Solutions Newsletter
October 2016
Featured Properties
Huge Bar/Restaurant With Video Gaming!
11419 S. Grant Highway, Marengo
Marengo area 9,628 sf bar/restaurant with living quarters and outdoor service bar/patio with volleyball courts.  Nearly 5 acres.
Sale: $1,100,000 ($114.25 psf)
Bruce Kaplan, Tina Kropke, CCIM & Kevin Kaplan

Bank Owned - Buy it Now!
7428 Hancock Drive, Wonder Lake
3,098 sf free-standing masonry commercial building formerly used as small engine repair/sales/service shop.  10x10 drive-in door.  Fenced storage. Fantastic deal!
Sale:  $199,000  ($64.23 psf)- PRICE REDUCED!
Bruce Kaplan & Michael Williamson, CCIM

Industrial Income Property
5210 S. Illinois Route 31, Crystal Lake
Crystal Lake/Prairie Grove - 4,000 sf free-standing steel building on .5 acre on Route 31 with 25,000 cars per day.  6 overhead doors, triple basin drains, small office.
Sale: $375,000  ($93.75 psf) - PRICE REDUCED!  
Bruce Kaplan & Kevin Kaplan

Potential Multi-Tenant Industrial Building
740 Eastgate Road, Crystal Lake
Crystal Lake - 9,445 sf free-standing steel industrial building with multi-tenant potential.  7 drive-in doors, triple basin drains, 200 amp, 13'6" - 16' ceilings.
Sale: $479,000 ($50.71 psf) - PRICE REDUCED!
Heather Schweitzer

Re-Development Play
11117 S. Church Street., Huntley
3.13 acres in town containing a former 33,000 sf brick factory building. Could be mixed use, retail, office or multi-family repurpose opportunity.  Clean Phase II report.
Sale:  $600,000 ($4.40 psf - land value) - PRICE REDUCED!
Heather Schweitzer & Tina Kropke, CCIM

Recently Sold and Pending
534 Congress Circle, Roselle
30,550 SF Industrial Building
Sold for $1,200,000 
Joe Billitteri

1309 North Avenue & 283 Elmwood, Crystal Lake
Retail Convenience Store
Sold for $950,000
Bruce Kaplan
684 Tek Drive, Crystal Lake
13,840 SF Industrial Building.
Sold for $750,000
Bruce Kaplan represented the Buyer
796 Tek Drive, Crystal Lake
12,000 SF Industrial Building
Sold for $680,000 
Bruce Kaplan
748 Tek Drive, Crystal Lake, IL
11,685 SF Industrial Flex Building
Sold for $630,000 
Heather Schweitzer & Bruce Kaplan 
37W437 Huntley Road, Dundee
2,158 SF Office/Church Building
Sold for $300,000 
Tina Kropke, CCIM and Mike Williamson, CCIM 
By:  Bruce Kaplan, Premier Commercial Realty

Premier is honored to be involved as listing broker for one of the largest commercial deals in the area.  The Parkway Bank hired us to market some commercial land in Cary that the bank took back from a party in a foreclosure.  A particular 27 acre parcel on Three Oaks Road caught the attention of neighboring giant, Sage Products, who was itself bought this year by Stryker Corp.  Sage is one of McHenry County's largest employers and reputedly one of the best places to work.  It is also one of the most charitable and community involved companies in the County

Hurdles to getting this expansion project to happen include vacating (closing) the road (Sage Parkway) so that they can build where the road now is.  The Village owns the road but the land for that road was donated to the Village when the initial Sage project was conceived in 2001.  The other hurdle is to change the zoning from B-2 to BP (Business Park).  The Cary Village Board will vote on the re-zoning on November 1 at their regular meeting.  As listing broker for the property, it is hard to conceive why the Village would not approve this beneficial project. Making productive use of a huge parcel that would eventually house a 810,000 square foot addition and employ 350 more people by 2021 is in the best interest of the Village.  Sage currently pays approximately $700,000 a year in real estate taxes.  When complete, the entire Sage owned property will generate well over $1 million in real estate taxes to all the taxing bodies.  In spite of that, several residents of the adjacent Cambria subdivision voiced objection to the project at an October 13 zoning hearing citing truck traffic, noise, intrusive lighting and potential damage to property values.  Some expressed concern about what would happen if Sage pulled out of Cary and left us with a million plus square foot vacant monstrosity like Motorola in Harvard.  Sage appears to be committed to work with the neighbors to minimize any potential negative impact to the adjacent properties.  It's a joy to see them so sensitive to the nearby residents' concerns. They truly want to be good neighbors.

If all goes well, the first phase of this project will be done in 2018 and the second phase by 2021.  Some people think the site should be reserved for a retail project. From a broker's standpoint, the traffic counts on Three Oaks are not likely to attract a major retailer.  The demographics in Cary have also been a deterrent to retail development meaning we just don't have a large enough population to compete with the likes of Crystal Lake, McHenry, Algonquin, Lake in the Hills and Woodstock.  Cary needs more residents to attract substantial retail development.

Congratulations to Cary for attracting Sage to the Village when they could have expanded just about anywhere.
Q2 2016 Apartment Cap Rate Trends
By: Ryan Severino, REIS

Just when we think the apartment market can't get any stronger, we hit the equivalent of 88 miles per hour and see cap rates  reaching a new record-low level. We observe that the mean cap rate, illustrated by the dark blue line in the chart, declined by 10 basis points to 5.7% during the second quarter. The market continues to reach record-low levels and the average commercial real estate cap rate has now been below 6% for all of 2016.

It remains remarkable that this far into an economic expansion that investors are willing to pay such a premium for apartment properties. Certainly, the low-yield environment around the world plays a big role, especially given the relative strength that we have observed in apartment fundamentals. But ultimately what this shows is that investors, despite new supply growth, continue to be bullish on the apartment sector, even if only on a relative-value basis.

As the mean cap rate has continued to fall over time, it is unsurprisingly pulling down the 12-month-rolling cap rate, depicted as the red line in the graph. Due to the strong downward trend in the market, that metric has now fallen below 6% for the first time ever, reaching 5.9% during the second quarter. This demonstrates that these sub-6% cap rates are a longer-term, durable phenomenon and not a one-quarter anomaly. 

The downward trend in  cap rates for multifamily properties  is also dragging down the historical long-term average cap rate, shown as the dashed line in the chart, which has now fallen to 6.5%. As I mentioned last quarter, the environment remains ideal for apartment cap rates to remain at or near historically low levels and possibly fall even further. Nothing fundamental has changed between this quarter and last quarter to alter that view.  While I am hearing anecdotally from clients that they are starting to balk at such high apartment prices, that looks more like the exception these days based on the cap rates for properties in the market that are actually trading.

Five Tips on the Reality of Funding a Commercial Real Estate Project
By: Necati Can, CEO at ECCONBASE-IPM

Whether seeking funding to acquire a commercial building or for a new construction project, sponsors should understand the realities of funding their project early in their planning.

Premier Commercial Realty
 industrial  | retail  | office | land 
business  | investment

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

Bruce Bossow, x 12 847-732-3462
Bruce Kaplan, x 20  847-507-1759
Heather Schweitzer, x 15  815-236-9816
Heide Casciaro, x 26 847-774-5660
Joe Billitteri, x 21  847-833-5004
Joe Heffernan, x 18  847-302-5550
Tina Kropke, CCIM, x 14  815-970-0546
Michael Williamson, CCIM, x 25  847-732-0504
Kevin Kaplan, x 13  309-261-0920