How the industrial commercial real estate landscape is evolving with automation, robotics, e-commerce, and more, with George Cutro & Chad Buch, co-leaders of the Chicago Industrial Research Platform for JLL.
On this episode I’m speaking with George Cutro & Chad Buch, co-leaders of the Chicago Industrial Research Platform for JLL. Based in the company's global headquarters, they track the largest industrial market in the United States at 1.2 billion square feet and work with a team of about 40 producers, which is JLL’s largest industrial brokerage team in the country.
Their research is utilized daily for a variety of unique and complex industrial transactions from tenant representation, dispositions, build-to-suits, and investment sales. Chad and George are also involved with market assessments using labor analytics and GIS mapping, and produce innovative whitepapers on industry trends.
Related links for this episode:
· Haven Allen of MHub
· Ben Breslau of JLL
· Real Time Podcast
· Real Time on iTunes
· JLL Chicago
· George on LinkedIn
· Chad on LinkedIn
Chris Arnold: Welcome back to the Transforming Cities Podcast. Each episode highlights ideas around rethinking the way cities are evolving. We discuss planning, design, technology, development, and other fields that contribute to the urban experience.
George Cutro: What they'll do is they'll hire, or we'll take drone footage and show construction as it goes. In addition to that, they'll slap a camera on a pole, so now anybody that goes to their website can see the actual live footage of their building being built.
George Cutro: So another great way to show that community, here's what we've got. You can now see it's a real building. We're not saying we're going to build it. You can see the construction live, as it's going up.
Chris Arnold: On this episode I'm speaking with George Cutro and Chad Buch, co-leaders of the Chicago Industrial Research Platform for JLL. Based in the company's global headquarters, they track the largest industrial market in the United States. At 1.2 billion square feet, and work with a team of about 40 producers, which is JLL's largest industrial brokerage team in the country. Their research is utilized daily for a variety of unique and complex industrial transactions: from tenant representation, dispositions, built-to-suits, and investment sales. Chad and George are also involved with market assessments using Neighbor Analytics and GIS mapping, and produce innovative white papers on industry trends.
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Chris Arnold: SO George and Chad, thank you so much for joining me today.
Chad Buch: Thanks, Chris
George Cutro: Thank you very much.
Chris Arnold: So let's start with how you both found your way into this commercial real estate world. And Chad, how about we start with you?
Chad Buch: Sure. So I grew up in Raleigh, North Carolina and I have a few family members, including my dad, that have worked in real estate for their entire careers. So have always been kind of interested in building, and construction, and that sort of thing. When I was an undergrad, I got my North Carolina real estate broker's license, just to... thought it'd be something interesting and good to have in my back pocket. I later went to graduate school in East Carolina. That was during 2010, kind of in the bottom of the recession. So I was studying urban planning, and kind of always had an interest in real estate and development. Not the best time to be getting a job in real estate development. Not a lot happening at that point, but obviously, we're in a very good part of the market right now. But after grad school, I started interning for JLL in their Raleigh office, which is primarily office tenant reps, and pretty small office there.
Chad Buch: But I was on the research team and doing our quarterly market reports, market surveys, white papers, very similar to what I do now, but obviously, in a different market, much more exposure and the Chicago market size is way bigger. And this is obviously our largest industrial brokerage team at JLL in the country. SO we have a really robust team, and really robust market here. And we actually do a good bit of national tenant-rep work out of this office. So we kind of parachute into other markets and are tracking some of the higher-level national trends around the country for JLL.
Chris Arnold: Yeah. Right. And let's back up a little bit. So you were back in school. You got your real estate license. Is that a common thing to see?
Chad Buch: You know, it's probably really rare.
George Cutro: No, it is rare.
Chad Buch: (laughs) It's not offered through the university, it's through a private real estate school, and I was probably one of the youngest people in the class, but glad to have done it because it really kind of opened my door to the real estate world and that's kind of a prerequisite course, and so I could have immediately left school and started selling houses on the side if I wanted to, but I was always more interested in the commercial real estate side and obviously industrial is very exciting.
