Golub & Company Opens Denver Office, Expands Presence Through Western U.S.

International real estate investment and development firm Golub & Company, headquartered in Chicago, announced today it will establish a Denver office focused on multifamily and office acquisitions across Colorado and the Western United States. The move builds on the company’s decades-long presence in the region with a long-term commitment to growing and managing a Western U.S. portfolio from this new office. Laura Newman, a third-generation member of the Golub family business, has moved from Chicago to Denver, and the company is actively searching for a senior-level real estate executive to oversee acquisition and investment activities.

“We’ve seen tremendous growth across the Rocky Mountains and areas west over the past two decades and believe the fundamentals will stay strong long-term,” said Michael Newman, principal, president and CEO of Golub & Company. “Establishing an on-the-ground presence in Denver will allow us to acquire and operate both value-add opportunities and core-plus properties that will expand our portfolio in the Western Region.”

Golub & Company owns and manages a robust portfolio of office and residential properties across the U.S. and in Central Europe. In Colorado, Golub is part of the joint venture that owns One Aspen, a residential townhome development. The firm entered the Colorado real estate market in the late 1980s, and past investments include properties in Denver and Snowmass. Golub also is involved in developments in Arizona and in the California Bay Area, including the Park Tower at Transbay, which was recently leased by social media giant Facebook in a landmark deal.

Golub is committed to bettering the communities in which it works through thoughtful investment, and has been recently honored with the Chicago Architecture Foundation’s Corporate Award, Loyola University’s Illinois Family Business of the Year, and the San Francisco Business Times’ “Deal of the Year.”

“I’m pleased to be setting down roots for Golub & Company in Denver and excited to become immersed in its local real estate community,” said Laura Newman. “Denver is a vibrant and thriving city, and the ideal place from which to continue to grow our business across the west.”

Laura Newman previously held roles in Golub & Company’s Commercial Leasing group and on its Portfolio Management Team, focusing on the execution of capital projects, major renovations, large tenant improvement projects and energy initiatives. She and the to-be-hired senior executive will be charged with generating new investment opportunities and cultivating related business relationships.

Link: Golub & Company Opens Denver Office, Expands Presence Through Western U.S.

Buck, Golub land major tenant in San Francisco

(Bloomberg)—Facebook is constantly expanding in its Silicon Valley hometown of Menlo Park, Calif. Now it’s making a bigger push into San Francisco.

The social media giant reached a deal last week to take all the approximately 756,000 square feet of office space at the newly constructed Park Tower at Transbay, according to the asset management arm of MetLife, one of the building’s developers, along with Chicago’s John Buck Co. and Golub & Co.

It’s the second big step into the city for Facebook following an agreement last year at 181 Fremont, another new tower. “We look forward to joining the San Francisco community as we gradually grow into MetLife Investment Management’s Park Tower,” John Tenanes, Facebook’s vice president of global facilities and real estate, said in an emailed statement. “This new space will support our growing workforce as we continue to attract strong talent.”

Giant tech companies have been eager to lease offices in cities in recent years to recruit employees who want to live in urban areas, rather than requiring them to commute to a suburban campus. That’s fueled intense competition for large blocks of space in the new towers that are opening in cities such as San Francisco and Seattle.

Microsoft’s LinkedIn and Alphabet’s Google are among the firms that have taken space in San Francisco buildings, even though their headquarters are to the south in Silicon Valley. Facebook currently buses employees from all over the Bay Area to its Menlo Park campus, which is about 30 miles (48 kilometers) from San Francisco.

Smaller companies are increasingly finding it difficult to operate in the Bay Area, where Facebook and Google are snapping up office space, offering higher salaries to the best engineers and quickly jumping on the most lucrative product ideas.

San Francisco is one of the hardest office markets to find space, with a vacancy rate of just 7.6 percent at the end of the first quarter, Robert Sammons, head of Northern California research for broker Cushman & Wakefield, said in an interview earlier this week, after media reports of a possible deal.

“This tightens the market dramatically,” he said. “It’s the last big block of space that’ll be available until the early 2020s.”

The 43-floor Park Tower is just blocks from the San Francisco Ferry Building in the heart of the city’s South of Market neighborhood. The building was leased by Jones Lang LaSalle.

“Facebook has made remarkable strides in connecting and building communities all over the world,” said Joel Redmon, San Francisco-based managing director for MetLife Investment Management’s real-estate business. “We hope that Park Tower will help Facebook continue their mission and that their local presence will play an important role in building the local San Francisco community.”

Link: Buck, Golub Land Major Tenant In San Francisco

Developers plan city’s second-tallest skyscraper next to new Tribune Tower condos

Developers on Monday unveiled plans for Chicago’s second-tallest skyscraper, a tapering shaft of metal and glass that would soar above historic Tribune Tower, resemble the top of Batman’s black mask and be only 29 feet shorter than Willis Tower.

If completed, the $1 billion-plus project to repurpose Tribune Tower and build a skinny, 1,422-foot high-rise just northeast of it would bring more than 700 residences and 200 hotel rooms to an area north of the Chicago River.

