Lake County Illinois Commercial Real Estate

Illinois Business Climate?

There is a lot of discussion about the potential failings of the business climate in Illinois but sometimes we lose perspective on the issue. Doing business in Illinois still has very significant advantages over our Midwestern neighbors as it is well documented in a recent Crain’s Chicago Business Editorial. This is particularly true for companies doing business outside of the political boundaries of Cook County. While there remains a need for pension, labor and tort reforms in Springfield, Illinois still stacks up pretty well against the competition!

Lincolnshire Corporate Center Hosts Farmer's Market

In its ongoing effort to contribute toward a healthy, sustainable workplace, the Lincolnshire Corporate Center is hosting a Farmer’s Market from 11:00 – 2:30 on Thursday, October 13, 2011 in the parking lot at the southeast corner of Barclay Boulevard and Tower Parkway (3 Overlook Point, Lincolnshire, Illinois). The market will allow employees in the Lincolnshire Corporate Center to purchase fresh locally produced foods during their lunch hour. A few of the vendors committed to the market include: Twin Garden Farms, Royal Oak Farm, Roedger Brothers Blueberries, Breadsmith, Treasure Breads, Grampy’s Gourmet and the Cheese People.

 

Road Closing on Illinois Route 22 in Bannockburn

The METRA railroad tracks west of Waukegan Road, east of Telegraph Road, and on Route 22 (Half Day Road) will be closed from October 6^th – October 13^th.  This road closure will commence on October 5, 2011 (Wednesday)  at 6:00 am and continue until October 13, 2011 (Thursday) at 6:00 am or sooner, if the work gets completed. 

Olde Half Day Road Construction in Lincolnshire

The Illinois Department of Transportation will be resurfacing Olde Half Day Road (in lieu of spot patching) from Route 21 (Milwaukee Avenue) east to Route 22 (Half Day Road). The contractor is scheduled to start the work on Saturday, October 8, 2011, to minimize traffic impact, and plan on completing the work within 3 business days, weather permitting. There will be no work on Sunday. While the road will be open to traffic, it will be reduced to one lane to accommodate construction activities. Heavy delays should be expected, so IDOT is encouraging motorists to avoid the area and utilize Route 21 and Route 22 instead.

City of Chicago Budget Woes May Lead to A Chicago Income Tax?

New Mayor Rahm Emanuel and his team are starting to float a variety of trial balloons regarding ways to raise the revenue needed to close the city's huge budget gap. Many of these revenue schemes, including a proposal for a City of Chicago income tax, have significant impact on businesses looking to locate in the city. How the revenue will eventually be raised is far from certain but it will surely be a significant disincentive for businesses looking to locate within the city limits. The current Chicago Tribune Article outlining some of the revenue raising ideas is well worth reading.

Dependable Power

The dependability of power service is increasingly becoming an important site location consideration. The storms which have plagued Northeastern Illinois over the last month have led to numerous power outages across the region. A few of these outages have extended over multiple days. Interestingly, none of the new business parks in Lincolnshire, Vernon Hills or Buffalo Grove experienced even temporary power disruptions due to these storms despite being in the direct path of some very strong winds. We attribute this to a combination of all underground utilities and the availability of electrical service from multiple sub-stations at many of these locations. While such service is often taken for granted, it is extremely important for any technology (power) dependent businesses.

Congratulations to 100 Years at Great Lakes Naval Training Center

Today marks the 100th anniversary of the Great Lakes Naval Training Station in North Chicago. While the base has always played an important role in the defense of our country, it plays an equally important role in the economy of Lake County, Illinois. Thank you to all who have served our country so well here!

For more information on the history of Great Lakes, please click this link. 

Lake County Remains Fiscally Sound

While there is a lot of talk about the worrisome finances of the State of Illinois and the city of Chicago. Lake County, Illinois remains fiscally sound with a AAA credit rating and a blanced budget. This is in stark contrast to the financial woes of Cook County detailed in the following blog posting from Crain's Chicago Business.

Access to Labor Again Becoming an Important Location Consideration

 

As the economy slowly regains momentum, we are again hearing more talk from clients about the importance of a location’s accessibility to a quality labor pool. In Lake County, Illinois this translates into locations within a reasonable commuting distance from the more affordable housing markets in the west and northwest portions of the county. While this need is sometimes offset by the dictates of “scientific plant location,” which leads executives to locate nearer to the largest concentration of executive housing along Chicago’s North Shore,  the limited labor pool along the North Shore has proven detrimental to many firms locating east of the Tri-State Tollway.

Increasingly, we are experiencing labor savvy employers selecting locations in the corporate parks along Milwaukee Avenue between Lake-Cook Road and Illinois Route 60 in Buffalo Grove, Lincolnshire and Vernon Hills. These locations balance the sometimes competing forces of “scientific plant location” and easy access for middle management and support staff. While less than 20 minutes from the North Shore lakefront, the Milwaukee Avenue corporate parks, including Lincolnshire Corporate Center and the Corporate Woods, offer dramatically shorter commutes for employees commuting from west and northwest Lake County and Eastern McHenry County, which offer quality housing at much more affordable price points. As the demand for employees continues to recover, we expect this consideration will become ever more important.

The Implications of Proposed New Accounting Rules for Commercial Real Estate Owners, Users, Developers and Brokers

 

The Financial Accounting Standards Board (FASB) has been contemplating making significant changes in how both public and private companies account for leases. While the eventual outcome of these discussions is not certain, many of the proposals challenge the current off balance sheet accounting, which commercial leases now enjoy. If companies are forced to place lease obligations and extension options on their balance sheets, the potential consequences for the many stakeholders in the commercial real estate industry may be significant:

• Some companies may simply choose to own rather than lease space. Some surveys indicate that as many as a third of the firms surveyed plan to go this route. While this would create new demand for the purchase of office and industrial buildings, it would do little to reinvigorate the leasing market.
• Commercial real estate brokers will also need to adapt to the changed marketplace as revenue from long term leases will no longer be as readily available. In the long run, the revenue loss will be made up by the increased velocity of transactions resulting from shorter term commitments but that benefit will be three to five years away, at best. It is highly unlikely that brokers will be able to simply raise transaction fees to cover this loss in the same way they did as leasing velocity decreased in the last three years.
• Leases under revised guidelines would certainly be shorter and fewer options included as part of the lease negotiations. The result would be far less certain income streams for building owners and lenders, which will likely reduce the acceptable levels of leverage available and increase borrowing spreads for commercial properties. Given the increased uncertainty of cash flow, lower leverage and increased borrowing costs, values would likely see some decline that may, or may not, be offset by the increased demand to purchase buildings.
• Shorter leases will result in less capital committed to interior space renovations by both tenants and building owners. As a consequence, there will become an increased demand for “as is” or “paint and carpet” spaces. I expect that the impact on the interior design, architecture and interior finish contractors will be significant.

Despite the good intentions for better financial disclosure, the impact of any new FASB regulations may come with some serious unintended consequences in addition to significant compliance costs. Much remains to be seen as the ultimate decisions are made over the course of the year with planned implementation anticipated in 2014. There is still is plenty of opportunity for an effective compromise.

The intent of this blog posting is to explore the potential implications of the proposed new regulations rather than discuss the intricacies of the FASB proposal. For a look at what is actually being considered, take a look at this link:  New FASB Proposal.

Just a little food for thought for the Memorial Day Holiday…