‘Tis the season to be jolly…and buy commercial real estate. I know that sounds self serving, but it’s true. With interest rates still near all time lows and the vaccine about to be unleashed, we smell an opportunity. Take a whiff! Prices are still substantially below what it costs to build new construction. SBA will still do loans on owner occupied commercial/industrial buildings with only 10% down. You can buy for less than renting in many cases. Please call if we can be of help buying, selling or leasing.
I’d like to wish you Happy Holidays and Happy New Year. We are proud to say that 2021 will be our 30th year in business as Premier Commercial Realty. Many of us are glad 2020 is coming to a close. May 2021 be your best year ever!
Featured Properties
210 N. Seminary Ave., Woodstock, IL 60098
Industrial Under $30 psf!

14,420 SF masonry industrial building near the Square. 9-13' ceilings, sprinklered, 5 DIDs, 2,520 SF office. Needs some work. Selling as-is. Great value.

Brokers: Bruce Kaplan and Kevin Kaplan
1013 Tamarac Dr., Carpentersville, IL 60110
10% Down, Price Reduced!
Sale: $895,000 ($53.97 psf)
Lease: $7.95 psf Mod Gross

16,582 SF pre-engineered steel industrial building with 14-16' ceilings, 2 docks, DID, 26% office, 400 amp power and new $38,000 roof. Price reduced!

Brokers: Bruce Kaplan & Kevin Kaplan
12 E. Crystal Lake Ave., Crystal Lake, IL 60014
Downtown Crystal Lake Office
$2,000/mo ($18.71 psf) Modified Gross

For lease - 1,283 SF one story office or potential retail with 3 offices, conference room, and full kitchen. Close to train with monument signage.

Broker: Sharon Glasshof
2506-2510 Randall Rd., Elgin, IL 60118
Randall Road Retail
$32.00 psf NNN

3,700 SF of divisible retail space on Randall Rd with nearly 50,000 cars per day traffic counts. Just north of I-90.

Broker: Mike Deacon
2200 & 2205 Tech Ct., Woodstock, IL 60098
User / Investor Industrial Building
Sale: $1,099,000 ($73.27 psf)
Lease: $4,688/mo ($7.50 psf) Mod Gross

15,000 SF 2 unit industrial building with 7,500 vacant and 750 SF leased to 20+ year tenant. 18' ceilings, 1 dock, 5 DIDs.

Brokers: Heather Schweitzer
Recently Sold & Leased

8609 US. 12
Richmond, IL 60071
3,706 SF

Bruce Kaplan and Kevin Kaplan

345 Memorial Dr.
Crystal Lake, IL 60014
9,550 SF

Heather Schweitzer

3973-3975 Algonquin Rd.
Algonquin, IL 60102
3,632 SF

Heather Schweitzer

735 Schneider Dr. 2&3
South Elgin, IL 60177
8,000 SF

Kevin Kaplan & Bruce Kaplan

113 Newell St.
Woodstock, IL 60098
19,861 SF

Bruce Kaplan & Kevin Kaplan

5100 McCullom Lake Rd.
McHenry, IL 60050
4,444 SF

Bruce Kaplan & Kevin Kaplan
Chicagoland Office Market Update

2020 was a tenant's market: office rents declined by 2.7% in downtown Chicago, and by 1.7% in the suburbs. Total available space increased to a record 86 million square feet. Average vacancy is expected to increase to 13.5%.
On a brighter note, real estate stocks have surged after news of successful Covid-19 vaccine test results. Investors, landlords, and tenants are now planning beyond the pandemic.
Most tenants will maintain a physical office but will reduce their office footprints to take advantage of the benefits of limited work-from-home. A 2007 meta-analysis of 46 academic studies reveals that workers see greater autonomy and lower work-life conflict when working up to 2.5 days per week at home. However, beyond 2.5 days per week, there were more significant harms to relationships with coworkers. Beyond mere productivity, work-from-home poses challenges to innovation, mentoring, recruitment/retention and company culture.
Ultimately, the suburban markets may benefit from an exodus of tenants from the downtown area. The suburbs feature low-density, low-rise buildings better suited for social-distancing measures, and lower rents compared to downtown. The suburbs also feature lower cost housing, which has become even more important as people spend more time working in their homes.

