Is Midwest Industrial Growth a Cause for Concern?

Recent years have seen a flurry of industrial development across the Midwest. Much of it has been speculative.

McShane Construction Company VP Tom Beres tells Bisnow that while this sector is sustaining the growth, there is no escaping the cyclical nature of the market.

“Some developers are worried about the long-term sustainability of the increasing amount of new product, while others are embracing the uptick and looking for ways to differentiate,” Tom says. “Fortunately, we are seeing more optimism than not.”

Tom says it can be difficult to determine when the market will plateau, and while it’s not time to cool off on industrial growth just yet, it’s important to always look to the future.

After speculative industrial product floods the market, will there be enough tenant activity to fill it? There may be a lull, but Tom believes it will be strong enough to hold investors over until the pool of interested tenants restocks.

Tom says the possibility of a future cool-off has yet to deter the equity side of development, which is still very interested in funding industrial projects.

So there may be more vacancies than would be ideal across America’s industrial heartland in the years to come, but the correction will be a natural part of a healthy real estate cycle.

But for projects delivering now, a potential tenant shortage is worrisome, regardless of positive forecasts on the horizon.

Tom says industrial properties are beginning to diversify and rely more on design/build construction expertise to enhance their amenity packages, much like their office counterparts.

“For the most part, industrial users—especially on the distribution side—are looking for a contemporary space to house their product with easy access to transportation. Many have not put a focus on amenities. However, tenants like Amazon have shifted the emphasis to amenities and employee satisfaction.”

Tom says many of the industrial buildings McShane Construction Company has constructed have kept modern tenants with an appetite for amenities in mind and those developments remain an enticing option, even as competition tightens.

“There’s an upward drive on the technology side,” he says, pointing to an increase in these types of companies turning to the Midwest for their industrial and warehousing needs. “We’re finishing up five speculative buildings right now and tech tenants are expected to make up a large portion of the rent roll.”

McShane Construction Company developments, such as Fountain Square Commerce Center and Northwest Pointe II, are equipped with optimal truck courts for easy maneuverability, efficient lighting, ESFR sprinkler systems, and flexible office and employee space to suit each user’s unique needs. Some also include well-appointed outdoor spaces and open green areas for employees and community residents.

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James A. McShane, Chief Executive Officer of The McShane Companies, is pleased to announce that the firm has relocated its corporate headquarters to the Gateway O’Hare office complex in Rosemont, Illinois. The national design/build construction company now occupies the entire second floor of the Class A office facility situated in the heart of Rosemont’s popular business and entertainment district.

As of Monday, September 26, 2016, McShane Construction Company utilizes the following address:
9500 W. Bryn Mawr Avenue, Suite 200
Rosemont, IL 60018
847.292.4300

“We are pleased to relocate into a new office suite that was completed to our specifications by our own construction professionals. Our relocation to Gateway O’Hare supports the organization’s continued growth in capacity, projects, and personnel while providing a more modern working environment and greater efficiencies in space utilization,” remarked McShane.

The McShane Companies, headquartered in Rosemont, Illinois, with offices in Irvine, California; Phoenix, Arizona; Auburn, Alabama; and Austin, Dallas, Houston and San Antonio, Texas, provides comprehensive and integrated real estate development and design/build construction services on a national basis. For more information, visit the firm’s website at www.mcshane.com.

Jeffrey A. Raday, PE, President of McShane Construction Company, is pleased to announce that the firm is underway on the comprehensive new construction of Trumpf Smart Factory located within the Huntington 90 business park in Hoffman Estates, Illinois.

Based in Germany with more than 70 subsidiaries and 11,000 employees worldwide, Trumpf is a leading manufacturer of fabricating equipment and industrial lasers and offers products and solutions in sheet metal processing, laser-based production and electronic applications. The firm purchased the five-acre site adjacent to Interstate 90 for its latest expansion in what is considered the epicenter of the sheet metal industry in North America. The Smart Factory was designed by the Berlin-based architectural firm, Barkow Leibinger, and its official opening is planned for the summer of 2017.

The single- and multi-story build-to-suit consists of 56,297 square feet designed to be at the forefront of integrated automation, material and information flow utilizing machine tools. The industry-leading facility incorporates a 26,052-square-foot open showroom where visitors can observe live sheet metal production while a unique 150′ clear span truss system fabricated by Trumpf equipment elevates the brand identity. A custom catwalk with a balcony spans the mezzanine within the showroom showcasing the production process from above.

