Although the Midwest hasn’t seen rapid commercial real estate development in recent years, there has been slow and steady growth in this sector.
Along with commercial real estate growth, the Midwest has shown signs of public demand for commercial property in recent years, and experts predict that these trends will continue into the new year. According to Mark Hanrahan of Urbandale Iowa, Founder and CEO of MarkMel Co.the commercial real estate market is looking promising for 2019.
A significant increase in both construction and new developments have been underway throughout the Midwest including new retail centers in Milwaukee and Indianapolis. This includes the possible addition to the ‘Mall of America’ in Minnesota, which would be a major undertaking.
Along with commercial real estate, new multifamily construction has also been on the rise in this sector as well, including new luxury condos in Milwaukee and Cleveland. This is largely due to the growing demand for mixed-use properties that can provide living, working and entertainment opportunities in one convenient place.
Key factors in retail commercial development in the Midwest
“The rise of e-commerce companies along with changing consumer habits continue to speed up the demand for commercial real estate in the Midwest,” says Mark Hanrahan. Another major contributor to the rise of commercial real estate is the millennial generation. Millennials are now the largest generational employee group and continue to have a big impact on the office sector. This generation is almost single-handedly behind the revitalization of urban cores across the US, and have blurred the lines between living, working, and playing. As millennials are approaching the years of parenthood, the demands for alternative urban home/office spaces is expected to continue to grow.
“The focus of urban properties and the preference of commercial real estate for office space is very much a matter of convenience,” says Mark Hanrahan. Rather than face a grueling daily commute, younger people are opting for the accessibility of having work, home, and recreation all in one spot. This trend has also played a role in urban communities becoming popular by companies wanting to attract highly qualified tech-savvy workers.
Another influence of the growing demand for commercial real estate is the overall shrinking of office sizes.
Offices are becoming smaller as companies have begun moving away from individual offices and cubicles in favor of a more social work setting and open concept spaces. As a result of this trend, many landlords and property managers are now leasing to a larger number of tenants, each of which is occupying less space than the average in recent years.
“One recent example of a successful mixed commercial real estate complex is NEWCITY in Chicago,” says Mark Hanrahan. In 2015 the structured development of a massive 565,000 square foot center NEWCITY was completed. It has been highly successful in bringing in revenue and has brought in a lot of tenants and travelers alike. With this success, many investors are becoming more aware of the growing demand for commercial real estate in the Midwest.