The developers, Chicago-based Golub & Co. and CIM Group of Los Angeles, will seek a rezoning to build the skyscraper, which would supplant Trump International Hotel & Tower as the city’s second-tallest. The designs were revealed at a community meeting Monday night.

In June, the Chicago Tribune will move from its neo-Gothic Michigan Avenue complex, its home for nearly a century, to One Prudential Plaza. CIM Group and Golub bought the Tribune property from Tribune Media, a separate broadcasting concern, for $240 million in 2016.

In the first phase, their plans call for 163 condominiums at Tribune Tower, which would retain its familiar name. The first units would be occupied in early 2020.

Plans for the new tower, which could start construction in late 2019, call for a 200-room hotel, 439 rental apartments and 125 condominiums in its upper reaches. The skyscraper would rise from what is now a surface parking lot behind Tribune Tower.

In contrast to the historic skyscraper’s filigreed crown of flying buttresses and pinnacles, the top of the new one would consist of curving glass walls extending beyond the building’s occupied floors. It would resemble the top of Batman’s mask — an unintended likeness that Golub Executive Vice President Lee Golub acknowledged in an interview before Monday’s meeting.

Asked why he didn’t push for another 30 feet in height, which would have made the proposed skyscraper Chicago’s tallest, Golub replied that height was a secondary priority to the ideal mix of units and floor heights.

“It just turned into what it is,” Golub said.

“Why didn’t we do it?” he added, addressing the prospect of being the tallest in town. “We don’t have that big of an ego.”

As the saga of the unbuilt Chicago Spire shows, it is easier to announce plans for a supertall skyscraper than to finance and build one. Complicating matters for Golub and CIM Group, other developers already have mega-towers underway or approved, most notably the 1,191-foot Vista Tower, a hotel and condominium high-rise under construction across the Chicago River from the Tribune site.

The bigger question, nearly a decade into the city’s post-recession real estate boom, is whether the expansion will still have steam more than a year from now, when the new tower is scheduled to start construction.

Undeterred by the risks, Golub cited the project’s unique location, expressing hope it would lure international buyers.

“We are on Michigan Avenue. We are on the river. We are in the center of everything here,” he said.

Condos in both buildings would sell at prices at or near the top of the Chicago market — more than $1,000 a square foot, Golub predicted. With condos in the new building and Tribune Tower expected to average 3,000 square feet and 2,700 square feet, respectively, that means many condominiums would fetch prices in excess of $3 million.

In January, when the Tribune reported that plans for a supertall skyscraper next to Tribune Tower were in the works, Ald. Brendan Reilly, 42nd, indicated a general openness to the project’s height but reserved the right to press for design changes and lower the number of parking spaces. At the time, the plans called for the new skyscraper to rise 1,388 feet, a foot shorter than Trump Tower. Since then, the plans grew, though not, the developers insisted, because of a desire to top the tower built by the current president.

About 400 people attended Monday night’s community meeting at the Sheraton Grand Chicago hotel. In opening remarks, Reilly stressed that the developers’ proposal is “aspirational” and could change.

“This marks the very beginning of our public process,” he said.

The conversion of Tribune Tower is expected to cost more than $500 million, with the development of the new tower easily eclipsing that figure.

The new tower plans were shaped by Adrian Smith + Gordon Gill Architecture, whose portfolio includes a tower under construction in Saudi Arabia that will, if completed, eclipse Dubai’s Burj Khalifa as the world’s tallest building.

The designers of the Tribune Tower conversion are the Chicago firm of SCB, or Solomon Cordwell Buenz, which specializes in new condominium high-rises. Vinci Hamp Architects of Chicago are the historic preservation consultants.

As part of the conversion, most of the Indiana limestone facades of the landmark tower and three adjoining low-rise structures — the WGN Radio and WGN Television buildings, plus the original Tribune printing plant — would be preserved. But the central portion of the old printing plant, whose vast floors now house the Tribune newsroom and other offices, would be demolished, making way for an elevated courtyard that would allow natural light to filter into the project’s lower-floor condominiums.

The courtyard, outfitted with an indoor pool, would be built behind the iconic Chicago Tribune sign. The sign has become the subject of a legal battle between the developers — who argue that they have a contractual agreement to buy the sign for $1 — and Tronc, the newspaper’s owner, which contends the sign is protected intellectual property.

The still-unnamed new tower would rise from the northeast corner of the Tribune site, ensuring that it would not compromise the Ogden Slip view corridor, which guarantees that Tribune Tower remain visible from Lake Shore Drive. The topmost of its 96 occupied floors would house Chicago’s highest residential units, topping those in the nearby Trump skyscraper.

The new tower’s tapering profile is designed to reduce wind pressure that would cause it to sway, unsettling residents.

Its strong vertical lines seek to echo those in Tribune Tower, which was the winning entry in an international competition to design “the world’s most beautiful and distinctive office building.” The building opened in 1925 under the leadership of Tribune publisher Col. Robert R. McCormick.

