For overall commercial real estate (CRE), value vs. price ratings were lowest for the Midwest compared to all other regions. However, values are still generally supporting prices in the region. The hotel and industrial sectors rated highest among all property types in the Midwest region of the U.S. for its value vs. price while the apartment sector fared the worst in that category. For return vs. risk, the industrial sector ranked highest while the retail sector was in last place among the property types. That’s according to a survey of regional correspondents conducted for the 4Q 2018 Situs RERC Real Estate Report, “Staying on Track.”
Here’s a closer look at some of the major metro areas in the Midwest:
Chicago’s employment grew 1.0% over the last 12 months, adding 48,380 jobs in 2018. At 4.0%, its unemployment rate is above the national average of 3.9%.
Chicago is one of the largest markets in the U.S. in terms of industrial space. The industrial market in the metro is driven by last-mile fulfillment centers, warehouses and distribution centers as e-commerce proliferates.
Kansas City’s employment grew 1.6% over the last 12 months, adding 17,845 jobs in 2018. At 3.0%, its unemployment rate is below the national average of 3.9%.
Kansas City’s office market continues to be steady. Speculative construction was active in the metro in 2018; however, demand is healthy enough that the new construction is not expected to greatly impact vacancy rates.
Columbus’ employment grew 1.8% over the last 12 months, adding 4,700 jobs in 2018. At 3.9%, its unemployment rate is the same as the national average.
Office lessees are occupying newer Class A spaces or are moving toward smaller space with better amenities in Columbus. The trend is true for the existing lessees and newcomers from out of state. While rent appreciation is strong in the market, construction costs are rising.
Last week in Newswatch, we looked at the West region of the U.S. In future weeks, we’ll look at the Situs RERC survey results for the South and East regions of the U.S.
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