Over the past 20 years, sale leaseback transactions have become a compelling tool for many companies to monetize their commercial real estate for a variety of reasons
Over the past 20 years, sale leaseback transactions have become a compelling tool for many companies to monetize their commercial real estate for a variety of reasons
The following provides insight into the Downtown South Bend Multi-Housing market:
For years, there had been relatively little market-rate multi-family (urban) housing options available in downtown South Bend. This lack of existing housing reinforced a negative cycle where the absence of market comparables – “comps” – inhibited lenders' ability to analyze real estate developers’ proposals for potential funding. In this absence of better information, the market was stalled.
In 2013, to help bridge the market gap, the City of South Bend engaged Zimmerman Volk Associates (ZVA), a housing market consultant company. ZVA has conducted over 450 market studies since 1988 and their reports are often cited as key milestones in several resurgent downtowns throughout the country. Validated by experience, the ZVA figures are often accepted by lenders as part of the due diligence for development projects in areas that are just beginning the redevelopment process.
The Zimmerman Volk Associates Report for downtown South Bend was published in July of 2013 and identified the market potential for newly introduced market-rate housing units that could be leased or sold in downtown. The ZVA study was part of a broader public policy agenda to support the reinvestment in downtown South Bend. Infrastructure improvements, new incentives and public space programming coincided with a renewed interest by the private sector to invest in downtown South Bend.
Bradley Company is providing an update on the status of rental apartment projects that have been developed or redeveloped in downtown South Bend since the publication of the 2013 ZVA study. Although the ZVA study also includes the analysis of multi-family for-sale and single-family attached for-sale properties, our analysis will focus solely on market rate multi-family for-rent projects.
The map below illustrates the focus area of this market study.
The target residential mix and optimum market position for downtown South Bend projected that at least 500 new dwelling units could be absorbed in less than 5 years. Of the 500 new units, 64.5% of them would be rental apartments. This means 322 new rental apartment units could be absorbed by July of 2018.
Target Residential Mix
In addition, based on ZVA’s capture rate analysis (how fast units will lease/sell), 66 to 98 new rental multi-family units could be absorbed annually between 2013 and 2018 in downtown South Bend. This projects that a total of 330 to 490 new rental multi-family units could be absorbed by July 2018.
Annual Capture of Market Potential
As of September 2017, 136 of the 146 completed units are occupied, representing only a 9% vacancy for new apartment units. Overall, these new developments are performing very well and, thus far, indicate that more people are moving into the downtown core of South Bend. With 229 apartment units expected to be completed from now to the end of 2018, we have more time to see if this trend will continue.
Remembering that the reported capture rate of apartment units could be 330 to 490 units by July 2018, downtown South Bend’s new apartment developments sit just above the bottom threshold at 375 expected units in 2018, with another 312 apartment units planned or proposed. As the reported July 2018 date is still a year away, we will have to see where the market is performing at that time, but as of now, downtown South Bend is proving to be "a place to be."
DTSB Project List
To discuss additional details regarding this study update, please feel free to contact Bradley Company's Senior Market Research Analyst, Steven Heatherly, at email@example.com or (574) 855-5710.
*ZVA = Zimmerman Volk Associates
Farmland moving out of agricultural production is referred to as transitional land, and our marketplace has many examples of this product category and perhaps more importantly, the potential for this development.
Northwest Indiana is known for its industrial strengths, but projects of all types are taking place in the region. Below we’ve highlighted five major projects in the works. For additional insight, check out our Northwest Indiana Market Study.
Two major projects are potentially in store for the South Shore Line system, totaling approximately $905 million. Referred to as the “West Lake Corridor” and “Doubletrack NWI”, this project combination is expected to improve traffic congestion, travel times, safety, etc.
West Lake Corridor
The $290 million Doubletrack NWI Project proposes to expand the South Shore Line from a single track to double tracks between Gary and Michigan City, Indiana. A major component of the project would include moving the street-running tracks in Michigan City, making the area significantly safer due to trains no longer traveling in the same roadway as drivers. Additionally, there would be improvements to five passenger stations. Benefits of this project would include faster travel times, more trains operating (specifically during rush hour), and increased safety.
The $615 million West Lake Corridor Project would be an 8-mile southern branch extension of the existing South Shore Line between Dyer and Hammond, Indiana. The overall goal of the extension is to create easier access to high-growth areas in Lake County. Benefits of the project would include faster, less expensive, and more reliable access to higher-paying jobs in the Chicago area, relief of existing and anticipated traffic congestion, reduction of vehicular emissions, and more. For a detailed breakdown of the project, check out the project factsheet.