Other highlights of the new plans include the following:

  • The bottom floors of the existing Tribune Tower complex would be converted into 47,500 square feet of retail space lining Michigan Avenue, Upper Illinois Street and the Pioneer Court pedestrian plaza, just north of the new Apple flagship store. The plaza’s northern portion would be repaved and would include a timeline charting the history of the site.
  • A four-story condominium addition would be built on top of the WGN Television Building, its metal and glass facade designed to complement the existing structure. McCormick’s 24th floor office, a baronial lair with its own fireplace, wood-paneled walls and personalized ceiling decoration, would be turned into condo space. Developers are speaking with nonprofits about possibly taking parts of the office that would be dismantled.
  • The Nathan Hale Courtyard, an outdoor space along Michigan Avenue that contains a statue of the Revolutionary War patriot, would be retained but reconfigured, with a new ramp to make it accessible. The courtyard would lead into new retail space, replacing a lobby that lacks landmark protection.
  • It has yet to be determined how much access tourists and architecture buffs would have to the ornate, high-ceilinged Tribune Tower lobby, which has official landmark protection. Golub said a compromise will have to be reached regarding which hours, if any, the lobby would be open to visitors.
  • The 25th-floor outdoor space beneath Tribune Tower’s flying buttresses, once an observatory open to the public and now a private event space called The Crown, will become an outdoor amenity area for residents.
  • The location of some of the roughly 150 fragments of famous buildings and historic sites from around the world that are embedded in Tribune Tower’s base could be shifted to accommodate the new ground-floor retail space.
  • The new tower would house a five-star hotel and 10,700 square feet of retail space. Its base, which would be wider than the thin tower, would include 430 parking spaces topped by an outdoor deck.

Under existing zoning, the Tribune site allows for 1.6 million square feet of space. The two towers, old and new, would encompass 2 million square feet. To increase the density, the developers would pay about $14 million into a city fund that seeks to encourage commercial development in struggling areas of the South and West sides, as well as $12 million into the city’s affordable housing fund.

Gill said the architects rejected the idea of replicating the setbacks and neo-Gothic architecture of Tribune Tower. “We tried it. We didn’t like it. It was becoming a big version of Tribune Tower. It didn’t seem appropriate,” he said.

At the meeting, some residents said they approved of the design while others complained the new tower would block views from their apartments and predicted that much of the retail space would remain unfilled. Citing the empty storefronts at the Trump Tower and other locations off Michigan Avenue, a resident said, “I would hate to see a lot of available and for-lease signs.”

 

Link: Developers plan city’s second-tallest skyscraper next to new Tribune Tower condos

$60 million condos-to-apartments deal closes

Golub has pulled off a $60 million condominium deconversion in the Loop, the biggest deal of its kind in Chicago, but not for long.

A joint venture between the Chicago developer and USAA Real Estate has acquired Century Tower, a 292-unit art deco high-rise at 182 W. Lake St. The venture is turning the 88-year-old condo building back into rental apartments, a type of deal that’s especially complicated but has become popular with developers amid the strong Chicago multifamily market.

Golub and USAA plan a multimillion-dollar renovation of the Loop property, sprucing up the kitchens and bathrooms in its apartments and building out an amenity floor with a fitness center and game room on its second level, said Collin McKenna, vice president of acquisitions at Golub. The developers are wagering that Century Tower will be worth more as an apartment building than it will as condos.

With investors paying up for apartments, more developers are making the same bet, reversing the condo conversion trend that began in the 1970s and took off again during condo boom of the mid-2000s. Back then, developers could buy apartment buildings and profit by selling them off for more money as condos. But the housing market has flipped since the recession, allowing developers to profit now by doing the opposite.

“Right now, the signs are that (the trend) is not slowing down,” said Kelly Elmore, principal at Kovitz Shifrin Nesbit, the local law firm that represented Century Tower’s condo association in the sale.

The firm has worked on 21 completed condo deconversions over the past year and a half and has another 18 in the works, she said. Several are bigger than Century Tower, exceeding 800 units, Elmore said.

Indeed, while Century Tower is the biggest completed Chicago deconversion, it could soon be eclipsed by two more.

Last month, the condo association at Kennelly Square, a 268-unit tower in Lincoln Park, voted to sell the property for as much as $78 million to Strategic Properties of North America, a New Jersey developer. And in December, condo owners at River City, a 448-unit complex in the South Loop, approved a $100 million sale to Marc Realty Capital. Both transactions have yet to close.

The Century Tower sale marks the end of one era and the beginning of a new one for the high-rise, which was built in 1930 and is listed on the National Register of Historic Places. It opened as an office building but was converted to apartments in 2001 and condos in 2006, at the tail end of the condo bubble.

ALL OWNERS HAVE A SAY

Condo deconversions are hard to pull off because every unit owner has a say in a bulk sale. Under Illinois law, a sale of an entire condo building can go forward only if owners of at least 75 percent of the units vote to approve the deal. The debate over whether to sell can become acrimonious, and not all parties go along with a sale willingly.