Chris Arnold: Yeah, so, let's pause for a moment and pivot over to George. You know George, you've been in the industry for quite a few years now and I want to know where did it start for you? And where did your background get rolling?
George Cutro: Well, thanks. Unlike Chad, I am born and raised in the Chicago area, northwest suburbs. My Dad, like Chad, was in the real estate industry but he was a residential broker and back in that day there was no computers and one of the things I learned from him, or actually he was allowing me to do was peruse through all his listing sheets of available houses that were for sale and pulling out all the ones that were sold, and add any new ones to his he called his "black book" that needed to be updated. So back around 12, 13 years old, I got my first foray into the real estate world. I liked doing it which I think for what I do now, database management, is a manual thing still. I like doing that and that's where I cut my teeth.
George Cutro: I graduated from Lewis University with a Marketing degree, and like Chad, when I graduated, the market was tough to find jobs, so I interned for a market research firm for a year. During the same time period I got engaged and was saying this is not enough to support a family. I answered a blind ad and got into the commercial real estate industry through that blind ad. And I've been doing it ever since now going on 31 years.
Chris Arnold: Wow. So, this is something that has always fascinated me, which is this idea of two stories converging and coming together at a certain point in time. So the both of you have worked together for a few years now, and the reason why this is fascinating to me in retrospect is you know, for example, George, you've been in the industry for 36 years now. What were you doing in the industry when Chad was in middle school or high school and kind of coming up through his younger ranks, and then your two worlds would eventually would collide and converge and you're working together now?
Chris Arnold: As I understand it, this actually happened at a local meet-up group, is that the way the story goes?
George Cutro: Uh, yeah, that's correct. Myself and a couple other colleagues from competitive firms were trying to find a way to exchange information more readily and my thought was let's meet as a group to share ideas and to help each other because we're all doing the same thing, just at different shops. Well, let's help each other be more collaborative with information so we had to do less data clocking and more sifting through the data...made our jobs more efficient.
George Cutro: So about 15 maybe 20 years we created the Chicago Industrial Research Council. We met a couple times a year. A couple big things that really came out this meeting is we started to come up with some standards for collecting data that we all shared. The biggest thing that we pushed to each other on a monthly basis is an exclusive list. Chad is the man from our office that maintains that list and sends it out to this group. But back then, everybody had an Excel spreadsheet, but the data was in different spots, they weren't all showing the same types of data. So from this group we were able to formulate the data, and then that's key here, if there were any new additions, or any changes to highlight those on the spreadsheet so it made all our jobs easier when we're looking for changes within that group.
George Cutro: The other big thing that came out of that was a com sharing program that we also feed to each other on "coms" that we're allowed to share to the group. Again, making our life a lot easier for collecting data.
Chris Arnold: Yeah. So what type of data for the layperson who's listening to the podcast today, what types of data are you discussing, collecting, making easier to access? Could you wrap that up and give us a nugget of what that looks like?
George Cutro: Oh, sure. From the availability side the most important features are where it's located, so your address location, the size of the asset and the pricing of the the asset. And then maybe a couple of salient property features, the most important features, and Chad correct me if I'm wrong, are clear height, how many docks the building has, how many doors the building has, how much office is in that building, and lastly power. And then on top of that you have your pricing components: if it's for sale what's the sale price, if it's for lease what the lease price is and then if you know what the taxes are, those are all key components for when people are looking for properties, they're going to want to know those aspects so they can make a determination whether they want to submit that property to a client or not.
Chad Buch: And Chris, we're tracking all this information in our proprietary software called Market Sphere our property database and you know the industrial market is very nuanced, so we're tracking a lot of different types of spaces including cold storage, truck terminals, crane manufacturing buildings, as well as we're really tracking a lot of other market information as well as scoops and tidbits on hey, this is coming to sale as part of a portfolio, or, hey we're getting a note from one of our brokers that this tenants about to renew, or we're tracking a variety of different data points that are in many cases non-public in their exchange, party-to-party amongst the brokerage community that are really valuable data points to our clients.