U.S. Steel has planned to invest over $50 million in its Gary Works steel mill this year as it seeks to make operations more efficient to capitalize off higher steel prices. The company already invested $23 million into restoring hot strip mills at Gary Works, and an additional $33 million worth of improvements are on the way.
$23 million toward restoring hot strip mills
$26 million toward improving reliability of the #6 blast furnace
$6 million toward the “Casters A Line Turret Bearing”
$1 million toward the 84” Pickle Waste Liquor Line
A $19.5 million upgrade is planned for the Port of Indiana – Burns Harbor. The expansion would include a new cargo terminal, 4.4 miles of rail, two new rail yards, additional usable dock space, a truck marshaling yard, extension of a retailing wall, and repaving of a dock apron. These investments will allow the port to increase its multimodal freight-handling capabilities to meet anticipated demand. "Indiana has one of the premier inland ports systems in North America. This project will increase our state's ability to attract and grow multimodal business in Northwest Indiana," said Indiana Governor Eric Holcomb.
Centennial Village is part of a dramatic remake planned for the intersection of Calumet Avenue and East 45th Street in Munster. Various components are planned for the village, including four restaurants and two multi-story mixed-use buildings with ground floor commercial space, three levels of condominiums and underground residence parking. A Spring Hill Suites by Marriott is currently under construction on the site, as well. The entire project is expected to take 7 years.
This new four-story multi-use hospital will specialize in care and rehabilitation for stroke patients. The first and second floors will house emergency care, imaging and physical therapy facilities, physician offices, outpatient clinics and a women’s care center. The remaining floors will house inpatient care and neurological rehabilitation. The new hospital will be a member of the Community Healthcare System that includes Community Hospital in Munster, St. Catherine Hospital in East Chicago and St. Mary Medical Center in Hobart. A completion date has not yet been set.
For additional insight, check out our Northwest Indiana Market Study.
Indianapolis sets the tone for overall developmental happenings in the Midwest. Below we've highlighted five of the largest, most impactful projects happening in the Indiana capital. For information regarding additional projects in the Indianapolis area, check out our 2017 Central Indiana Market Study!
This $260 million development proposed by Hendricks Commercial Properties will feature a 136-room West Elm hotel, an eight-screen cinema, office and retail space, and apartments and condominiums – totaling approximately 1.2 million square feet. The project has been dubbed "Bottleworks" in reference to the former Coca-Cola bottling plant on the site. It's expected to take five to 10 years to complete and will be constructed in five phases, with Hendricks tackling the hotel first. The latest news on this project can be found here.
157 apartment units; 40 condominiums
170,000 square feet of office space
114,000 square feet of retail space
~1,000 space parking garage
When complete, this $121 million project will be the tallest mixed-use luxury residential building in Indiana. Special amenities include a sky terrace on the top level, resort-style pool and sundeck, a bike repair shop and electric car charging station. The project is anchored by a 40,000-square foot Whole Foods Market. Although no project completion date has been announced, Whole Foods is expected to be settled in place by the end of 2017.
28 stories; 300 feet tall
292 luxury apartment units
648,561 total square feet
525 space parking garage
This massive, 6 million-square-foot project will feature flexible research space for advanced industries (i.e. technology, advanced manufacturing, life sciences), creative industries and the arts, ample public space, a mix of housing opportunities, and retail and office space for entrepreneurs and established companies. The anchor tenant will be the Indiana Biosciences Research Institute, a $360-million independent research institute addressing metabolic disease and poor nutrition. It will take 20 years to get 16 Tech to full development with all plans and amenities. For further insight regarding the scale and impact of this project, see here.
Research/innovation space: 715,000 square feet
Residential: 450,000 sqauare feet
Retail: 150,000 square feet
Hotel: Up to 180,000 square feet
Indianapolis firm Ambrose Property Group plans to redevelop the former GM Stamping Plant into a $550 million project set to include a hotel, apartments, offices, retail space and greenspace along the river. The entire project is expected to take 15 years to complete, with 535,000 square feet of mixed-use construction occurring within the first five years. "Development of the former GM Stamping plant is a unique opportunity for Indianapolis -- because of its size, location, and quality of place, it is positioned to attract the kind of development that will benefit our community for generations to come,” said Mayor Joe Hogsett.
