Illinois Real Estate Journal October : Page 1

VOLUME 15, NUMBER 5 ©2012 Law Bulletin Publishing Co. October 2012 DIRECTORIES: Real Estate Law Firms • Top Brokerage Firms • Green Sustainable/Products & Services • Multi-Family Finance p. 30 National events maintain air of uncertainty in healthcare industry By Brian Wasag he healthcare industry continues to op-erate under a cloud of uncertainty in spite of the Supreme Court ruling but ahead of a national election that could further and significantly alter the landscape. According to members of the Healthcare So-lutions group at Jones Lang LaSalle, hospital and healthcare system executives would be well-suited to look beyond the distractions of these national events and focus on the matter at hand, delivering the highest quality health-care in the most cost efficient manner. Even with the decision by the Supreme Court to uphold most of the Affordable Care Act, the landscape for hospitals and healthcare systems remains largely the same, according to Jones Lang LaSalle: • Hospitals are challenged by continued de-HEALTHCARE continued on Page 16 T Suburban office market on a slow pace toward recovery By Brian Wasag T he suburban office market saw absorption turn posi-tive again during the third quarter, as 204,518 square feet of vacant space was absorbed through leasing and sales activity, according to CBRE. And more than 1.1 million va-cant square feet has been re-occu-pied by tenants signing new leases and expanding their existing leases through the first half of 2012, according to NAI Hiffman. Colliers International notes that while some submarkets are bouncing back more quickly than others, landlords overall remain cautiously optimistic that the worst is over. “Everyone talks about this downtown migration and how no-body wants to be in the suburbs,” said Dan Svachula, agency leasing director at Cushman & Wakefield. “I think people are a little too quick to dismiss the suburbs. There’s always going to be a need and there’s always going to be strong demand for well-located buildings in the suburbs.” The North Suburban and East-West Corridor office markets wit-nessed the strongest demand in the second quarter, each absorb-ing well over 200,000 square feet, according to NAI Hiffman. Pat Gallagher, senior vice presi-dent of the Alter Group, said it is no surprise that the East-West Corridor has performed so well. “Historically in the suburban market, the East-West Corridor gets more than its fair share of ab-sorption,” he said. “Obviously, it’s the largest market as well. If you go back 25 years, the East-West Corridor every year is always the top performer as far as the strength and vitality of the market and that’s true today.” The recovery continues to be focused primarily on class A buildings, those with the best amenities and top-of-the-line fin-ishes, according to NAI Hiffman. While this demand has just begun to spread to class B buildings, conditions among less desirable class C buildings continue to de-teriorate. Svachula said there is a lack of institutional quality buildings in the 150,000-to 170,000-square-foot range. “There is a supply issue,” he said. “You have some vintage buildings. You have the class C buildings that were built in the 70s. That stuff is really going to continue to struggle.” The direct vacancy rate de-creased to 21.1 percent in the third quarter from 21.3 percent in the second quarter, according to CBRE. And while this is the fourth consecutive quarter of declining vacancy rates and positive ab-OFFICE continued on Page 20 PRSRT STD U.S. Postage PAID TWIN CITIES, MN PERMIT NO. 31515

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