Trumpf Smart Factory also includes a three-story office component adjacent to the showroom and a separate single-story office located on the west side of the building totaling 30,245 square feet. The office areas incorporate an auditorium, multimedia room, open and private offices and meeting rooms. A center courtyard will offer a landscaped gathering area for employees and guests.

The exterior of the facility features a contemporary design with 40′ tall glass panels at the front of the building with a pitched roof system gradually declining to 15′ at the back. The facade will utilize corten steel panel cladding that will rust into place for an artfully weathered effect.

“The unique features of Trumpf Smart Factory requires a skilled team of professionals and careful coordination,” remarked Raday. “The McShane team is experienced in highly specialized build-to-suit construction that requires strategic material procurement and site logistics. We will utilize our expertise to meet the fast track timeline and ensure the highest attention to detail that is needed on this assignment.”

As part of the project, McShane will install eleven 150′ clear span custom trusses weighing 11 tons each that are being fabricated by Trumpf equipment in Atlanta, Georgia. Each steel beam is being shipped and assembled on-site prior to installation. The firm is also completing all sitework including landscaping, sidewalks and paved parking for 50 vehicles.

Heitman Architects is serving as Architect of Record for this comprehensive build-to-suit assignment.

James A. McShane, Chief Executive Officer of The McShane Companies, is pleased to announce that Bob Galante, CPA, has joined the firm as Chief Financial Officer. Galante offices at the firm’s Rosemont, Illinois headquarters and has assumed his role of managing its finances on a national basis.

Galante is an experienced financial professional contributing over 30 years of experience within the commercial real estate development and construction industries with a strong planning and analysis background. Galante joins The McShane Companies following the recent retirement of former CFO, Mel Meyer, who had been with the company since 1999. Galante has completed the seamless transition and is now overseeing the firm’s accounting, financial reporting, tax and treasury functions.

As CFO, Galante provides oversight of the annual financial audit and management of the company’s risk exposure and insurance programs. He periodically reports to the senior management team regarding the operations and long-term growth plans for the organization ensuring that its strategic goals are met. Galante also serves as the company’s primary liaison with banks, insurance companies, sureties and external auditors. In addition, he manages the human resources and technology departments and is a member of The McShane Companies Advisory Board of Directors.

Prior to joining The McShane Companies, Galante served as the CFO for several national real estate firms including Opus Development Corporation and Amli Commercial Properties. Most recently, he was the CFO of Zeman Homes in Chicago, Illinois.

“The selection of Galante for this pivotal role within the company was carefully evaluated to ensure that our vision and objectives would be under the leadership of a strategic and highly-experienced professional,” remarked McShane. “We strongly believe that his past track record demonstrates his ability to uphold our strong financial foundation and values as we continue to expand within new markets and product types nationwide.”

Galante earned a Bachelor of Science degree in Accounting from the University of Illinois at Urbana-Champaign and is a Certified Public Accountant. He is a member of the Illinois CPA Society and is on the Board of Directors for Norwood Crossing, an assisted living facility and senior network located in Chicago.

Scott J. Hoppa, Senior Vice President of McShane Construction Company’s Southeast Region, is pleased to announce that the firm has been selected by developer, The Integral Group, for the new construction of The Veranda at Groveway – an affordable senior housing residence.

The 102-unit, four-story apartment building is under construction on a three-acre site at 735 Myrtle Street in Roswell, Georgia. McShane Construction formed a joint venture with IBG Construction Services to complete the new development that is slated for completion in July 2017.

The Veranda at Groveway will offer 109,714 square feet of well-appointed senior living space carefully designed to maximize the well-being and comfort of its residents. The complex features 102 private units with 85 one- and 17 two-bedroom floorplans incorporating contemporary fixtures and finishes and an emergency call system within each residence. Tenant amenities will include a wellness center, fitness center, yoga/aerobics room, business center, game room and sunroom together with a rooftop deck offering outdoor space for entertainment and relaxation.

The wood frame residence will incorporate an artfully clad exterior with brick and fiber cement siding, surface parking for 72 vehicles and lush landscaping. The complex is being constructed to meet EarthCraft Certification through the use of numerous sustainable design and construction features such as low VOC paint and flooring, energy efficient HVAC, and Energy Star appliances. Partial funding for the project is being provided by the U.S. Department of Housing and Urban Development (HUD) and Georgia Department of Community Affairs.

McShane Construction and IBG Construction will complete all sitework as part of the assignment.