535,000 square foot first phase
2.7 million square feet upon project completion
The $35 million Sports Legends Experience will feature 7 acres of outdoor activity space and half-an-acre of indoor activity space. The project is expected to include an 18-hole miniature golf course, small-scale baseball field, small-scale ice hockey rink (made of an artificial surface), small-scale football field, tennis courts, and pedal-car racetrack. This project is the largest investment at the Children’s Museum in 40 years and is projected to open in Spring 2018. A University of Michigan study suggests it should have a $130 million economic impact over five years.
Like many other large cities in the Midwest, Fort Wayne is undergoing various development and redevelopment projects. We have highlighted a handful of the biggest and most exciting projects below. For insight regarding additional projects in the area, check out this video or refer to our 2017 Northeast Indiana Market Study.
The $300 million redevelopment of Fort Wayne’s General Electric campus will revitalize the 32-acre campus and its 17 vacant buildings, encompassing 1.2 million square feet. “Electric Works” will be the new name of this mixed-use innovation district. The project is set to include residential, retail, office and community space, along with restaurants, a hotel, and a tract for a university (although no universities have officially claimed interest in the territory as of yet). Construction is set to begin as early as fall 2017.
The $1.2 billion expansion of Fort Wayne’s GM plant is the highest ever investment at the Fort Wayne site, and one of the largest commitments to any of its facilities nationwide. The expansion will add 1.6 million square feet, increasing the footprint of the complex by 50%. The expansion is expected to be complete in late 2018 or early 2019.
A proposed $105 million three-level sports arena could be coming to downtown Fort Wayne. The structure is described as a multi-use facility with the capability of housing trade shows and other types of events in addition to sporting events. The arena would also be connected to the Grand Wayne Convention Center, increasing overall event capacity in the city. To view additional plans and renderings, see here.
Fort Wayne will soon see development on the ~$20 million riverfront initiative project along the St. Mary’s River. Highlights of the plans include a promenade, park pavilion, event lawn, urban bioswale, interactive sculptures, urban riverfront terraces, educational water features, an elevated boardwalk, a dock, and a children’s play area. The project is expected to be completed by late 2018.
The $40 million Skyline Tower project, developed by Great Lakes Capital, is the final piece of an overall downtown development initiative featuring Ash Skyline Plaza. The tower will offer apartments as well as office space, with Ruth’s Chris Steakhouse committing to anchor ground-level retail space. The project is set to be completed by summer 2018.
Grand Rapids is booming with new development and redevelopment projects. The once soot-covered city from decades of coal heating is now a West Michigan metropolis. Currently there are nearly 20 projects under construction worth approximately $584 million, and more than 20 projects proposed or in the planning stages worth approximately $600 million, according to the Grand Rapids Business Journal. To view a complete interactive map of these projects, see here. Below we’ve selected 5 of the most impactful projects to highlight.
A nine-screen movie theatre is awaiting groundbreaking in the downtown Arena District, but the theatre isn’t the only component set to occupy the space. 616 Development and Loeks Theatres Inc. (aka Celebration! Cinema) are partnering on the $100 million project that will include retail space, apartment units, a piazza and parking ramp. With a significant shortage of downtown parking, the 900-space parking ramp will be beneficial to the city and provide another option for drivers in the area. A study conducted by Downtown Grand Rapids Inc. found that throughout the first 10 years upon completion, Studio C should generate $369 million in economic benefits, not including the cost of construction, short-term construction jobs and income tax receipts.
Nevada-based technology firm, Switch, selected the former Steelcase Pyramid as the location for its massive SuperNAP data center. When complete, the $5 billion Michigan SuperNAP will be the largest data center in the Eastern U.S. and will be powered by 100% green energy. The renovation of the Pyramid itself is complete, and construction on one of three additional structures is also complete. The project is expected to be in continuous expansion for at least 10 years, making it a constant source of construction and growing employment.
A parking lot located in the Historic District of Grand Rapids will soon be developed into the city’s tallest building. The proposed 40-story, triangular highrise will include a mix of retail space, hotel rooms and market-rate apartments. Included in the project will be the renovation of a nearby parking lot, which will be developed into a parking ramp and connected to the tower via skywalk. No date has been set for groundbreaking, nor has the total cost of the project been announced.
The site of the former Grand Rapids Press building is now home to the $88.1 million Michigan State University Grand Rapids Research Center. Research for the College of Human Medicine will focus on such topics as Parkinson’s disease, Alzheimer’s disease, autism, cancer, genetics, and women’s health and reproductive medicine. The project is finalizing construction as workers prepare to load in laboratory equipment.
