Special Section: Midwest

Compared with the rapid pace of development along the East Coast and West Coast, the real estate market in the Midwest tends to be slow and steady.

Kahler Slater designed a concept for a 22-story, 170-unit residential tower for Milwaukee-based Northwestern Mutual. (Kahler Slater)

OneEleven in Chicago, a residential high rise along the Chicago River, was built out of the remnants of a failed 2008 condo development that halted construction after 24 floors had been poured. (Epstein/Handel Architects)

Chicago-based Epstein provided design/build services for the transformation of an industrial building in Romeoville, Illinois, into a 604,000-square-foot (56,000 sq m) headquarters, manufacturing, and warehouse facility for Magid Glove & Safety Manufacturing Company. The retrofit was completed in February 2015. (Epstein/Ballogg Photography)

Chicago-based Epstein provided design/build services for the transformation of an industrial building in Romeoville, Illinois, into a 604,000-square-foot (56,000 sq m) headquarters, manufacturing, and warehouse facility for Magid Glove & Safety Manufacturing Company. The retrofit was completed in February 2015. (Epstein/Ballogg Photography)

Compared with the rapid pace of development along the East Coast and West Coast, the real estate market in the Midwest tends to be slow and steady. “We don’t have the real estate ups and downs that the other places do,” says Brad Chambers, president and chief executive officer of Indianapolis-based real estate firm Buckingham Companies. “The Midwest is a stable area that doesn’t go boom and doesn’t go bust.”

That does not mean there has not been an uptick in development in five states of the Midwest—Illinois, Indiana, Ohio, Wisconsin, and Iowa—says Stan Pepper, chairman and chief executive officer of the Pepper Companies, a construction firm based in Chicago. “Chicagoland is the third-largest construction market in the nation—in the world’s largest economy—and we’re seeing an increased level of energy and activity that hasn’t been felt in a few years,” he says. “The Chicago manufacturing and industrial sectors indicate higher levels of investment in production and productivity that support a growth economy.”

Transit-oriented development, a robust health care segment, and a growing education sector are further contributing to real estate activity in the nation’s midsection, with millennials driving much of the downtown residential activity, says Thomas Miller, an associate principal and housing and hospitality team leader at Milwaukee-based design firm Kahler Slater. “A number of multifamily projects designed to serve a generation that values urban lifestyle, mobility, and mass transit are being built,” he says. “The current bias toward renting apartments versus homeownership in our urban environs will continue, and we are excited about the reemergence of the condominium market.”

One-time events also are driving real estate development in the region. Cleveland’s fortunes, which have risen in recent years, are expected to be enhanced by the Republican National Convention (RNC), scheduled for July. “The RNC is a major catalyst for much of the public and private development occurring in Cleveland,” says Rich Wilden, director of design at locally based design firm KA. “With the convention coming to the city, there is a significant focus on the urban core, especially in the residential, hospitality, and office sectors,” he says. “As the downtown residential population increases—it is currently over 13,000—retail demand will continue to heat up.”

Illinois

As architect of record, Epstein is providing LEED consulting, civil, and structural engineering services for Pizzuti Development’s 300-unit residential high rise with retail space in Chicago’s West Loop. Construction is scheduled to begin in this spring. (Epstein/Arquitectonica)

As architect of record, Epstein is providing LEED consulting, civil, and structural engineering services for Pizzuti Development’s 300-unit residential high rise with retail space in Chicago’s West Loop. Construction is scheduled to begin in this spring. (Epstein/Arquitectonica)

The Prairie State is benefiting from an improved national and local economy. Companies and developers in Chicago are making significant real estate investments throughout the region, keeping architects and engineers engaged, says Randy Buescher, vice president and director of architecture at Epstein, a Chicago-based design firm. The office, residential, hospitality, and retail commercial sectors in the state’s largest city have taken off over the past 12 months, he adds.

