spotlight / Regional Outlook
Managing the Midwest
TECHNOLOGY PLAYS IMPORTANT, ALTHOUGH NOT EXCLUSIVE, ROLE IN CRE RECOVERY
By Kristin Gunderson Hunt
As high-technology companies venture into smaller markets across the country, some Midwest cities are reaping the benefits, par- ticularly in the office sector, according to the Jones Lang LaSalle Spring 2013 report, High Technology Office Highlights.
“Silicon Valley and other traditional tech hubs are still at the forefront
for high-tech employment growth, but the battle for talent is creating new
technology-friendly cities,” said Conan Lee, Senior Vice President with Jones
Lang LaSalle, in a news release regarding the report.
In Minneapolis, high tech job growth has outpaced office job growth since
2009. In 2012, Kroll Ontrack leased 195,000 square feet—one of the nation’s
top 10 tech real estate transactions last year, according to the report. Overall,
the Twin Cities—with its diversified economy and 19 Fortune 500 companies—experienced 131,587 square feet of absorption in the first quarter of
2013, its eighth consecutive quarter of positive absorption, according to CB
Richard Ellis’ Minneapolis Office MarketView.
ALL PROPERTY TYPES NUDGED BY TECH GROWTH
Chicago is also becoming a popular tech hub, with Salesforce.com and Belly
leasing 116,000 and 60,000 square feet respectively in 2012. Such activity is
helping to fill vacancies in general. During the first quarter of 2013, the Chicago CBD office market experienced steady rent rates and an 11. 5 percent
vacancy rate, down from 12. 2 percent one year ago, according to Transwest-ern’s Chicago Office Outlook.
While Milwaukee is not considered an emerging tech
hub, its office market has benefitted from tech occupiers
Mortgagebot LLC, provider of an Internet-based loan
origination platform, and Zywave Inc., a software developer for the insurance industry. They leased 36,096
and 59,828 square feet respectively in the first quarter
of 2013, according to CB Richard Ellis’ Milwaukee Office
MarketView—helping reduce the vacancy rate to 15. 7
percent, down 100 basis points from one year ago.
Commercial real estate is being influenced by technology well beyond high-tech companies occupying office space, though.
Technology is improving service delivery to retain tenants and residents
alike, a critical strategy for real estate managers even as market conditions
improve, said Midwest CPM Members.
“We always want to retain ten-
ants, but as fundamentals improve
and more product comes online,
tenant retention is even more im-
portant,” said Lisa Dongoske, CPM,
executive vice president for Cush-
man and Wakefield/Marquette Real
Estate Group in Minneapolis. “We
are very focused on improving ser-
vice delivery, and there are always
things you can do to improve ser-
Dongoske said office tenants in-
creasingly expect improved service
delivery through the latest technol-
ogy. Ed Valerio, CPM, general man-
ager for Jones Lang LaSalle in Mil-
waukee, said his tenants appreciate
being able to enter work orders,
“Tenants like to feel
informed and empow-
ered when it comes to
Valerio said. “Technol-
ogy helps create that
want the capability to
do everything digitally
from paying rent, to submitting
maintenance requests, to engag-
ing in online resident communi-
ties where they can build common
touts one of the
vacancy rates in the
country at 2. 7 percent.
Construction on several
projects is expected to
begin in 2013.