1/6/22 Chicago Mastermind Group Meeting

Key Take Aways from Chicago’s February 2022 Mastermind Group Meeting!

• Hart Passman, Elrod Friedman LLP: Development work has been slow but still some activity.  Two items to keep an eye on: (1) a law took effective January 1 regarding lobbying.  It expanded lobby registration rules to lobby at the local level.  If you are seeking anything from a local unit of government, you have to register as a lobbyist with the state.  Some exceptions may exist for lawyers, but brokers, engineers, etc. may have to register. (2) There is still movement of legislation that would curtail TIFF in Illinois. They want to narrow the categories that qualify for TIFF along with securing unanimous votes from all government entities involved.  Definitely a bill to watch.
• Corey Walz, Walz Capital: They are expanding their relations recently with the PE groups as well as brokers and consultants who are helping them to position their post-close.   Because many of their property owners (doctors) have developed their space/office over the years, it has become almost a second home and when letting go of it, there is a “borderline residential emotional element” involved.  It is important to acknowledge the emotions attached to these deals – especially for those who survived the pandemic. The dynamic just makes deals more complex in a unique way.
• Daniel Brennan, Laurie & Brennan, LLP: Shared that Chicago-based developers are doing work everywhere but Chicago.  On the contractor side, everyone is waiting for infrastructure money to come out of the Biden administration.  Some of the infrastructure money is starting to get pushed out, but mostly at the state level so probably another year to 1.5 years before we start seeing results.
• Joe Calvanico, J2C Valuation: The Cook County Assessor’s Office has finally finished all their assessments (Hyde Park was the last one) but because they were so late completing them, it is very possible that some owners will see two tax bills come out around the same time which will be interesting.  There is no statue that prohibits the county from sending two at the same time. Joe also shared that he is seeing a big uptick in valuations of single-family homes for future rental.
• Hunter Cannon, Colliers International:  Seeing a lot of retail properties sell and transfer hands.  Retail leasing is changing (spaces are smaller and the urban downtown districts are suffering waiting for covid to wrap-up).  A lot won’t happen until the mandates are removed.  That said, numbers are improving; Chicago is under five percent.  Outside the major cities things are moving well.
• Lauren Zangl, ECS Midwest: Lauren has had a drastic shift in her clientele over the last month. Typically, she focuses on local and regional level (phase 1) work.  In January she has been doing all national work (bigger national firms).  Keeping an eye on this movement but it appears the trend is that shoppers are taking a more nationwide approach.
• Jared Placek, Manhard Consulting: Busiest they have been since the early 2000’s for land development work but trying to determine if it is backlog work or advanced movement activities in anticipation of the rising interest rates.  Their biggest markets are industrial, multi-family and some single-family.  Single-family rentals are spiking.
• Rick Rembusch, Digital Realty: Data center space is a unique space; what they sell goes beyond space and power. He recently visited the new post office space and the developers he spoke to stated that they are trying to identify how they can build out the commercial space such that people want to come to the office vs. staying at home. The landlord needs to identify why people want to come back.
• Mike Spirovski, Wedgewood LLC:  When comparing suburban office space vs. the city, the suburban office deal is tough as the space needs a serious anchor.  What is great about Chicago (outside of the concerns regarding safety), Chicago is not going anywhere, and people will return to the office (even if not at the levels it was pre-pandemic).  The suburban market is definitely more challenging.
• Joe Grody, Cornerstone Commercial Real Estate: The loop has always been a rollercoaster and it will come back around and survive.  His office focuses on tenant work (primarily restaurants and retail) in the city, suburbs and around the country recently opening an office in Florida because it is a hot market (along with Texas and Indianapolis). In the Chicago markets, the hot spots for restaurants are Schaumburg and Oak Brook and some Naperville.  In the City, everyone wants to be on Randolph (not Fulton as it still has a long way to go).  Randolph is morphing into more than just restaurants and becoming more of a mix of restaurants and retail (e.g., bakeries, coffee companies, etc.). Also mentioned that State Street is becoming the new Michigan Avenue.  Until the rents come down, Mom and Pop businesses will not be back.