“After a few years of minimal movement, we are seeing numerous opportunities for projects in these markets,” Buescher says. “More and more businesses are moving their headquarters into the city; people therefore need places to live, eat, and shop. Chicago is also experiencing a tourism boom that is spurring the need for new hotels and renovated ones that offer modern amenities.”

Multifamily housing is one of the region’s strongest sectors. Epstein is working on or has completed a number of residential projects in the city, including Pizzuti Development’s 300-unit Van Buren & Aberdeen, a luxury multifamily development in Chicago’s West Loop; Gellar Investment Company’s office-to-hotel redevelopment of 101 E. Erie, now under construction and expected to open later this spring as a Conrad by Hilton hotel; and Related Companies’ 60-story luxury multifamily development OneEleven. (The latter was profiled in the July/August 2015 issue of Urban Land.) “It seems like over the past couple of months, a new plan for a high-rise multifamily building has been unveiled nearly every week,” jokes Buescher. “These residential buildings are also incredibly ambitious and massive in nature.”

The redesign of the Capitol Avenue streetscape in Springfield, Illinois, updated infrastructure, addressed parking and pedestrian issues, and modified building facades. The public art throughout the historic streetscape features the local culture and state history. RDG Planning & Design planned and designed the transformation of four blocks along Federal Avenue and a plaza in Mason City, Iowa’s, downtown to reestablish the area as a destination for visitors and residents. (Kun Zhang)

The redesign of the Capitol Avenue streetscape in Springfield, Illinois, updated infrastructure, addressed parking and pedestrian issues, and modified building facades. The public art throughout the historic streetscape features the local culture and state history.

The health care and education sectors also are resilient. “Health care is loosening up and we’re seeing greater activity in higher education, K–12, mixed use, hospitality, and interiors,” says Pepper. “The development market seems to have moved from stabilization to moderate growth in most sectors of the state economy. The high levels of inquiries in the architectural field indicate the trend toward modest growth will continue for the coming months.”

Pepper is involved in a number of health care projects across the state, including Carle Hospital in Champaign; Palos Community Hospital in Palos Heights; Advocate Christ Medical Center in Oak Lawn; Northwestern Medicine in downtown Chicago; and Trinity Regional Health in Moline. “We are also working on higher education projects ranging from Northwestern University in Evanston, Dominican University in River Forest, and North Central College in Naperville. As a result of more market activity, trade contractors are expanding their business to handle increased capacity, and building costs are escalating.”

Indiana

Now under construction, Pinecrest—a retail and entertainment district in Orange Village, located east of Cleveland—is scheduled to include retail, restaurant, multifamily, hotel, and parking uses. (Fairmount Properties)

Now under construction, Pinecrest—a retail and entertainment district in Orange Village, located east of Cleveland—is scheduled to include retail, restaurant, multifamily, hotel, and parking uses. (Fairmount Properties)

Indiana’s economy also is performing well, with a low unemployment rate, says Buckingham’s Chambers. “Indiana is creating jobs, and businesses in the state are expanding,” he adds. “In Indianapolis, there’s growth in a number of different sectors, including health care, finance, and real estate. Indianapolis is home to a number of strong real estate investment trusts [REITs] that continue to grow, including Simon Property Group, Duke Realty, and Kite Realty Group Trust. We also have solid technology growth with our fair share of millennial startups.”

Buckingham Companies just kicked off Phase II of a downtown mixed-use project, CityWay, which was a finalist for ULI’s Global Awards of Excellence in 2014. A 14-acre (5.7 ha) neighborhood, CityWay includes a 209-room hotel, 250 luxury apartments, 40,000 square feet (3,700 sq m) of retail and office space, and a state-of-the-art YMCA.

“Indy, like many downtowns, is attracting millennials, which is terrific,” Chambers says. “We have a lot of young people moving to the urban core every day. Indianapolis has initiated numerous sustainable efforts including car sharing and bike lanes, which attract that generation and others. Indianapolis is an entrepreneurial city and it continues on a roll.”