The sale at Century Tower passed with a 75.6 percent vote, with 16.2 percent voting “no” and the rest not voting, Elmore said. She said the deal was her most difficult “by far,” including last-minute lawsuits against some uncooperative condo owners who refused to sign closing documents and a brief court dispute with the owner of a ground-floor retail space occupied by a sushi restaurant.

Complicating matters further were some outstanding building code violations involving the building’s elevators, a potential deal breaker. City inspectors came out at the last minute to approve the required fixes but found more four more violations, Elmore said. All but one were resolved; the board credited Golub to account for it, she said.

Though every deconversion has its dissenters, many condo owners like them because an apartment developer will often pay more for their units than they would receive in a traditional condo sale. McKenna, the Golub executive, estimated that the price differential can range from 20 to 50 percent.

The $60 million price for Century Tower, which was disclosed in court documents, amounts to about $205,000 a unit, but individual prices paid varied by unit type and condition.

Century Tower was a good deconversion candidate because investors owned and rented out about threequarters of its condos. Because they don’t live in their units and view them purely as an investment, investors typically are more open to a sale than owners who occupy theirs.

Investor-heavy buildings are also attractive to developers because many renters are happy to keep living in the building, providing an immediate source of revenue for a new owner. About 25 to 30 renters in Century Tower are staying put and leasing their units from Golub, McKenna said.

Century Tower is Golub’s third deconversion and the firm continues to scout for more, said Golub President and CEO Michael Newman. The firm has been plenty busy with other deals, too, recently completing two big apartment projects in the South Loop and Streeterville and teaming up with CIM Group, a Los Angeles developer, to redevelop the Tribune Tower property on North Michigan Avenue.

“We’re absolutely looking for” more deconversions “if we can make sense of it,” Newman said. “It’s a lot of work. It’s got to be the right kind of transaction.”

Link: $60 Million Condos-To-Apartments Deal Closes

Chicago high rise creates “smart apartments”

CHICAGO (WLS) — Many of us already hear voice assistant technology like Amazon’s Alexa and Google Home making life hands-free. These devices can perform tasks like a thermostat temperature change, playing music on demand and turning on your lights.

Now, local firms Golub & Company and Whiz Cribs are looking to make this tech central to their tenants’ lifestyles with “smart apartments.”

Their goal is to keep apartment renters connected while putting down their phones at home. Alexa helps achieve this by connecting popular smartphone applications and functions through its platform.

“We think this is a trend that’s going to continue to evolve in the marketplace and that there will be more and more features added through this infrastructure,” said Golub Senior Vice President Stephen Sise of the company’s decision to upgrade some luxury units in its Streeterville Moment building and others across the country.

That means new wiring and light switches installed to ensure overhead lighting can be controlled by Alexa. Golub will offer the same upgrade to any tenant who requests it. Sise says those tenants do not pay for installation fees, though rent will be higher for those who opt in. The extra money brings expertise from Whiz Cribs, which helps make the most of Alexa in your home by bridging “the gap between Alexa and their lifestyle and then incorporate it in their living,” explained Whiz Cribs Co-Founder Jordan Cooper.

Cooper says Google and Apple are making strides in voice assistant tech too, though he sees Amazon’s Alexa as the best platform for now.

Plus, as more home appliances develop voice assistant tech, Cooper believes Alexa will continue being compatible; smart apartments may be an investment speaking volumes about our future.

Link: Chicago High Rise Creates “Smart Apartments”

ULI Product Council Outlook for Global Investment

Members of ULI’s Global Exchange Council discuss factors and trends influencing real estate investment and development decisions.

Political upheavals, refugee crises, climate change, terrorism, economic uncertainties—how much are these factors changing decisions about where and how to invest in the years ahead?

Kenneth Munkacy:
There is a lot of volatility. The “Trump bump” has already been factored into the market. The post-Brexit settlement is still a question mark. The geopolitical tensions in Korea have certainly given people a pause. Against this backdrop, investors are increasingly concerned about the potential downside exposure and look to the markets where they can invest safely, despite all the static in the environment. In the United States, strong economic growth continues, which sustains demand from the user side and helps to drive transactions. Investors are seeing the Fed as supportive; unemployment is at postrecession lows; corporate earnings are strong; and capital markets have ample liquidity. Those are all good driving forces for continued investment.

Michael Newman: The majority of our deals are in the United States with U.S. investors and capital partners, but we’ve also been in central/eastern Europe since 1989, and recently we’ve been focused just on Poland. There’s quite a bit of concern and uncertainty throughout the world about where to find stability. The United States, in spite of all the difficult political conditions, is still a general safe haven where foreign and U.S. investors want to invest. We used to think that the countries in central Europe had stronger growth potential—and we still think they do—but they’re not without their political issues as well. Through much of Europe, including central/eastern Europe, there is a more nationalistic political mentality, and that may cause concern for some outside investors.

