Prospects for Chicago’s Real Estate Market Chicago Association of REALTORS Presented by Amy de Vallet Senior Director January 11, 2018 Tribune Real Estate Holdings, LLC.
TRIBUNE REAL ESTATE HOLDINGS MAXIMIZING LEGACY REAL ESTATE IN A DIGITAL ECONOMY • Tribune Real Estate Holdings was formed in 2013 after emergence from bankruptcy • New Tribune Company management saw opportunity to maximize value of real estate assets to create shareholder value • Since formation, we have sold over $700mm in real estate assets and anticipate as much as another $400mm in the coming years 2
OUR LEGACY FOOTPRINT • Owned 76 properties in 23 states upon formation of the holding company • 8M SF on 1,200 acres • Mix of urban office and industrial, and large suburban/rural parcels • Large presence in Chicago, Los Angeles, New York 3
OUR APPROACH A private equity approach to real estate holdings: • Define & execute optimal strategies for each asset • Perfect entitlements and enhance/improve zoning • Enter JV agreements with local operators and monetize when appropriate Our experience as a holder, leaser and renter of property advises our real estate approach 4
GROWTH AND DEMAND IN CHICAGO’S URBAN CENTER • Chicago’s Downtown Central Business District is growing • City of Chicago is modernizing policies to encourage growth • Educated millennials overwhelmingly settle downtown, prefer CBD to suburbs at a 15:1 ratio • They demand live/work/play environments that emphasize connectivity (digital & physical) 5
URBAN OPPORTUNITY: SUBURBAN FLIGHT • Urban centers are replacing suburban campuses – and businesses are relocating to Chicago 6
URBAN OPPORTUNITY: CORPORATE TRENDS • They’re looking for talent, unique and creative space and to use their presence in an urban setting to further define their brand 7
So what does this mean for land owners and developers – especially in a large gateway market like Chicago? 8
WE’RE BULLISH… BUT THERE ARE CHALLENGES • Old buildings with aging infrastructure • Significant transportation infrastructure needs • Absence of regional planning with widespread, cross-jurisdiction political support and cooperation • Potential for excess inventory 9
CAN IT ALL BE ABSORBED? THE RIVER DISTRICT 37 acres OLD POST OFFICE 2.5M sq. ft. GOOSE ISLAND/MORTON SALT 4.25 acres LINCOLN YARDS 28 acres RIVERLINE 14 acres UNION STATION 14 acres THE 78 62 acres MICHAEL REESE 49 acres
Why are we still bullish? Because geography and demographics still matter 11
THE RIVER DISTRICT 37 CONTIGUOUS ACRES BOUNDED BY CHICAGO RIVER, HALSTED, AND GRAND AVENUE 12
URBAN CONTEXT NEXUS OF CHICAGO’S MOST DESIRABLE RESIDENTIAL NEIGHBORHOODS LAKEVIEW 70,984 15-30 minute LINCOLN PARK 83.3% BUCKTOWN 2 Mile Radius commute (or less) to 66,085 LOGAN SQUARE all of Chicago’s 85,319 LOGAN SQUARE 82.2% 67% most desirable BUCKTOWN GOLD COAST neighborhoods for WICKER PARK 1 Mile Radius OLD TOWN 26,164 millennial talent 40,133 78% 72.3% UKRAINIAN HUMBOLDT PARK VILLAGE 250,000 residents WEST TOWN 11,450 (146,000 RIVER WEST STREETERVILLE RIVER NORTH 59% 35,077 29,507 households) within 16,022 43.4% 79.1% 82.7% 2 miles of site TRI-TAYLOR WEST LOOP 7,141 FULTON MARKET 62.6% 55,161 953,000 residents THE LOOP 68.1% (442,000 15,812 80.4% households) within UNIVERSITY VILLAGE 5 miles of site 34,017 43.4% SOUTH LOOP PRINTER’S ROW EAST PILSEN POPULATION ESTIMATE 30,505 51,527 COLLEGE DEGREE 78.0% 44.6%
TRANSIT CONNECTIVITY TRANSPORTATION CONNECTIVITY CENTRAL LOCATION CONVENIENT ACCESS TO MAJOR BUS, TRAIN, BIKE, AND COMMUTER HUBS • 50% of site within ¼ mile of CTA Blue Line • CTA Blue goes direct to ORD • Within ½ mile of 5 CTA train stations (Blue, Brown/Purple, Green) • Bounded by 3 major bus lines (Halsted, Chicago, and Grand) • Halsted and Milwaukee are major bike ‘spoke routes’ • 1 mile to Ogilvie / Union Station commuter train system
KEY TAKEAWAYS • There’s good reason to be bullish on Chicago and other gateway cities • Geography and demographics still matter • Watch out for oversaturation and challenges for absorption 15
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