The Cleveland law firm of Calfee, Halter & Griswold signed a 20-year lease for a seven-story, 115,000-square-foot (11,000 sq m) structure developed by CRM in downtown Cleveland. Now named the Calfee Building, the nearly century-old building is on the National Register of Historic Places. It was originally built for the East Ohio Gas Company in 1916 and was recently awarded LEED Gold certification. (Donald Lesko for Calfee, Halter & Griswold LLP)

The Cleveland law firm of Calfee, Halter & Griswold signed a 20-year lease for a seven-story, 115,000-square-foot (11,000 sq m) structure developed by CRM in downtown Cleveland. Now named the Calfee Building, the nearly century-old building is on the National Register of Historic Places. It was originally built for the East Ohio Gas Company in 1916 and was recently awarded LEED Gold certification. (Donald Lesko for Calfee, Halter & Griswold LLP)

The largest city in Indiana is experiencing high residential absorption rates, even with numerous new multifamily developments such as Flaherty & Collins Properties’ 360 Market Square tower and other downtown Indianapolis multifamily products under construction. “We expect multifamily design to be strong over the next year,” says Jack Lashenik, vice president of American Structurepoint of Indianapolis. “The health care market also has rebounded. Health care investment dollars have been waiting on the sidelines while firms tried to figure out how the changes in the health care laws may affect their businesses. Now, those firms are moving ahead with plans.”

American Structurepoint is working on two health care projects totaling $50 million for the Riverview Health network in Hamilton County. One is a 110,000-square-foot (10,000 sq m) outpatient medical office building in Westfield; the other is a renovation of Riverview Health’s acute-care hospital in Noblesville. “We’re seeing some of the bigger health care networks in central Indiana and throughout all of Indiana starting to spend and invest, and that is a very, very good thing for the real estate industry in Indiana,” Lashenik adds.

Ohio

The Urban Farmer steakhouse is adjacent to the 484-room Westin Cleveland Downtown. A joint venture of Miami-based Optima Ventures and Denver-based Sage Hospitality developed the newly opened hotel. Optima and Sage purchased the structure and parking garage from defunct financial services giant Lehman Brothers Holdings in 2011. (Shawn O’Connor)

The Urban Farmer steakhouse is adjacent to the 484-room Westin Cleveland Downtown. A joint venture of Miami-based Optima Ventures and Denver-based Sage Hospitality developed the newly opened hotel. Optima and Sage purchased the structure and parking garage from defunct financial services giant Lehman Brothers Holdings in 2011. (Shawn O’Connor)

A very good thing for Cleveland is the aforementioned 2016 Republican National Convention. The RNC is one of the engines propelling the completion of key developments in the center of the rock-and-roll capital of the world, ranging from highway and transportation projects to the redevelopment of Public Square to a number of new hospitality venues, says Mara E. Cushwa, a partner and chair of Calfee, Halter & Griswold’s real estate practice.

Calfee served as local counsel to the project team that redeveloped a downtown hotel property that opened last year as the Westin Hotel and Urban Farmer restaurant. The Metropolitan at the 9 and an Aloft hotel in downtown Cleveland also began taking guests in 2015. “Additional hotel projects include a new Hilton hotel under construction at the Cleveland Medical Mart and Convention Center. A Kimpton hotel and a Drury hotel are scheduled for two central business district historic rehab projects,” she adds.

In addition to hospitality construction, Cleveland is experiencing a multifamily building boom—a story that is being repeated in Columbus and Cincinnati and elsewhere in Ohio, Cushwa adds. “In the last half of 2015 alone, 300 additional multifamily units were added to the downtown Cleveland market,” she says. “The apartment occupancy rate in downtown is nearly 98 percent, and numerous high-end apartment projects have waiting lists. The repopulation of the city’s downtown core is driving other investments such as the opening of a high-end Heinen’s grocery store in the historic Ameritrust Building and a new Geiger’s clothing and sporting goods store immediately next door.”