Sujan Patel: There has been a fair amount of volatility throughout the world in the last few years. In the United States, the market has been pretty resilient despite this, and that speaks to the strength of the U.S. economy overall. Investors still view the United States as a safe haven and a place where they’d like to invest capital, sometimes more from a capital preservation standpoint than a potential capital appreciation standpoint, especially given where we are in this economic cycle.

Philip Fitzgerald: In the end, most investors realize that life has to go on, and that people will continue to need a place to live, a place to work, a place to play. Of course, for a frontier market directly affected by those crises, the chance of attracting capital is zero—now. But there is new interest in emerging markets, probably because there’s a feeling that the United States is pretty topped out, at least in certain major core markets, where there’s more downside than upside at this point. The largest variable now is politics. When Donald Trump was elected in November, one investor I knew said, “We are not investing in Mexico, because he’s going to tear up NAFTA [the North American Free Trade Agreement] and everything is going to go to hell in a handbasket.” That hasn’t happened. The Mexican manufacturing base continues to do well.

Are the recent extreme weather events and earthquakes changing people’s minds about where to invest?

Fitzgerald: Post-Katrina, there was a knee-jerk reaction. Everybody said, don’t invest anywhere in the Southeast, Gulf Coast, or Atlantic Coast. But a season or two later, when there were no more calamities, everything went back to normal. So with the storms that hit Houston and Miami, people may be having that knee-jerk reaction again. But 2 million people are not going to move out of Houston. There may even be some interesting buying opportunities there as some investors pull back in the short term.

Newman: There is concern about these areas. In Mexico City, the buildings destroyed by the recent earthquake were older. Building codes aren’t the same there as they are in the United States. In Florida, after Hurricanes Irma and Jose, a lot of the buildings constructed with modern building codes have held up. We were under construction on a project in south Florida, and the hurricane caused only a short delay. We don’t expect any long-term impact market-wise or construction-wise. Given the nature of the demographics in south Florida and similar regions in the United States, we don’t believe that there will be a significant drop-off in long-term investment in these areas.

Patel: Investors tend to be cautious about certain markets with a history of weather-related issues, although sometimes memories can be short. Due to how far along we are in this economic cycle, some of these markets have come back in favor compared to where they were a few years ago. As we get further into any economic cycle, investors move toward secondary and tertiary markets for higher yields, including markets such as the Caribbean and others that are more prone to experience weather-related issues. The recent unfortunate events seem to have given many investors some pause once again, which can also create opportunity.

Which parts of the world are you particularly bullish on?

Patel: Depending upon someone’s return expectations, I believe that the United States offers the most favorable risk-adjusted return opportunity. It may be harder to invest opportunistic capital today, but you can still find opportunities to place core, core-plus, and some value-add funds capital as well as credit-oriented investment strategies. I’m bullish on the United States overall, and some unique opportunities to achieve opportunistic returns are starting to emerge once again. Europe is also an exciting place to invest, and a few years behind the United States in its economic recovery, creating a compelling investment opportunity.

Munkacy: In the United States, the multifamily sector remains very underserved, particularly in the workforce housing sector. In South America, the time has come for rental housing. The population dynamics are clearly sustainable; the lack of affordable for-sale housing makes the renter-by-necessity market appealing. There continue to be good debt vehicles in Europe. Japan still has a good story, too, but the North Korea situation is a concern there. Globally, urban infill housing and last-mile close-in urban warehouse space is a good risk-adjusted bet. The Andean region is a particularly good niche—Colombia, Peru, Chile—as is Mexico. They continue to be vibrant economies that are under-allocated historically, with good structured-debt opportunities. Their capital markets are immature relative to the opportunity set. Puerto Rico in the post-hurricane era provides extraordinary opportunities for housing, cell towers, and infrastructure, and is also eligible for significant federal funding.

Fitzgerald: In Latin America, countries to watch include Argentina, where the economy is doing significantly better. President [Mauricio] Macri’s administration has made some fundamental changes. I hope that they bear enough fruit that the electorate will see fit to continue the program, but I have my doubts. The real estate seems a bit overpriced to me, because a lot of investors moved early and got good value. Brazil is going through what I would consider chemotherapy. With the anticorruption probe of the government and the prosecutions, hopefully enough people will be held accountable, and that will serve as a deterrent in the future. Peru is being overlooked again. It has an oversupply of office space, but the rest of the real estate property types there are likely somewhat undersupplied. The Colombian economy is chugging along nicely, and the FARC Peace Accord is going to pay some interesting dividends. People are bullish about the prospects of less conflict and more peace there.

Are big data and other technologies transforming the global real estate investment market?

Patel: Absolutely. It’s in the early stages for the real estate industry, but investors are very interested in finding ways to capture data and analyze it to make smarter investment decisions as well as paying attention to how technology is impacting asset classes and markets, including creating new asset classes and alternative investment and capital-raising platforms.

Newman: There is better technology for underwriting and analysis, as well as in building systems and tenant interface, and that streamlines the due diligence process, but I haven’t seen anything from a technology standpoint that has greatly influenced a capital partner’s decision to invest in a certain deal or not.

