Featured Listings

Recently Sold & Leased

$975,000 / Industrial

471 Jennings Dr.

Lake in the Hills

Bruce Kaplan

$950,000 / Industrial

470 Jennings Dr.

Lake in the Hills

Bruce Kaplan

$618,250 / Industrial

460 Jennings Dr.

Lake in the Hills

Bruce Kaplan

$51,112 / Industrial

450 Jennings Dr.

Lake in the Hills

Bruce Kaplan

$370,000 / Office

528 Market Loop Rd.

West Dundee

Sharon Glasshof

$85,000 / Office

4318 Crystal Lake Rd. Unit J

McHenry

Bruce Kaplan

$60,000 / Land

0 Borden St.

Woodstock

Mike Deacon

Office

1005 Alexander Ct. Unit E

Cary

Heather Schweitzer

Office

760 McArdle, Suite B

Crystal Lake

Heather Schweitzer

Industrial

6704 Pingree Rd.

Crystal Lake

Bruce Kaplan

Industrial

8200 Ridgefield Rd.

Crystal Lake

Bruce Kaplan

Retail

2102-04 W. Algonquin Rd.

Lake in the Hills

Bruce Kaplan

Retail

2029 E. Algonquin Rd.

Algonquin

Heather Schweitzer

& Sharon Glasshof

Featured Articles

DOES YOUR BROKER HAVE A PLAN?

At the risk of giving away trade secrets or otherwise proprietary information, I want to devote this month’s column to Marketing Plans for getting commercial properties leased or sold. Some brokers promise you the world and tell you what you want to hear in order to secure an exclusive listing for your property. Most professional brokers will create a customized marketing plan tailored to your specific property. Without such a plan coupled with effective implementation, the sale or lease of your property is left to dumb luck.

What is a marketing plan? Each parcel of real estate is somewhat unique. A good broker has a skill set that will enable him or her to create a written description of the attributes, features and benefits of any given property. That information can then be packaged into custom formats and shared with the world in a multitude of ways. A marketing plan, then, is a written expose of exactly how that broker intends to expose that property to the market.

Components of a convincing marketing plan will depend on the type and size of the property. A partial list of key components is below:

1. Signage-20-30% of all calls into a brokerage come from signs. If you don’t allow one, you are hurting your exposure. Having a lot of signs in the marketplace means that a call on an entirely different property can result in a showing and sale of your property.
2. Electronic Date Bases-seems like most prospective buyers/tenants who don’t call on signs start by searching the internet for their information. Specific data bases cater to commercial properties and are the “go-to” sites for data. CoStar and Loopnet are the kings. And there are others. Brokers pay huge sums to be able to put their listings in these services and search these golden resources for available properties. Some data bases are geared to brokers and others are aimed at the general public.
3. Company Web site-most companies today have a website where prospects can log on and do a property search. Visits to the website are driven by a well conceived marketing strategy and search engine optimization (SEO) plan.
4. Direct Mail-Some firms have their own company newsletters which are sent out via regular mail or electronically. Certain properties may warrant buying a targeted mailing list and doing a direct calling or mailing campaign to likely prospects.
5. Advertising-This has changed over the years. Newspaper display and classified ads are not big call generators anymore and tend to be expensive. Our advertising consists of selective trade publications when warranted (e.g. Food Industry News is a good one for restaurants). Beyond that we use e-blasts to proprietary email lists that are compiled and kept constantly updated. Many of these lists are aimed at brokers who specialize in the property type being marketed.
6. Trade Associations-Commercial real estate has numerous trade organizations. Mailing to and networking with the members of these organizations is an integral part of a complete marketing plan.
7. Public Agencies-Each property lies in a governmental jurisdiction (city, town, county). Most communities have community development staffs that monitor and actively promote commercial properties. Making sure properties are exposed to the correct personnel can make the difference in a broker’s success rate.
8. Publicity-sometimes referred to as “free advertising”, many publications accept press releases about properties of interest being marketed by brokers. Large or unique properties tend to get the most play.
9. Social Media-more and more brokers are using social media platforms to promote their activities and properties. LinkedIn, Facebook, Instagram, and X (formerly Twitter) are used in various ways by brokers varying levels of success.

Holding your broker accountable to implement a written marketing plan is key in increasing the odds of a property selling or leasing. No plan can guarantee that even a well orchestrated effort will be 100% effective. You will want to know the track record of any particular broker you are considering. What have they sold or leased lately in your market? Overall demand and proper pricing have considerable bearing on whether a marketing plan can be effective. But without a plan coupled with a broker with a track record, you are casting your fate to the wind.

By Bruce Kaplan, Senior Broker Associate with Premier Commercial Realty

FED RESERVE RATE DECISION - MORTGAGE INDUSTRY REACTS

Positive Signs at Last for the Mortgage Industry

It’s been a while since there’s been much to cheer about in the mortgage industry. Yet the decision by the Federal Reserve to leave rates at their current level of 5.25% to 5.5% sent waves of optimism across the landscape.

While the Fed doesn’t set mortgage rates directly, its decisions play a key role on their movement. The Fed’s hands-off stance at its latest meeting on Wednesday comes after 11 rate hikes from early 2022 to mid-2023 as it seeks to bring inflation down to 2%.

Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association, said the development bodes well for the mortgage industry and housing market in general.