Pepper Construction completed the 300,000-square-foot (29,000 sq m), nine-story Ambulatory Care Pavilion at Advocate Christ Medical Center in Oak Lawn, Illinois, in 2014. (Photo courtesy of HDR Architecture, Inc./©2014 Tom Rossiter)

Pepper Construction completed the 300,000-square-foot (29,000 sq m), nine-story Ambulatory Care Pavilion at Advocate Christ Medical Center in Oak Lawn, Illinois, in 2014. (Photo courtesy of HDR Architecture, Inc./©2014 Tom Rossiter)

Cleveland continues to attract well-educated younger professionals who want to live and work in an area that offers a vibrant, walkable, bikable, and transit-friendly environment, says Wilden. With a walk score (a number between 0 and 100 that measures the walkability of an address) of 87, a vigorous public transportation system, and amenities that come along with an established urban center, “Cleveland is becoming an ideal city for businesses to locate, attract, and retain talent,” he says.

Such increased residential activity has caught the attention of area retailers. Liberty Center, a mixed-use development in Liberty Township, Ohio, developed by Steiner + Associates and Bucksbaum Retail Properties, opened in 2015. KA served as the executive architect of the development in collaboration with Torti Gallas and Partners, RTKL Associates, and M+A Architects. “Liberty Center is designed to leverage the 24/7 vibrancy of the live/work/shop/dine/play elements and create a vital, amenity-rich environment and destination,” he says.

Calfee is working with the development group constructing the new Pinecrest retail and entertainment district in Orange Village east of Cleveland, Cushwa says. “Fairmount Properties is the lead developer and is working in a joint venture with Lennar Commercial, members of the DiGeronimo family, and Lewanski Development,” she says. “The Pinecrest mixed-use project promises retail, restaurant, apartment, hotel, and parking development.”

Wisconsin

Stevens Construction hired Kahler Slater of Milwaukee to design the general contractor’s new corporate office building in Madison, Wisconsin. The headquarters includes 35 offices, expanded meeting and conference spaces, a training facility, and other corporate support functions. (C&N Photography)

Stevens Construction hired Kahler Slater of Milwaukee to design the general contractor’s new corporate office building in Madison, Wisconsin. The headquarters includes 35 offices, expanded meeting and conference spaces, a training facility, and other corporate support functions. (C&N Photography)

Referred to as Brew City, a reference to its most famous product, Milwaukee might be thought of as “Hospitality City” thanks to its strong expansion in the hospitality, multifamily, and commercial sectors. “Milwaukee’s skyline is changing and our neighborhoods are becoming even more livable,” says Miller of Kahler Slater. “The healthy economy is having a significant impact on the built environment in the city.”

Kahler Slater has six hotels in various stages of design or construction in Milwaukee as well as other properties in the region. “Full-service, limited-service, extended-stay, and adaptive use hoteliers are all looking to fill the need for additional rooms in the market,” Miller says. “HKS Holdings, for instance, is developing a Kimpton hotel in Milwaukee’s Third Ward. It will be the only Kimpton in the state.”

Like other Midwest locations, Milwaukee and Wisconsin are reporting robust multifamily development. One example is in St. Francis, south of Milwaukee, where Bear Development is building a three-phase, 300-unit project designed by Kahler Slater and connected by bicycle trails to downtown. “St. Francis is directly tied to Milwaukee by Kinnickinnic Avenue, one of the city’s key neighborhood retail and entertainment streets,” Miller says.

Iowa

Home of the Kokomo Jackrabbits, the $11.5 million, 40,000-square-foot (3,700 sq m) Kokomo Baseball Stadium in Kokomo, Indiana, accommodates 4,000 spectators for baseball games and other sporting events. (American Structurepoint)

Home of the Kokomo Jackrabbits, the $11.5 million, 40,000-square-foot (3,700 sq m) Kokomo Baseball Stadium in Kokomo, Indiana, accommodates 4,000 spectators for baseball games and other sporting events. (American Structurepoint)

With relatively low unemployment and a strengthening economy, Iowa is experiencing an upswing in real estate activity in its major cities, says Justin Platts, landscape architect and senior partner at RDG Planning & Design in Des Moines.