Chris Arnold: Yeah, that makes a lot of sense. And so, George, when you two met in the research council world I'll call it, what year was that?
George Cutro: It was about five years ago.
Chris Arnold: Wow, so is that when you both started working together? Or did you meet each other before you started working together?
George Cutro: No, first time I met him was at a research council meeting. And then from there a couple of years later I ended up joining his firm and he's taught me everything ever since on how to be a great research guy.
Chad Buch: When I hired him, he was just out looking for a job
George Cutro: (Laughs)
Chad Buch: And we brought him over! Down on his luck...(laughs)
George Cutro: And I owe Chad a lot for the career he's helped me really push forward today.
Chris Arnold: So, this is a great segue. I want to know more about this symbiotic relationship that you two have. You have your own podcast, feel free to mention that and plug that. You guys are high energy, funny, there's a lot of laughs in your conversation. I'd love to start with you Chad, and learn more about your role in that relationship.
Chad Buch: Sure, so, we actually function as a three-person team, fully dedicated to the industrial market here in Chicago. We have about 40 brokers in this office including guys who do investment sales. So this is, like a mentioned earlier, JLL's largest national industrial real estate brokerage team in the country so we support the Chicago market, which is about 16 thousand buildings, 1.2 billion square feet. The primary responsibility for research is our quarterly market report. We like to think that we have the most robust and comprehensive market report, covering 20 sub-markets.
George Cutro: No, Chad, we do.
Chad Buch: And it's a great piece, it's available on our website, and we're happy to share that with you. But it's really valuable insight on a quarterly basis, but the rest of our time is really direct support to all of the transactions we're doing, as well as we help out with business development, we work with our property marketing teams, and we also get out and have a little bit of fun, tour some buildings, do some open houses, and our meeting with clients. And talking to clients very frequently.
Chris Arnold: And talk to me a little bit about JLL's proprietary GIS platform, which you mentioned to me in a previous conversation, but I think it's called Blackbird, is that right?
Chad Buch: Yeah, correct. So Blackbird's a great tool, it's a geospatial tool that is integrated with Marketsphere our GLL property database, which shows availability, property information, and we overlay that with a ton of different variables from labor and demographics that we do heat mapping with, we do drive time analysis, we do simple property surveys looking for available spaces. We are tracking a lot of different amenity data to public transit accessibility. It's really a great tool for virtual market presentations. For example, we're working with client based in Chicago, long-time client that is starting a new project and they're looking at five other markets around the country.
Chad Buch: So, before we go get on a private jet with this client, we're doing the market tour in the office tomorrow looking at Atlanta, Dallas, and Nashville; we have their size requirement, we have loaded in some available properties that we are going to go fly the market, virtually, Blackbird, go look at these, and we're going to let the client kind of whittle down which ones look best, which ones are available now, which ones will kind of lay out best for their process, which ones can be upgraded with office space, that sort of thing as well as which ones appear to be in a good labor market and are close to highways.
Chad Buch: So, those are some of the main variables that we're looking at with this client tomorrow, and we're hopefully going to whittle down this tour list to a more manageable order and then we'll go out and physically tour the buildings. So, that's one of the most logical applications that we do with industrial because these buildings are so big and so far apart and the clients always have a very unique need for their distribution and manufacturing use so that's a great way to kind of virtually tour the buildings.
Chris Arnold: Yeah. So Chad, you're more the visualization of the data, it sounds like being more proactive in those strategies and talking clients through those options and those decisions and George, you alluded to this earlier, but please take it away, it sounds like data collection is a huge emphasis in your role.
George Cutro: Well, that's correct, that's my strong suit. I've been primarily collecting data, I've been doing it since day one. And basically I've been doing the same operation since day one, which is taking the population and then re-verifying vacancies over a quarterly time period. And then from that information, you're going to get a couple different pieces that you can then put analysis to: whether they trade or they're still available if they trade you get all the economic information from buyer/seller, tenant/landlord, what it sold for, what are the economic terms in the lease and then from there we can then feed it to our database so on a quarterly basis we can now interpret, so, okay, here's what's happening, here's what's leasing, here's the size range leasing, here's the markets that are hot, here's the markets that are you know not doing so well.