Troy Golden, Golden Real Estate Group
Key Leasing Considerations for Commercial Landlords in Age of the Coronavirus

At its onset nearly nine months ago, the novel coronavirus forced federal, state and local leaders to consider measures necessary to prevent the virus’s inevitable spread. Those leaders imposed measures they calculated to balance minimizing the spread and harm of coronavirus to the national and local economies.
Whether those measures were effective in achieving those goals is a question for another day. However, now that coronavirus is currently a part of daily life, businesses have been considering what measures they must take. Like political leaders, they must also consider balancing the potential liability they may face for the spread of the coronavirus or other illness, the harm to their patrons and clients, and the harm to their bottom lines.

Commercial landlords are not exempt from considering the coronavirus or other pandemics in future leasing. It is unlikely a court would find a commercial landlord liable for the spread of a pandemic in their leased properties, except in rare circumstances. However, tenants may require landlords to provide upgrades to properties to ensure the safety of the leased premises.
This article considers whether landlords may be liable for the spread of a pandemic in their leased premises. It also discusses requirements tenants may have when negotiating the lease of commercial properties. It concludes with suggestions on how landlords should handle negotiating those requirements with tenants.
I am a commercial landlord. Will I be liable for the spread of illness in my leased premises?
A landlord’s liability for the spread of coronavirus or other illness would likely come from a negligence lawsuit. For a landlord to be found liable, a plaintiff would need to prove several things, including that the landlord owed a duty to protect others against the spread of illness, the landlord breached that duty, and that breach caused a person’s illness resulting in damages.

While not impossible, it is unlikely a court would find that a landlord even owes a duty to a tenant’s invitees to prevent the spread of illness. Courts often find that where there is a unique relationship between a plaintiff and a defendant, such as an employer and an employee, a duty is owed. However, a landlord probably does not have a unique relationship to its tenant’s invitees. A landlord is more likely to owe a duty to its tenant.
In the rare circumstance a court does determine a landlord owes a duty to his tenant or tenant’s patrons or clients, a court then has to also determine the landlord breached his duty of care and that breach caused the harm.

If a landlord acts reasonably by providing reasonably safe premises, a landlord should not be found liable for the spread of illness in the premises the landlord is leasing. However, even if the premises are not reasonably safe, it would be highly unlikely a court could link the spread of illness directly to a portion of the premises the landlord is responsible for. For example, it would be nearly impossible for a court to determine that it was the air filtration system that directly caused a person to contract coronavirus, as opposed to contact with an infected person also in the premises.

Overall, it is unlikely a court would hold a landlord liable for the spread of illness in a leased space. Nonetheless, tenants may still demand heightened safety features when negotiating leases. By providing some of those features, a landlord may further decrease its potential liability for the spread of coronavirus or other illness in leased space.

What are my tenants going to ask me for? And is it reasonable for me to provide those upgrades?
Tenants may be worried about their own liability, as they have a more direct relationship with those parties. For that reason, tenants may request several safety upgrades when negotiating to lease commercial space.

Upgraded air filtration systems
Because coronavirus — among many other illnesses — is an airborne illness, tenants may require upgrading the air filtration components in an HVAC system. Typically, standard commercial buildings utilize filters with a Minimum Efficiency Reporting Value (MERV) rating of 11. The higher the MERV rating, the more effective the filter is in filtering particles out of the air. For perspective, MERV filters range from 1 to 20. MERV 1 filters are typically pre-filters in commercial buildings, MERV 12 filters are typically found in homes and MERV 20 filters are used in operating rooms.

Upgrading filters to higher MERV ratings may be commonplace for tenants to request when negotiating leases in the future. Albeit not cheap to upgrade an entire filter system in a large commercial space, it not only adds a shield of protection for tenants and their patrons, but for the landlord if ever sued for the spread of coronavirus or other illness.

In lieu of or in addition to upgrading air filters, landlords may also consider supplementing with additional air filters such as High Efficiency Particulate Air units or UV-C (ultraviolet) lights. These additions help reduce specifically infectious particles in the air. Both options are relatively inexpensive and add a layer of protection for both tenants and landlords in the event of a lawsuit.