Fitzgerald: Here in the United States, we’re investing in markets where there is an intersection of four industries: technology, life sciences, energy, and trade. The first three are heavily dependent on people with advanced degrees and advanced technological education. Those jobs used to be clustered in places like Silicon Valley, which meant employers had to pay relocation costs to bring recent graduates there, and they had to pay them a premium because of the high cost of living. But with the advent of reliable and robust high-speed communications, a lot of these industries are locating part of their operations to places where technologically skilled people already are living, which often have a lower cost of living. You don’t have to put all your employers in Palo Alto anymore. You can put them in cities like Indianapolis, Houston, Austin, or Miami.

What other challenges are real estate investors strategizing about?

Munkacy: Infrastructure. It’s an international problem. I don’t think the real estate industry focuses enough on roads, bridges, tunnels, and ports. Aging infrastructure is the big Achilles’ heel of the United States, whereas inadequate infrastructure hinders emerging-market growth. Not all countries have the ability, like China does, to control the economy and direct infrastructure improvements. Most emerging markets lack sufficient infrastructure to get to the next economic level; unfortunately, they are fixated on having consumption drive the ship, as opposed to investing in essential capital budget items to drive productivity.

Patel: I think we’re going to see interest rates continue to trend up, and there is much discussion about the resulting impact on pricing and valuation of real estate, combined with debate around growth expectations. Due to the abundance of capital targeting real estate, especially in the United States, valuations are likely to continue to be stable overall for the next few years.

What trends or forces in the global real estate market should we be paying more attention to?

Newman: There aren’t as many bidders on properties as there were a couple of years ago. I think that may be tied to the uncertain political landscape. Certainly in Illinois, where I’m based, there is less capital out there to buy core deals at the prices that were being achieved a year or two ago. With the issues in North Korea and Washington, D.C., people may just be waiting to see how things shake out and see what the Fed does with interest rates. There is a lot of debt in the marketplace, so if you’re a borrower right now, you are getting many more aggressive quotes from lenders than you had in the last few years. There is a lot of equity, too, but it’s more on the sidelines at the moment. I think in the first part of 2018 there will be more activity. There are still a lot of capital sources that want to invest.

Munkacy: The market is oriented more toward cash flow and downside protection, with investors less focused on earning residuals than they were before. In times like these, it makes sense to try and get 70 percent of your total returns from cash, as opposed to looking for back-end appreciation. For global funds, the challenge is to find pockets of opportunity in as many alternative asset classes as possible, like structured debt, cell towers, hospitals, education buildings, student or senior housing, and infrastructure with annuities like toll roads. Global investors are now pursuing a broader landscape of alternative real estate investing.

Patel: I think technology’s impact is the area that everyone should be focused on the most. We also have to focus on how the younger generations live, work, and play, and on how they think about incorporating real estate into their lives. Lots of people have been posturing that millennials mostly want to live in central business districts in the major gateway markets. But I think we will be seeing a shift, in the next five to ten years, of a large population of millennials moving to certain suburban markets—suburbs that have good transportation into central business districts and that have the ability to accommodate density from a live/work/play standpoint.

Members Contributing Their Insights:

Philip Fitzgerald, chief executive officer, 7 Bridges Capital Partners, Santa Monica, California; member, Global Exchange Council
Kenneth Munkacy, senior managing director, Kingbird Properties; assistant chair, Global Exchange Council
Michael Newman, president and chief executive officer, Golub & Company, Chicago; member, Global Exchange Council
Sujan Patel, cohead of U.S. investment management, Colony NorthStar, New York City; member, Global Exchange Council

Link: ULI Product Council Outlook For Global Investment

Golub & Company Named Illinois Family Business of the Year by Loyola University Chicago

Chicago-based Golub & Company, an international real estate investment and development firm, has been honored by the Family Business Center at Loyola University Chicago’s Quinlan School of Business as the Illinois Family Business of the Year, in the medium-sized business category. In its 24th year, the awards program celebrates Illinois family businesses with a strong commitment to both business and family. In addition to business success, those recognized have demonstrated multi-generational family business involvement, contributions to industry and community, and innovative business practices and strategies.

Paula Harris, principal and senior vice president, accepted the award on behalf of Golub & Company and the entire family, including co-principals Michael Newman, president and CEO, and Lee Golub, executive vice president, her father Eugene Golub, founder and chairman of the board, and third generation family members Alex Newman, Laura Newman, Samantha Patinkin and Josh Patinkin.

“Working, building and growing a successful family business certainly isn’t easy, but it is one of the most thrilling and fulfilling things in life,” said Harris. “Instilled with our core values of honesty, integrity and respect, we’ve grown the company into an even stronger and more innovative entity in the real estate industry. And we’re laying the foundation for our family business future.”

Golub & Company was established in 1960 by Eugene Golub, and the company has since welcomed a second and third generation to the family business. Golub & Company has maintained a strong reputation as a real estate investment and development firm, and boasts a diverse portfolio of multi-family, office and mixed-use properties in the U.S. and Central Europe. The company also prides itself on being a good corporate citizen, supporting the Chicago-area community through the Golub Family Foundation and GoCommunity, its award-winning employee volunteering program.