George Cutro: We can also break it down, as Chad mentioned earlier, by product type, by whether it's warehouse, manufacturing, or some product type, and then we look into the Capital Markets Group, you know, where are these investment buildings trading hands at what cap rates. So now we can tell a really rich story from the primary data that we're collecting and not relying on a third party vendor forum.
Chris Arnold: Uh huh, yeah. No, I love this. We're starting to get into the weeds a little bit and I'm admittedly not that well versed on this so I'm excited to have this conversation today and jumping into some of our main talking points, which are really focused around the industrial CRE space and more specifically what it means when we think of the warehouses of the future or industrial warehouses of the future. So as we get deeper into that expertise that you both bring to the table, talk tome about and set the stage for the biggest changes you've been seeing in this industry over the last 5,10,20 years.
George Cutro: Well, I'll start, this is George. I think the biggest change in warehouses is the size and the technology within the building. Like, we've gone from, call it 20 years ago, 150,000 square foot building was the largest building being developed on a speculative basis, to now its not uncommon to see a developer build a million square foot speculative building for the next e-commerce or large 3PO warehouser looking for that size space because that's where some of the demand is running from.
George Cutro: And then, from inside the buildings you're looking at a couple different things, you're power is definitely a big thing to have typically the spec buildings of the past a thousand, two thousand amps of power, where the norm now because of conveyor systems and IT technology you need abundantly more power so you're looking at 5 to 10 thousand amps of power being brought to these speculative buildings now because of those demands for that space. The floors on the buildings are a lot thicker. You know typically the floor on the building is 6", now you're looking to 7-10" for warehouse space and that also depends on whether you're going to mezzanine the building like some of the e-commerce folks out there, they mezzanine their buildings, which takes a million square foot footprint and now turns into 3 million square feet because its three stories. You need to have a floor to support that additional weight, so you're seeing that.
George Cutro: The other important feature especially for these fulfillment centers is we have a lot of bodies collecting pieces to package them to be sent out on a truck so you have a huge parking requirement now. Also, in addition to that, now since you've got these bigger buildings, you have a lot more trucks coming through and with those trucks you can just store them somewhere. So you see the truck yards being a lot bigger where they store these trailers to accommodate that. And then, in addition to that, Chad, what do you think about what we can so to those buildings?
Chad Buch: Yes, these buildings have air conditioning, they have more amenities, there's more sensors, there's heavy-duty wireless infrastructure in there, people are running around with handheld scanners collecting a lot of data as soon as packages come in the door and when they go back out, that requires a really robust IT infrastructure as well as increasingly a lot more automation whether that's package sorters, material handling infrastructures, spiral sorters and things like that to direct products in and out of the building. There's automated storage and retrieval systems which are moving pallets up and down in fully kind of dark facilities. So, these buildings are getting increasingly more complex and expensive.
George Cutro: And the unique thing about that is with those type of buildings, the inside of the building cost more than the outside of the building. You're putting more in the infrastructure than you are on the shell.
Chris Arnold: Yeah. Another thing I believe is occurring is, and forgive me if this is not the correct industry term, but I think it's something like hub and spokes? Where you have these sort of different rings of industrial warehouses and has that changed over the years or how would you discuss that, how would you explain that?
Chad Buch: Yeah, I think that has changed in many kind of manufacturing and distribution models of the past. There was a couple of manufacturing centers, and product was produced there and sent out maybe to two or three national or regional distribution centers. A typical model would be one in New Jersey or Pennsylvania and one in California on the west coast, and maybe another in the middle of the country like a Chicago or St. Louis and you shipped an order and it got there on a truck in like a week or two weeks and that was the normal logically accepted delivery service time.