Cleaning contracts, specifications
Tenants may also have more stringent requirements when agreeing to cleaning specifications, which are typically addendums to leases. Tenants leasing premises in large commercial buildings with several other tenants, such as large office buildings, mixed-use developments and malls, may require more frequent cleaning of shared spaces. They may also require higher standards of cleaning, ranging from what needs to be cleaned (for example, elevator buttons) to what materials cleaning suppliers use.

What can I negotiate in my lease if I am going to make upgrades to my commercial premises?
What tenants may require may become expensive. Of course, a landlord can incorporate cleaning into common area expenses or additional rent. But, for expensive upgrades, a landlord may also negotiate for provisions that will limit its potential liability in the future.

For example, a landlord may negotiate to ensure a pandemic is explicitly not within the covered events within a force majeure clause. A vast majority of commercial leases currently contain force majeure clauses. However, whether a pandemic triggers a force majeure clause, relieving parties from their obligations under a lease, is a question that is currently making its way through the courts. A bankruptcy court in Illinois determined a restaurant lessor was partially relieved of the obligation to pay rent under a force majeure clause in a lease. Whether this will be the typical outcome is yet to be seen.

To avoid the uncertainty of how courts resolve this issue and having to litigate this issue in the future, landlords may explicitly exclude pandemic and stay-at-home orders from force majeure clauses. This exclusion may be a bargaining tool for a landlord when agreeing to additional safety provisions.
A landlord may also negotiate a provision waiving them from liability in the event a tenant is sued because a tenant allowed coronavirus or other illness to spread within the leased premises. These liability waivers are legal and found in many leases and license agreements, and may also include waivers from liability for illness resulting from a pandemic. Again, this provision may be a bargaining tool.

Commercial leasing in the future may look different, but the changes are manageable.
When leasing in the future, considering the consequences of a pandemic will be unavoidable for commercial landlords. While it is unlikely a court would find a landlord liable for the spread of coronavirus or other contagious illnesses through the landlord’s leased premises, tenants are sure to require heightened safety measures. By working with these tenants’ requests, landlords will be able to continue to provide high-quality commercial properties while also limiting their own potential liability.

By Addison Fairchild, Baird Holm - Click here to view article.
The Forecast: Disruptions Will Continue for Industrial Real Estate in '21

Predicting real estate is a thorny business. This time last year, for example, who would have foreseen the events that have unfolded following the spread of COVID-19? Nevertheless, there are a number of aspects of industrial real estate upon which we can make some educated guesses.

It’s certainly not breaking news that online shopping is having an impact on the industrial sector. By all accounts, however, e-commerce leapt ahead in 2020, pushing the trend out to where it would have been in five years’ time. Is this a momentary bump or a permanent elevation?

“From everything that we’ve experienced and that I’ve seen, this is a game changer. And it’s going to continue,” said Bob Smietana, CEO of HSA Commercial Real Estate. “I think people’s habits, and their demands in terms of distribution and receipt of goods, has changed forever.”

The pandemic has accelerated the direct-to-consumer phenomenon by reaching out to late adopters. Whereas many consumers had already turned to online shopping out of expediency, many more did so this year out of necessity. Those in the latter group now understand the mindset of the former.

“There is a convenience factor,” said Adam Roth, executive vice president – industrial services, NAI Hiffman. “As an example, my parents now have bought a couple things online which is, relatively speaking, a minor miracle.”

Supply chain
We all remember the Great Toilet Paper Shortage of spring 2020. That represents just one of numerous examples where the global supply chain was proven to be operating too close to margins. The disruption created by COVID-19 created chaos in the system that traveled from manufacturer to distributor to retail to consumer.

“Frankly, the distribution network got caught with their pants down,” Smietana said. “Globally, the amount of stuff coming from just one country, China, was somewhere around 30 to 40 percent.”

As a result of this experience, many companies have signaled an intent to draw down their overseas presences. This may result in a reshoring of jobs to the U.S. or nearshoring to Mexico. Roth thinks most firms will go with an “Asia-plus-one” model; companies will maintain an overseas manufacturing presence, but due to supply chain risks and the ability to respond quicker to the market, some manufacturing will come back to North America.