For more information about the awards, visit Family Business Center: Quinlan School Of Business: Loyola University

Michael Jordan Dunks a Restaurant into the Suburbs

His airness opens his first spot in the suburbs today, officially giving Oak Brook a Michael Jordan’s Restaurant. The restaurant, located in the Oak Brook 22 office and retail complex at 1225 W. 22nd Street, is a little different than his steakhouses on the Mag Mile, in Connecticut and Washington state: Its menu has steak but also focuses on Southern dishes including shrimp hush puppies and a pork chop sandwich. The large space includes a 90-seat bar, multiple private dining rooms, and more than 100 photos of MJ, according to a news release. A grab-and-go addition, MJ’s Coffee Bar and Market, is also slated to open there “in the coming weeks.”

Link: Michael Jordan Dunks A Restaurant Into The Suburbs

Golub & Company and Alcion Ventures Acquire 300 South Wacker

Chicago-based Golub & Company, an international real estate investment and development firm, announced the acquisition today of 300 South Wacker, a 36-floor, class A office building, in a partnership with Boston-based real estate private equity firm Alcion Ventures. The new owners plan to expand on a 2014 renovation of the building with a focus on tenant experience and amenities.

“This area of South Wacker is poised for continuing high demand with the Union Station and Old Main Post Office redevelopments driving the neighborhood’s transformation,” said Michael Newman, CEO of Golub & Company. “Our renovation of 300 South Wacker will spotlight its attractive location and deliver the amenities and design today’s workforce is seeking.”

A team from Golub, led by Adam Short and Ania Najder, along with Alcion Ventures negotiated the transaction. The seller, Beacon Partners, was represented by JLL. JLL’s Managing Director Keith Largay also arranged financing for the deal through Deutsche Bank on behalf of the purchaser. Terms of the deal were not disclosed.

“This acquisition continues our strategy of investing in well-located value-added opportunities,” said Mark Potter, Co-Founder and Partner of Alcion Ventures. “We’re eager to bring a revitalized office option to Chicago businesses in this re-emergent area of the CBD.”

The 536,000-square-foot property, originally built in 1971, boasts unobstructed 360-degree views of downtown Chicago and is located directly on the Chicago River. The building also features smaller footplates of 16,000 square feet, allowing small to mid-size companies to occupy full floors. Other amenities include 24/7 staffed security, a 17-car executive parking facility, a new destination dispatch elevator system, and a fitness center. Planned updates will focus on the lobby, indoor and outdoor common areas, and a new tenant amenity lounge.

“The office market in Chicago’s central business district continues to be one of the strongest in the country, with limited opportunities to buy significant space along the coveted Wacker Drive corridor and extremely strong tenant demand,” said JLL International Director Bruce Miller. “Our purchaser recognized the strength of the Chicago market and had confidence this strength will continue for years to come.”

About Alcion Ventures
Founded in 2004, Alcion Ventures is a real estate investment manager with extensive experience of generating risk-adjusted returns for institutional investors through the active repositioning of assets across property types. Alcion’s senior team have worked together for almost two decades resulting in a disciplined, thesis-driven investment strategy that leverages a deep network of relationships and targets seven major North American cities. Based in Boston, Alcion invests on behalf of major U.S. and international institutional investors including public and private pensions, endowment and foundations and high net worth individuals. For more information, please visit www.alcionventures.com.

About Golub & Company LLC
Since its founding more than 55 years ago, with three generations of professionals working in the business, Golub & Company has built a strong reputation as a trusted co-investor and developer with its many institutional and private capital partners. It’s a reputation based on track record; Golub and its affiliates have owned, leased or managed more than 50 million square feet of commercial, mixed-use and multifamily real estate properties, including 45,000 residential units, valued in excess of $10 billion located across the United States and internationally. Access more information by visiting www.golubandcompany.com.

Link: Golub & Company And Alcion Ventures Acquire 300 South Wacker

WORKING FROM HOME? REAL-ESTATE DEVELOPERS ARE HERE TO HELP

When Joshua Bryan leaves his apartment to go to work, he travels up three stories, to the 40th floor of his building in Chicago’s South Loop neighborhood. There, he settles into a workspace with television screens, a kitchenette and sweeping views of Lake Michigan.

For meetings, Mr. Bryan books a first-floor conference room with teleconference equipment and interactive white boards for presentations. The building also has a fifth-floor “Makerspace,” a shared office area with personal computers, a 3-D laser printer and a computerized milling machine for cutting and shaping metal or wood.
“The communal workspace is pretty much the reason I chose this building,” says Mr. Bryan, who is 37 and owns the Chicago franchise of Poop 911, a company for dog-waste removal.
With his wife, Irene Rivera, a 36-year-old practitioner of alternative medicine, and cocker spaniels Gracie and Sophie, he rents a two-bedroom corner unit with floor-to-ceiling windows for $3,705 a month. Since moving there in December, Mr. Bryan has saved $1,500 a month in office rent he used to pay in a suburb—not counting the gas “and the years of my life sitting in Chicago traffic,” he says. Now, he likes to take work calls on a 40th-floor terrace, also equipped with TVs and Wi-Fi.