Chad Buch: Obviously there's other company's out there that are delivering in two days or 24 hours and so that has really changed the distribution model and so the boiled down version of that is more distribution nodes in more places for faster service. You can't just put one big warehouse in the middle of the country and expect to service everyone in two weeks, you need to be faster, your customers are demanding it so that has been a fundamental shift in the business.
George Cutro: And again, Chris, this is really stemming from e-commerce. E-commerce has changed the supply chain cycle in the way things are moved, because you know, what was, and Chad mentioned this earlier, what was typically the standard from okay five days is okay to wait for a shipment maybe five years ago, today, you're getting it within a couple hours. And in order to feed that beast, you need to have more distribution centers and you get them from larger down to smaller, and the smaller distribution centers typically from 20-50,000 square feet are located in highly dense population where those goods are being sold to.
Chris Arnold: Right. And would you say that e-commerce is the main driver of these industrial changes or are there other drivers or other niches that are pushing this forward as well.
George Cutro: Well, they're the main niche for that, but call it 15 years there was another term in the industry called "just in time" delivery. Which was brought on by the manufacturing group as more manufacturers were getting rid of their access warehouse phase and turned it into production. They didn't want to warehouse the stuff anymore. They were requiring distributors of those parts they were using for the final product to bring them the goods as they needed it. So that freed them up to not have to keep that stuff in their buildings, and these other manufacturers and or their warehousers were now responsible to get them those parts when they wanted them. So that's sort of the first wave of this. And then e-commerce, and as a business-to-business cycle, with e-commerce it's a business-to-person.
Chad Buch: Right.
George Cutro: And, so you have a lot more people that you're catering to so you need to have a lot more locations to deliver the products in the amount of time they're delivering them to.
Chris Arnold: Yeah.
George Cutro: Some in a couple of hours.
Chris Arnold: Yeah. And the locations matter a lot because you mentioned to me this idea of a buy market quandary. In that, the way that the lay of the land, per se, in Chicago isn't necessarily the lay of the land in New York City. I guess let's start with you George, can you explain to the listeners what's happening? Where, and kind of why there are those differences?
George Cutro: Oh sure. Chicago is unique because it's a flat surface. I mean, New York is flat as well, in the city of New York that is, your topography is not an issue. However, the price of land in New York is such a premium that in order to build an industrial facility where the population is, you have to go up. So you're going to build buildings that are multi-story in nature because of the cost of the real estate. And the last time that it happened, was back in the 1900s when we had the industrial revolution come through. Again, in that period of time we weren't as spread out as we are now so you get a lot of people, again, going up with their facilities multi-storying them to be close to the population node where their workers were. And then once the urban sprawl happened in the 60s and 70s, you saw the exodus of building buildings multi-story and moving out to more rural but close in areas and had the land available to build single-story industrial structures.
George Cutro: So now, reverting back to that need all these population nodes are very dense and they want to get back into those nodes and the only way to build in some of these markets is to go up. Another example of that is in Washington where they're building multi-story buildings warehouses again for the e-commerce community and that's the only way they can do it because its too costly to try to assemble enough land to building a single story structure.
Chris Arnold: Mm-hmm (affirmative) And what are those... Chad feel free to jump in here, what do those more dense urban areas... what do their industrial buildings end up looking like? I'm hearing multiple floors, maybe some modifications to how those delivery processes actually play out, or how would you describe that?
Chad Buch: For example, in a place like Prologis' Seattle warehouse, this is a new to market type project, so the ramps for loading are incredibly unique. This is not just, you know, you drive your truck... you come in and there's a ramp to take you to a second level which, you know maybe if you look at one of these buildings there may be one portion of the building that's better dedicated for putting 50, 3' trailers in which is kind of the new domestic standard whereas another portion or level of the building may be better suited for smaller box trucks or vans so these buildings are meant to be a multi-tenant scenario, and maybe another level will be you know just better for pure parking and maybe manufacturing assembly because the human workforce can get in their via elevators or steps or whatever. So the buildings itself are going to be much more expensive ramps and truck courts are going to look a lot different. These are not your typical cross docks with 190' truck courts, they're just going to look a little bit different and much taller. So the typical distribution building today is built to about anywhere from 32-36 maybe even 40 foot clear. These buildings are essentially three times that.