The Veranda at Groveway marks the firm’s second affordable senior housing project for The Integral Group in partnership with IBG Construction Services. The venture previously completed Oasis at Scholars Landing, an affordable and assisted living residence for seniors located in Atlanta, Georgia late last year.

“We are thrilled to have been selected by The Integral Group for our second venture with IBG Construction,” remarked Hoppa. “Coupled with our proven track record in senior and multi-family construction, our winning partnership will serve the growing demand for high-quality affordable living options for seniors in the Roswell area.”

REES Architects is providing the architectural services for The Veranda at Groveway.

Jeffrey A. Raday, PE, President of McShane Construction Company, is pleased to announce the completion and grand opening of The Arts and Recreation Center at Ellis Park. The firm delivered the highly-anticipated 32,000-square-foot, two-story facility on behalf of The Community Builders, Inc. – a leading nonprofit developer of mixed income housing and commercial real estate – and Quad Communities Development Corporation. The project was a result of numerous public and private partners including the City of Chicago, Chicago Housing Authority, Chicago Park District and Chicago Public Schools.

Situated on a 3.1-acre parcel at the northern edge of Ellis Park at 3520 South Cottage Grove Avenue in Chicago’s Bronzeville neighborhood, the recreation center recently opened on schedule for summer programming offering a variety recreational, arts and community opportunities.

The facility was constructed of precast concrete and metal framing boasting a contemporary exterior aesthetic utilizing a mix of artfully designed precast and GFRC (glass fiber reinforced concrete) wall panels. The main entrance welcomes visitors into a window-lined lobby highlighted by an elegant, open staircase leading to a rooftop terrace and green roof system overlooking the surrounding park.

The Arts and Recreation Center at Ellis Park features numerous recreational spaces including a full-size gymnasium featuring basketball courts, five-lane indoor swimming pool with an ADA accessible ramp, fully-equipped fitness center and outfitted locker room facilities. Flexible spaces for art, education and community use are also available including space for music and theater performances.

As part of the assignment, McShane completed the relocation of a city sewer as well as the associated sitework for the project including landscaping, sidewalks and a parking lot utilizing permeable pavers.

“McShane Construction is proud to deliver this long-awaited recreational facility to the residents of Bronzeville,” remarked Raday. “The significance and necessity of this undertaking was recognized by our project team from the onset, and we ensured that the highest level of quality was implemented throughout construction in order to provide a finished facility that leverages the need for recreational, arts and community space within this urban neighborhood in close proximity to several schools.”

Booth Hansen served as Design Architect while NIA Architects, Inc. was the Architect of Record for this assignment.

Jeffrey A. Raday, PE, President of McShane Construction Company, is pleased to announce that the firm has completed Campus Circle for joint venture partners, The Bainbridge Companies and a subsidiary of Blue Vista Capital Management. The 524-bed, 276,000-square-foot, five-story apartment complex is located at 1010 West University Avenue in Urbana, Illinois, adjacent to the University of Illinois at Urbana-Champaign campus.

With a total of 181 units, students can select from one-, two- and four-bedroom configurations with all bedrooms incorporating a private bathroom. Each apartment is outfitted with today’s most desirable fixtures and finishes appealing to student renters such as open floorplans, granite countertops, high-end appliances and in-unit washers and dryers.

The assignment included 2,000 square feet of retail space on the ground floor and an adjacent five-story, 101,000-square-foot access-controlled parking garage accommodating up to 291 vehicles. McShane Construction also completed an expansive technology package providing Wi-Fi connectivity throughout the entire property.

Campus Circle incorporates an on-site management and leasing office and over 13,500 square feet of amenities such as a two-story club room with a communal kitchen, 90″ entertainment wall, various arcade games with two separate rooms equipped with the latest digital-gaming consoles, tanning bed facilities, a theater and 20 private study rooms. There is also a two-story fitness center featuring state-of-the-art strength and cardio equipment together with a yoga/dance studio.

The rooftop of the development’s communal area provides a sizable covered lounge, bar with outdoor television, fire pits and seating areas while the outdoor swimming pool and kitchen, located within the property’s courtyard, offers additional outdoor entertainment space.

“We utilized our depth of experience in delivering contemporary, Class A rental properties to augment the goals and objectives of this project. The finished property offers a balance of residential units and communal spaces that meet student lifestyles while aligning with the quality and budget of our valued clients, The Bainbridge Companies and Blue Vista Capital Management,” remarked Raday.