Economist sees modest growth for housing, mortgage markets

“Additional rate hikes no longer appear to be part of the conversation,” the MBA economist said. “It is all about the pace of cuts from here. This is good news for the housing and mortgage markets. We expect that this path for monetary policy should support further declines in mortgage rates, just in time for the spring housing market.”

The upshot: “We are forecasting modest growth in new and existing home sales in 2024, supporting growth in purchase originations, following an extraordinarily slow 2023,” Fratantoni said.

The current 3% rate of inflation – close to the desired 2% the Fed has sought to achieve – figured prominently in the Fed’s calculus. Given the narrowing gap, the Federal Open Market Committee – consisting of members of the Board of Governors of the Federal Reserve System – opted to leave rates untouched this go-around.

CRE market stands to gain from Fed’s less aggressive rate stance

The Fed’s action – or lack thereof – at their meeting this week also bodes well for commercial real estate, suggested Xander Snyder, senior commercial real estate economist at First American. In its Summary of Economic Projections, the Fed revised downwards its expectations of the Federal Funds rate at the end of 2024 for the first time in more than a year, Snyder noted. The Fed’s expectation is a drop from 5.1% to 4.6%.

“This decline in rate expectations is welcome news for those who have waited with bated breath for signs that we are at peak fed funds rate,” Snyder said. “Indeed, [Federal Reserve Chair] Jerome Powell said ‘we acknowledge that we are likely at or near the peak rates for this cycle.’ With the Federal Funds rate currently at 5.3%, this roughly implies that the Fed is currently expecting two to three 25-basis point rate cuts next year.”

Such a scenario would offer some reprieve to the beleaguered CRE market, he noted: “Lower rates in 2024 would relieve some pressure in CRE credit markets, making it easier to finance commercial property purchases,” Synder said.

CBRE analysts forecast that elusive 2% inflation rate is close at hand: “CBRE expects inflation will decline toward the Fed’s 2% target next year,” analysts wrote in a report after the Fed’s meeting. “We expect that the Fed will gradually reduce rates to ensure that inflation remains in check. For the year, we forecast that the Fed will reduce rates by 100bps to a range of 4.25% to 4.50%.”

That doesn’t mean an immediate jumpstart in the capital markets, however. “We expect capital markets activity will not pick up until mid-2024,” CBRE analysts wrote. “However, recent declines in the 10-year Treasury yield could lead to greater-than-expected investment activity. Leasing activity should remain relatively resilient, although economic uncertainty will be a headwind.”

Melissa Cohn, regional vice president of William Raveis Mortgage, also envisions a future rate cut following the Fed meeting this week. “There are signs that the cumulative rate hikes are doing their job and working to bring the rate of inflation down to its goal rate,” she said. “High interest rates are impacting the economy and hopefully will bring inflation back to 2% next year. The next move by the Fed will be a rate cut at some point in 2024.”

Also responding giddily to the news – albeit in a wordless manner – was Wall Street. The Dow Jones Industrial average rallied more than 500 points after the Fed’s meeting, breaching above the 37,000 mark for the first time. The Dow closed at 37,090.24, exceeding a previous record set in January 2022.

By Tony Cantu, MPA Magazine 12/14/2023

DEMAND FOR RETAIL SPACE HITS RECORD HIGH IN THE US

Freestanding and Local Properties Drive Gains as Underperforming Malls Lose More Ground

While rising costs and shifting consumer spending patterns have hurt the bottom lines of many U.S. retailers this year, they kept their physical expansion going into the third quarter as the amount of retail space occupied across the country climbed to a historical high.

In total, demand for retail space rose by just under 15 million square feet in the third quarter of 2023, marking the 11th consecutive quarter that tenants filled more retail space than they vacated. With slightly more than 14 million square feet of net new retail space opening in the same time, the amount of vacant retail space in the U.S. fell to the lowest level seen since before the Great Recession.

Numerous sectors continue driving the growth in demand for retail space, including food and beverage, fitness, experiential, discount, health and beauty and medical services. Each of these expanding sectors has benefited from the pivot in consumer spending toward value, wellness and experiences.

While retail space market fundamentals are strong, more than a decade of minimal construction combined with persistent demand growth has led to a lack of institutional-quality space across many primary and even secondary corridors across the United States. As such, numerous retail tenants and tenant representatives have reported a lack of available space in desired locations as a factor weighing on the pace of demand growth, which has notably downshifted to more sustainable levels over the past year.

Even with this downshift, however, retail demand has risen by more than 69 million square feet over the past four quarters. Moreover, given a preference among retailers for efficient spaces closer to the consumer, most of this demand has flowed into freestanding or neighborhood retail properties. In total, these two retail property types accounted for 95% of all retail demand growth over the past year.

On the other end of the spectrum, demand for space within the mall segment fell by more than 4 million square feet over the past year. The mall segment remains highly divided and moving in opposite directions. Malls rated three-stars and below continue to lose tenants, while luxury outlets and top-rated four- and five-star malls have largely increased occupancy over the past year.

Total demand for retail space in malls rated as three-star and below malls has fallen by more than 45 million square feet since 2017 and is projected to fall further in 2024 as numerous tenants such as Foot Locker and Bath and Body Works accelerate their announced plans to relocate stores out of under-performing malls and into better trafficked, smaller centers.

By Brandon Svec, CoStar Analytics 12/10/23

9225 S. IL Route 31

Lake in the Hills, IL 60156

 847-854-2300 

www.PremierCommercialRealty.com