The “just in time” process of aligning manufacturing volume with perceived demand has proven to be a flawed system. Regardless of where a widget is made, more companies now understand that it’s better to have an overstock to meet a potential surge than to miss out on sales due to lack of inventory. As consumers now expect next-day delivery on most items, this means more distribution facilities close to population centers. In fact, CBRE projections posit that every $1 billion in new sales among e-commerce companies will culminate in an additional 1.25 million square feet of demand for warehouse space nationwide.

From a distribution perspective, Chicago is positioned extremely well for the disruptions that have come about because of the pandemic. But according to Roth, two regulatory changes could have an equal, if not bigger, impact on the industrial real estate sector.

The electronic logging device (ELD) rule, a federal mandate that passed in 2017, was designed to improve safety on the highways by requiring truck drivers to electronically record their hours on the road rather than keep physical handwritten logs. A two-year grace period closed last December and as a result, the truck driver pool has been reduced.

As of this January, the Federal Motor Carrier Safety Administration also maintains a drug and alcohol clearinghouse, tracking truck drivers’ failed drug tests if and when they move to a new carrier. As a result, there are currently about 35,000 truck drivers that are “suspended” due to drug and alcohol clearinghouse.
“I’ve been going to the same trade shows and dealing with my same contacts for over 25 years now, and I have found that whatever they’re complaining about in transportation—and particularly in trucking and rail—trickles down to the real estate departments about a year and a half later. I actually call it the ‘rule of 1.5.’”
If Roth’s rule of 1.5 holds true, then reduced truck driver capacity will really start to be felt in the industrial real estate world next summer. Fewer drivers mean higher shipping costs, so distributors will likely focus on transportation-adjacent assets even more than they have in the past.

Secondary and tertiary markets may see more forward point deployment centers. Major transportation hubs like Chicago, however, are going to see an exponential growth in big box multistate distribution centers as firms look to offset higher trucking costs.

Investor and tenant activity
Chicago is positioned extremely well for industrial growth as there is a deep pool of buyers and almost unlimited capital that wants to get into the industrial space. This seller’s market is causing escalation in pricing and a near frenzy over any investment opportunities that come to market.

“That, coupled with aggressive debt, is putting downward pressure on cap rates,” said Roth. “I don’t see any decrease in the amount of capital looking to get into the industrial sector.”

According to Smietana, the submarkets that were performing well going into 2020 should continue to do so in 2021, for the most part. The space-constrained O’Hare and Northern Lake County submarkets have both seen good absorption in 2020 and the same should continue next year. Though HSA was able to lease up a 750,000-square-foot development in Shorewood, Illinois to a full-building user, Smietana points to the I-80 corridor’s glut of spec inventory as a reason that this submarket may see slower absorption levels.
Overall, however, construction of spec warehouses should continue apace. HSA is currently building a three-structure, 1-million-square-foot project in Bristol, Wisconsin. The firm’s decision to continue development during the early onset of the pandemic when others pulled back has paid off as approximately 5 million square feet of nearby competing projects were delayed.

Roth noted a peculiar and unprecedented theme that developed in 2020, as there was relatively consistent demand for 30,000-square-foot spaces and under, as well as, conversely, 500,000-square-feet and above. He speculated that some smaller companies manufacturing COVID-related products like PPE are taking the smaller spaces while interstate distributors continue to gobble up the big box warehouses. Other firms that would typically occupy those mid-tier spaces may have taken a wait-and-see approach during the pandemic.

There will be other disruptions for this sector in the years to come, including wider use of robotics, autonomous shipping, additive manufacturing and more that we have yet to dream up. But for 2021 and the near term, e-commerce, supply chain and transportation trends will continue to drive industrial real estate decisions.

Matt Baker - RE Journals
Bruce Bossow x 12 / C: 847-732-3462
Bruce Kaplan x 20 / C: 847-507-1759
Heather Schweitzer x 15 / C: 815-236-9816
Heide Casciaro x 26 / C: 847-774-5660
Joe Billitteri x 21 / C: 847-833-5004
Kevin Kaplan x 13 / C: 309-261-0920
Sharon Glasshof x 14 / C: 847-533-6974
Brian Cowell x 18 / C: 815-529-7890
Mike Deacon x 28 / C: 815-814-6500

 9225 S. IL Route 31
Lake in the Hills, IL 60156