Charlan Brock & Associates, Inc. was the project architect for this off-campus student housing assignment. The property is being managed by Peak Campus.

The aftermath of the 2009 recession has led to a significant shift in how developers view the outskirts of Chicago.

While the Second City remains one of the strongest draws between the coasts, interest isn’t solely focused on Wacker Drive.

McShane Construction EVP & Regional Manager Mathew Dougherty tells Bisnow multi-family development honed in on high-rise projects in the heart of the city immediately following the downturn.

But as the product began to develop and the market matured, a need for residential housing grew outside of the metro area.

The past few years have seen a steep rise in demand for condos and apartments set against a small town, walkable, suburban backdrop.

The most appealing communities are stocked with trendy bars and restaurants as well as a town center with the local train station at the epicenter.

This modern suburb, a transit-oriented community has created new opportunities for Chicago-area developers. “If you asked a developer in the suburban market who their target demographic was 15 or 16 years ago, you’d get a very quick and pointed response,” Mat says. “They’d point to new grads that want to move into a place of their own while staying close to home.”

The demographic pool has changed quite a bit, with a diverse range of residents looking to set down roots outside of Chicago proper.

Mat tells us the rise in TOD popularity isn’t quite a revitalization of urban sprawl, but rather a reflection of how desirable proximity to the city is.

“Chicago is still a big magnet; a lot of the jobs are still in the metro area,” he says, pointing to employers such as McDonald’s and Motorola that are relocating to the city. Mat says a “good portion” of Chicago’s workforce wants to live in the city and within shouting distance of the office, but others would rather live near a train station and commute. The suburbs allow those workers to enjoy life far from the main drag after work, while providing them with a relatively simple commute.

Mat mentioned Park 205, a development in Park Ridge. Trammell Crow tabbed McShane to provide the construction services for the LEED-certified apartment residence. The residential units themselves echo the upscale suburban lifestyle that Mat says more demographics are pursuing. The 115 units in the three-story complex are stocked with quartz countertops, stainless steel appliances, and in-unit washers and dryers. The parking lots are set against well-landscaped lawns.

Midtown Square, a four-story mixed-use development in downtown Glenview, required the demolition of four buildings. In their place, McShane constructed a 137-unit residential structure above 11k SF of retail space.

In Evanston, M&R Development also called upon McShane, this time tasking it with the construction of Central Station Apartments.

In addition to the residential units, McShane built an exercise room, cyber café, lounge, patio spaces, integrated parking and a green roof on the second floor. Mat tells Bisnow developers are excited about the opportunity to develop these type of projects in the more rural areas surrounding the main hub of the city. TODs are attracting everyone, including young adults just starting life on their own, established professionals and senior citizens who are looking to downsize but maintain their lifestyle.

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Milt Elmer, Vice President of McShane Construction Company’s Southwest Region, is pleased to announce that the firm is making on-time progress at the new Medline distribution center in Phoenix, Arizona. Currently under construction on a design/build basis on the southwest corner of 87^th Avenue and Buckeye Road, the facility will allow the firm to consolidate its existing operations into one contemporary and fully-equipped space upon its scheduled completion in September 2016.

The 630,000-square-foot medical supplies distribution center will feature a 9,000-square-foot main office together with a sizable 604,000-square-foot distribution area in a cross-dock configuration. The sophisticated warehouse/distribution component will boast a 37′ clear height, 60 dock doors and an ESFR sprinkler system. A 16,956-square-foot temperature controlled room will also be incorporated for the storage of medical supplies requiring the building to be fully redundant on generated power in case of electricity loss.

The new facility is being constructed of site-cast concrete panels supporting a contemporary design scheme with space for future expansion. A 195′ truck court and on-site parking for 307 vehicles and 144 trailers will also be completed.

Designed and constructed to achieve LEED certification, a variety of sustainable features will be incorporated throughout the facility such as numerous skylights in the warehouse/distribution area, LED lighting fixtures at the high bays and exterior, and a heavily insulated roof deck for greater temperature control.

“We are very pleased with the construction progress at the new Medline medical supplies distribution center,” remarked Elmer. “Our project team continues to apply McShane’s standards of quality and focus on budget and schedule to ensure that the project delivery aligns with our client’s goals. We look forward to turning over this Class A facility to help this fast-growing medical supply company continue its commitment to supporting customers across the continuum of care.”

Ware Malcomb is providing the architectural services for this distribution facility.