November 1, 2019
By Paul Bubny
More than 400 industry professionals convened at the Intercontinental Chicago Magnificent Mile on Tuesday for Connect Conferences’ second event in the Windy City. Although it was the opening keynote by Cook County Assessor Fritz Kaegi that prompted hotel staff to bring in extra chairs, the panel discussions that followed gave Connect Chicago Fall 2019 attendees a wealth of insights on subjects ranging from development opportunities to the capital stack.
Moderator Collete English Dixon set the stage for the “Preparing Your Business and Portfolio for What’s Next” conversation, by expanding the definition of “what’s next” beyond a possible downturn. “What’s next in real estate is more than just preparing for a recession,” said English Dixon, citing demographics among the agents of change shaping strategies.
Veteran developer Mark Goodman of Mark Goodman & Associates pointed to a common thread uniting Baby Boomers, Millennials and Generation Z: although they may want different things, all of them want interaction. “People want to be engaged,” he said.
Caton Commercial’s Amy Hall advocated a focused approach to leasing, particularly for retail. “It’s not just a free-for-all to achieve occupancy,” she said. “You’re leasing for consistency.”
An overarching theme of the development trends panel that followed was connectivity, in the broader sense of making connections between people and places rather than a property’s broadband access. “Connectivity is the wave of the future,” said Lendlease’s Ted Weldon.
Here again, moderator Danny Nikitas of Avison Young modified the premise implied in the panel’s subtitle, “Urban vs. Suburban,” to reflect that both city and suburbs offer opportunities. He noted that like retail, the suburbs aren’t dead but are changing.
Farpoint’s Regina Stilp, whose firm has been active in both Chicago and the surrounding metro area, said suburban development is predicated on access to public transit—especially given that a fair number of younger residents are no longer interested in car ownership.
Adaptive reuse is an element common to both Chicago and its suburbs. With banks now moving off LaSalle Street in favor of newer product downtown, there’s potential for converting older office properties, Weldon said.
In the suburbs, the former AT&T campus in Hoffman Estates is being given a makeover by the same team that had considerable success with the former Bell Labs campus in central New Jersey, and there are more where that came from.
Whether it’s a ground-up development or repurposing of an existing property, amenities are part of the conversation. And, as moderator Karoline Eigel of MB Real Estate pointed out, the lines increasingly are blurred between residential and commercial uses when it comes to amenities.
For Randy Fifield and her team, a Walk Score of 90 or above is an essential amenity. The Fifield Properties chairwoman advised ranking possible amenities according to a hierarchy of check-the-box must-haves, “I wish” features that would be desirable but not essential and superfluous extras.
In the commercial realm, what counts as “must-have” amenities are frequently determined by tenants’ employees, said Cushman & Wakefield’s Ari Klein. No longer is it a matter of the CEO making these decisions, he said. Nowadays, almost every meeting with prospective tenants will include a representative from human resources weighing in.
With the capital markets panel that concluded the afternoon, moderator Tammy Kelly of Redwood Capital Group turned the discussion’s subtitle, “It’s Complicated,” on its ear. The capital stack isn’t so much complicated as diversified, she said.
A diverse range of viewpoints from the lending and investing arena—those of PGIM Real Estate Finance’s Christy Lockridge, Pearlmark’s Doug Lyons, Barnett Capital’s Elan Peretz and Broadstone Real Estate’s Kate Davis—detailed their strategies. They homed in on the capital stack segments they’re most focused on, property types beyond the staple five food groups and the array of debt sources available to owners and investors.
The conference concluded with a presentation to most of this year’s Chicago honorees in Connect Media’s Next Generation Awards, including National winners based in Chicago. Vanessa Anderson, Grady Capobianco, Adam Garcia, Moses Hall, Patrick Hewitt, Joaquin Manriques, Manuel Marti and Eugene Rutenberg all received their awards in person.
Pictured: The “Preparing Your Business and Portfolio for What’s Next” panel.
For comments, questions or concerns, please contact Paul Bubny