Insurance and finance firms, including Principal, Nationwide, Wells Fargo, and Wellmark, dominate the city’s economy along with media concerns such Des Moines–based Meredith Corporation, and technology firms such as Facebook and Microsoft, which have major data centers outside the city. “Corporations in these sectors have heavily invested in public-realm improvements to aid in recruitment and retention of talented workers, including millennials, and to enhance the community overall for all of our citizens,” Platts says.

The downtown, east village, and western gateway neighborhoods of Des Moines are undergoing significant adaptive use. “Many historic structures are being repurposed for residential and commercial retail uses,” Platts adds. “The same can be said for other communities around the state. Many municipalities are redeveloping their urban areas. It is a paradigm change in Iowa.”
RDG is leading the design of an adaptive use effort converting two historic structures, the Harbach furniture store and its warehouse, into housing and retail space. “A thematic element of the Harbach Lofts redevelopment is the bicycle,” Platts says. “The Lofts will be along Des Moines’s extensive bicycle trail system, and many bicycle amenities will be built into the facility. Iowa has a great bicycle culture, and the project will cater to those who want to use their car less and their bicycle for more than recreation.”

American Structurepoint provided architectural, civil engineering, structural engineering, and IT services for the $55 million Lawrenceburg Event Center in Lawrenceburg, Indiana. Completed in June 2014, the complex includes a 114,000-square-foot (10,600 sq m), two-story, 1,600-seat performance space and event center. The venue also includes a nine-story, 168-room DoubleTree by Hilton hotel. (Tony Frederick Photography)

American Structurepoint provided architectural, civil engineering, structural engineering, and IT services for the $55 million Lawrenceburg Event Center in Lawrenceburg, Indiana. Completed in June 2014, the complex includes a 114,000-square-foot (10,600 sq m), two-story, 1,600-seat performance space and event center. The venue also includes a nine-story, 168-room DoubleTree by Hilton hotel. (Tony Frederick Photography)

Iowa is expected to continue its stable growth this year, with both employment and housing steadily growing. “Iowa’s economy tends to be more measured than [that of] some of the primary markets, and its concentration of agribusiness, financial, and insurance companies provides some constancy,” says Aimee Staudt, vice president and director of development at Knapp Properties, a Des Moines–based commercial and residential real estate firm. “Downtown Des Moines is experiencing great success in residential development that is expected to continue. Building permits throughout the metro area are at an all-time high, and land is still readily available.”

Companies also are making plans. For example, Staudt says, Principal Financial Group has undertaken an overhaul and reinvestment at its downtown headquarters. “Wells Fargo recently expanded its corporate campus, and [convenience store chain] Kum & Go is constructing a world-class corporate headquarters in Des Moines,” she says. “Facebook, Microsoft, and Google continue to expand their facilities within the state as well.”

Knapp Properties is partnering with midwestern supermarket chain Hy-Vee to bring a much-needed grocery store to downtown Des Moines. “The development will be first of its kind for Hy-Vee, with a 35,000–square-foot [3,300 sq m] full-service grocery store on ground level with three floors of multifamily above. It will serve the more than 70,000 workers and 8,000-plus residents of downtown,” Staudt notes. “Construction has begun on the development, which is expected to be completed later this year.”

With a strengthening economy, increasing demand for multifamily properties, particularly in urban cores, and expansion of businesses in the health care and education sectors, the Midwest is expected to see its real estate activity continue following a slow-and-steady course.

Mike Sheridan is a freelance writer based in Parsippany, New Jersey.

Mike Sheridan is a freelance writer in Richmond, Virginia.
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