One of today’s most practical amenities in residential buildings: shared office space equipped with the latest tech and communications equipment. With more Americans working from home, architects and developers are designing spaces that spare residents from conducting business at a Starbucks . At Mr. Bryan’s building, 1001 South State, developer Golub & Co. hoped to build a creative, techie vibe for young professionals. The idea, says president and chief executive Michael Newman, was to differentiate the building and charge higher rents than what is typical for the neighborhood. Developers say amenities such as communal offices and gyms also keep revenue in the building, rather than residents paying for them elsewhere.

In 2016, 15 million workers, or 10% of the American workforce, were self-employed, according to the U.S. Bureau of Labor Statistics. Along with telecommuters, consultants and others with flexible schedules, they make up a sizable market of renters and home buyers in need of living space that fits their lifestyle. For single-family houses, home builders are now conceiving floorplans with fully wired “flex space” suitable as an office area. In apartment buildings, they are installing work lounges inspired by the creative work environments of the tech world—less business center and more cyber-café—with big windows, hip furniture and often, free coffee.

Shared office space reflects the tastes of young Americans growing into the real-estate market. Those in their 20s and 30s are more social than their parents were, architects say, and need larger spaces for public amenities and smaller private apartments. Whether at work or play, they note, young renters and buyers need functioning electronics, electrical outlets and Wi-Fi everywhere in a building. And even if freelancing, observers note, young adults crave the camaraderie that comes with an old-fashioned office.

“It’s not just giving them a space to work in the building, but a space to interact with fellow residents—for sharing ideas, social events and for being part of a bigger community,” says Rohit Anand, principal in the Tysons, Va., office of Irvine, Calif.-based KTGY Architecture + Planning.

Community was a draw for 31-year-old Michael Weinberger, who moved into a new KTGY-designed building in Washington, D.C., on April 12. The building, called AVA NoMa for its location in the bustling North of Massachusetts Avenue district, has an open-plan ground floor, where chill-out seating groups are adjacent to a long work table reminiscent of Apple Inc.’s Genius Bars.

Mr. Weinberger, a transportation planner with Rockville, Md.-based Foursquare ITP, works remotely two days a week and plans to use the space on those days. For meetings or Skype calls that require privacy, there are enclosed workstations with sliding doors.

“There was no other place that was going to make telework so convenient,” says Mr. Weinberger, who leases a 650-square-foot studio for $1,950 a month. The building’s open ground floor, he says, is “like I’m going to a coffee shop without going to a coffee shop.”

Mr. Weinberger also hopes to use other amenities, such as a bike-repair shop and yoga studio, now nearly ubiquitous in new buildings, along with pet spas, gyms and outdoor hot tubs. In most cases, renters don’t pay extra to use the amenities.

Even luxury condo developments lure buyers with facilities for at-home work. 50 West, a new residential tower in Manhattan’s Financial District, where a three-bedroom, 3,400-square-foot penthouse costs $24.5 million, lists a “laptop bar” among the amenities on its entertainment floor.

The building, designed by Chicago-based architect Helmut Jahn, also has 15 office condominiums with a separate entrance that residents can buy separately from their apartments. Prices for the office condos range from roughly $500,000 for a 260-square-foot space to $1.4 million for a 740-square-foot space.

The offices, which are set to be completed in the summer, are drawing interest from foreign buyers who need workspace when in New York, says Francis Greenburger, founder and chief executive of real-estate firm Time Equities Inc., which developed the building. He predicts that the suites will also appeal to New Yorkers like himself.

“I work a lot at the office, but I have adopted a mobile lifestyle, where I work from home early in the day and on weekends,” says Mr. Greenburger, who bought an office condo in the building to complement his main office on Fifth Avenue.

Self-employment rates are higher for older Americans than for younger workers, according to the Bureau of Labor Statistics, and new homes targeting mature buyers reflect this trend.

At Chelsea Heights, a development in Silver Spring, Md., developer EYA built townhouses with a flex space on the ground floor, which many owners use as an office.

In 2015, Michael Shulman and Jackie Judd paid $950,000—more than they planned—for a 2,600-square-foot townhouse in Chelsea Heights. It has three bedrooms, along with flex space.

“The flexibility of the floorplan was very important to us,” says Mr. Shulman, a 60-year-old investment adviser who runs an online service called “Options Income Blueprint” from his townhome’s first-floor flex space. Ms. Judd, a freelance journalist, works on the townhome’s third floor, far away from her husband’s frequent webinars.

“We don’t get into each other’s way during the day,” says Mr. Shulman. “You know that old saying: I married you for better or for worse, but not for lunch.”

Link: Working From Home? Real Estate Developers Are Here To Help