The West end of downtown Grand Rapids is anticipating a new mixed-use development that is set to include a Meijer-affiliated grocery store, although it will not assume the name of the successful Midwest chain. Construction for the “Bridge Street Market” is expected to break ground on June 26th of this year with first phase work scheduled to be completed by fall 2018.
The South Bend–Elkhart Region is undergoing tremendous transformation as various projects push beyond the planning stages and come to fruition. South Bend is gaining more and more recognition for its “up and coming city” status, and both local and distant investors are targeting the area to contribute to, and benefit from, this movement. Elkhart’s recent RV boom has been catalytic for the city and surrounding area’s economic condition, with momentum expected to continue for the foreseeable future. The region’s spike in development and redevelopment projects should greatly benefit the local economy in years to come and is deserving of a closer look. The following will highlight some of the biggest projects in the South Bend-Elkhart region.
The Smart Streets initiative is a catalyst for over $200 million worth of investments in downtown South Bend. The project is aimed at enhancing the quality of life in the downtown area by fostering a more vibrant atmosphere and attracting economic development. Conversions of one-way to two-way streets throughout downtown, combined with multiple streetscape improvements have contributed to the vision of a vibrant downtown.
Main Street Row
Chase Building / Aloft Hotel
JMS Building / Studebaker Lofts
At the heart of the Renaissance District, the former Studebaker plant is being redeveloped into the Midwest’s largest mixed-use technology campus, converting 1.3 million square feet of industrial space into office, co-working, residential, retail, conference and entertainment space. “While the interior renovation will drive economic impact, transforming the facade of this massive, historic building will play a significant role in changing the hearts and minds of our city,” said Jacob Titus, local entrepreneur and founder of West.SB
The new River District near downtown Elkhart includes a $60 million aquatics and fitness center, $29 million luxury apartment complex, streetscape improvements and other mixed-use developments. The plan is focused around a 155-acre piece of land that is encompassed by the St. Joseph River to the North and the Elkhart River to the South and West. Access to rivers, walkability, greenspace and diversity of users are a few of the key components of this plan that aims to transform the East Jackson Boulevard corridor. “This is an unprecedented amount of development,” said Mayor Tim Neese in an Indiana Economic Digest article.
The $4.35 million infrastructure project to create a new industrial park in rural New Carlisle is projected to be completed by the end of May 2017. Once completed, the project will open over 1,000 acres for development. Already underway in the park is the first phase of the St. Joseph Energy Center, Toyota Group’s and Ares Private Equity Group’s $500 million project, which is expected to be completed by March of 2018. The output from Phase I of the St. Joseph Energy Center will serve approximately 450,000 households, and is expected to generate approximately 500 jobs during the construction phase and 25 permanent jobs when it comes online in the first half of 2018.
GrandView Flats and Townhomes establish a new standard of residential life, bringing together urban sophistication and suburban luxury all while sitting at a prime Granger location. This $100 million mixed-use development features two and three-story residential and commercial buildings. Sixty residential units became available last spring, however there will be over 200 total units upon completion of the project by 2020.
The Studebaker Corporation was a longtime driver of the South Bend economy. On that site today, the developing Ignition Park is striving to meet the needs of innovators and entrepreneurs. Flexibility is the key to serving companies on that growth spiral. HeadQuarters is a co-working space that opened in late 2016, and the Notre Dame Turbomachinery Laboratory is a $36 million facility working with industry and government partners....
In 2016, the University Park Trade Area (UPTA) benefitted from the rejuvenation of Wilshire Plaza. Six tenants leased over 103,446 square feet in the shopping center, increasing the occupancy rate from 75 percent in 2015 to 96 percent in 2016. The plaza brought in multiple regional and national quality tenants such as Fresh Thyme, SkyZone, DSW, and HomeGoods. The revitalized shopping center, along with several other retail projects, has helped renew national interest in the Grape and Main corridor.
The retail market in Elkhart County has picked up over the last couple of years. This uptick in development is in part due to an increase in disposable income for the county, driven by high employment in the RV industry. Shoppes on Six, an 115,000-square-foot development completed in 2015, created a new shopping destination for the entire Elkhart trade area.
Concord Towne Center, previously known as the Concord Mall, began plans in 2016 on a $60 million overhaul, transforming the existing indoor mall into an open-air, mixed-use destination. The project is reportedly expected to generate $150 million to $200 million annually for the Elkhart and Michiana region once completed.
The Smart Streets project, while controversial and still ongoing, has reached a point where we can see some early returns based on the projects that were waiting in the wings for news on whether it would be approved. So far, there have been several positive outcomes:
Continued observation will be needed to see the full extent of how the project will impact South Bend's future.