Experts: 'Small Ball' Is the Game Plan for Suburban Real Estate, Construction
Byline: Richard R. Klicki
It was a strategy that earned the White Sox a World Series championship in 2005.
In 2011, "small ball" will continue to be the game for the suburban commercial real estate and construction market as it struggles in a sluggish economy, according to experts at the recent Newsmakers Forum.
"We're not seeing many home runs in this industry right now," said Jerry Lopatka, managing principal of Dugan and Lopatka in Wheaton. "We are seeing a fair amount of singles and doubles."
Other panelists echoed Lopatka's comment at the Newsmakers' Forum on Real Estate and Construction, sponsored by Daily Herald Suburban Business and Daily Herald Business Ledger. Dugan & Lopatka was the presenting sponsor and Comcast Business Class, Seven Bridges Golf Club were corporate sponsors.
Lopatka pointed to five key local and five national factors that were continuing to keep the market from recovery. Locally, he said, excess capacity, weak demand for property, a high unemployment rate, the Illinois Appellate Court's reversal of a law that provides the state's capital funding projects, and the Illinois business climate in general were affecting recovery.
Nationally, federal spending and tax issues, Obamacare, the turmoil in the Mideast, the overall economic uncertainty and slow hiring in the private sector have also had an impact.
Jeffrey Ludwig, senior vice president and managing director of Alter 360 in Skokie, said vacancy rates of office space in the Chicago area is around 15 percent, while in DuPage County that rate is 19.2 percent. For industrial space, the rates are 15 1/2 percent in the Chicago area and 19.2 percent in DuPage County.
As a result, very few businesses are doing large construction projects. Large builders are bidding on mid-sized projects, local builders are bidding on smaller projects and residential builders are focusing on remodeling, according to Joseph Krusinski, founder and CEO of Krusinski Construction Co. in Oak Brook.
"I'm happy to be playing small ball right now," Krusinski said.
The panel agreed that the Illinois business climate has also been a factor. While the state has many good things to offer business, recent tax changes and a lack of action from the state Legislature has made it difficult to do business in Illinois, and has led other states to try to lure businesses out of the state. …