Illinois Real Estate Journal June 2012 : Page 1

VOLUME 15, NUMBER 3 ©2012 Law Bulletin Publishing Co. June 2012 Retail market continues to favor larger, national tenants By Brian Wasag Annual Supplement inside S pending by newly employed res-idents and a tempered pace of expansion by retailers will drive further improvements in the Chicago retail property sector, according to a retail market research report from Marcus & Millichap. However, the ac-tual pace of recovery remains unques-tionably subdued, the report noted. Charles Margosian III, senior vice president of Highland Management Associates Inc., said the Chicago re-tail market has improved slightly, with activity favoring larger tenants such as Verizon, AT&T and Star-bucks. “The tenant activity for the larger-type national tenants has started to pick up,” he said. “We’re continuing to see good tenant demand from the large big-box retailers, albeit discoun-ters who are generally looking for second generation space. “The market is still very quiet for the users of smaller spaces and neigh-borhood big-box centers because the depth just isn’t there. They can’t get financing. Unless they’re a national-type user with access to public mar-kets or large balance sheets, we’re not seeing franchisees or small business owners in this market because of a dearth of available funds.” Projected net absorption of 2.6 mil-lion square feet this year represents a positive trend, but equals less than half of the annual amounts recorded in the three years preceding the re-cession, according to the Marcus & Millichap report. In the city, vacancy has lingered around 7 percent for the last two years and will decline mod-estly in 2012. “I think in good markets that are in good locations, the space will get ab-sorbed,” Margosian said. “You may not see centers running at 90 percent-plus occupancies, but I would think that you’ll start to see centers in good RETAIL FEATURE continued on Page 8 Directories Top Contractors, Sub Contractors, Top Developers, Union/Trade Groups and Associations P . 30 Chicago hotel market benefits from increased convention activity, business travel By Brian Wasag A n improving convention business and an increase in business and leisure travel have given a boost to Chicago’s hotel market. For Chicago overall, revenue per available room (RevPAR), a metric that accounts for both occupancy and room rate, is expected to rise 8.3 percent this year, to $81.94, after an 8.8 percent rise last year, according to a forecast from Colliers PKF Consulting USA. RevPAR is forecast to rise another 9.1 percent in 2013. “The market has definitely been improving,” said Neil Freeman, chairman of Aries Capital. “I think HOTEL FEATURE continued on Page 20 PRSRT STD U.S. Postage PAID TWIN CITIES, MN PERMIT NO. 31515

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