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“We are in a changing marketplace. We are in a period of flux.” That was one of the main messages delivered by Thad DenHartog, managing broker and principal at Mel Foster Commercial Real Estate Services, on Thursday, Oct. 6, at the Quad Cities Regional Business Journal’s inaugural Commercial Real Estate Symposium. Mr. DenHartog provided the keynote speech during a luncheon event at the Bend XPO in East Moline. That event, presented by Platinum Sponsor Mel Foster Co. along with sponsors GreenState Credit Union and Russell, brought together more than 100 business, government and community leaders to learn about the region’s current commercial real estate landscape. His speech, “A Quad City Commercial Real Estate Update: How We Got Here and Where We Are Heading,” covered a wide range of timely topics for the region. Those topics included: the impact of inflation, supply chain delays, the pandemic and a possible recession on various local real estate sectors. When it comes to a possible recession, Mr. DenHartog bluntly said: “Recession is on the horizon. I don’t think that’s debatable.” A possible recession also was on the minds of a panel of area city managers and administrators at Thursday’s event. Most said they expect a recession and their communities have been making plans to ride out the economic storm. For instance, Moline City Administrator Bob Vitas said “You can see it (a recession) coming.” That coming recession might make Moline delay some projects and delay buying new equipment, he added. Others said it is important for communities to have a strong cash reserve fund on hand to help survive a recession. “We’ve got more reserves than we’ve ever had,” said Decker Ploehn, Bettendorf city administrator. But there was also good news to report during the real estate symposium. Mr. DenHartog said that industrial space and property is a “hot area” in the Quad Cities with companies looking for space. During his presentation, he said the vacancy rates in the region are below 5% with no vacancies listed in outlying markets. Mr. DenHartog added that when it comes to investments, industrial buildings could be a “popular and safe place right now.” The keynote speaker also reviewed trends in investment property sales, commercial investment real estate, office space, apartments and multifamily units and other sectors. Some of the highlights included:
- Apartments (multi-family buildings). The vacancy rates are below 5%. There are currently 554 units under construction. There were 193 units added in 2021, and 220 units added so far in 2022. Some of the rents include: in Scott County, downtown studios are $1,075 a month, one-bedroom – $1,150; two-bedroom – $1,350. In Rock Island County, newly constructed: studio – $1,100; one-bedroom – $1,300; two-bedroom – $1,500. (During his talk, he noted “It has been a long time since I rented an apartment, but those rates shocked me.”)
- Office space. The vacancy rates are 11% to 15% in Iowa, and higher in Illinois at between 24% to 26%. There are 577 active listings. He added that those rates may be declined because many employers want their workers back in the office. “Employers are bringing employees back to the office. ‘Work from home’ did not work. Office users have gone from downsizing to adding back space (and) modernizing current footprints,” according to information presented by Mr. DenHartog.
- Retail space. The vacancy rate is 12% to 15% in Iowa, and 18% to 20% in Illinois. He added that restaurants have been hit hard by inflation, supply chain and labor shortage issues.