole Langdon.

BMO’s features include a brand-new lobby, updated tenant lounge with a ping-pong and pool table and space to relax, a fitness center, meeting space and an indoor parking garage with a direct entrance into the building. Lofted space, open ceilings, modern design, a library and patio spaces (including a rooftop patio) add to the property’s attractiveness. There’s room to grow in spaces from 800 to 54,000 square feet, with options to fit a small start-up, a professional services firm or an established tech company. Exterior building signage opportunities and electric car-share at the front door are also available.

The building is an easy walk from the Indianapolis City Market and Monument Circle area. Tenants include: a bank, law firms, a government agency, title companies, food service, an employment agency and a market research firm.

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