Chad Buch: So, the peak of the roof is a hundred something feet.
Chris Arnold: And how often are you seeing that these industrial buildings being new-builds versus readapted or modified over time?
Chad Buch: Well, the building I just referenced is brand new, one of a kind. There's one on the west coast and maybe two coming out of the ground in maybe in the New York City area. In many of these old cities, Chicago, Baltimore, Philadelphia, there's definitely a big stock of multi-story industrial buildings call it plus or minus a hundred years old masonry brick and timber, uh they do not have the big truck courts or the loading capability for today's modern users so in many of these markets these buildings are just excellent redevelopment candidates for loft offices or multi-family housing. So, a lot of that inventory has just been taken out of the market, they're not...being converted, they're off the table.
Chad Buch: But what's left, you know, some of these are not just really efficient for modern distribution. You may have one or two freight elevators in there, and if you're sending out a package of parcels every day the loading, getting stuff in and out, is sort of inefficient. Those buildings have largely been used for dead storage or maybe a small distribution use, but not something that's highly efficient like we think of with the modern e-commerce operation but those buildings still have a valuable purpose. They're well constructed and well located but maybe you're just doing some kind of traditional distribution off a lower floor, if it's a five story building, it may be the upper stories are more dead storage or maybe even converted.
Chris Arnold: Hmmm.
George Cutro: And just to add on to that Chris, just for your listeners, a better understanding of the difference between the two buildings. First, the older vintage buildings how they service the floors is through freight elevators. These freight elevators have the ability to take very heavy items from floor to floor versus the modern buildings today, they're bringing each floor, and I think in the one in Washington, they have the ability to service multiple floors with docks. So they're not putting in an elevator bank to move the goods up and down, they're either bringing the docks to the levels or as a conveyor system where they're moving the goods from floor to floor on a conveyor system.
George Cutro: The other thing, looking at the older stock of buildings, those are great for the time period and then after a while when their use became outdated, a lot of those buildings were converted like Chad mentioned, to other uses but a lot of them stayed in the industrial realm but they were really incubator type buildings where someone was working in his garage on a project needed more space, he would move into these buildings because these would be a great cheap alternative to go and try to find single story space in the city.
Chris Arnold: Yeah.
George Cutro: But once those guys grew out of that space and moved into something single story, well that was a great entrée for them to really start to expand their business.
Chris Arnold: Do the newer buildings the technology there, do those have a specific name? Is that a specific building name that's been coined or is that just an architectural and build style?
Chad Buch: Well, we kind of think of the market as what we call a Class A building is more maybe built in the last 15 years or so. It's usually a minimum of 30' clear ceiling height and by and large that is built with precast concrete. That is kind of the more modern institutional grade type asset and that's really the market that we typically play in, Class A/Class B for distribution space. But it's really kind of driven by the kind of premium investor market they really focus on that kind of asset. Those are the life insurance companies, the pension funds, the big private equity firms, that's kind of the asset class that has been driving...
George Cutro: ...the Chad Buch's of the world by those on a personal basis...
Chad Buch: (laughs)
Chris Arnold: So guys, lets switch gears a bit into how these buildings are being positioned or marketed and what have you found as being the biggest themes of how these are being discussed and sold and that could be from the brokers to the buyers to the public at large? Obviously I'm representative of the public at large and I'm learning a lot today. George, let's start with you. Talk to me about how these properties and the marketing around them has changed?
George Cutro: There's really two issues that have changed throughout my lifetime. Uh, the first one and the most important one is demographics of the area. With the unemployment rate at historic lows, companies now when they're making a decision about real estate needs, their number one thing they're asking brokers today is "If I move here will I have labor to be able to support my business"? So you'll see a lot of people marketing buildings will show on the marketing brochure a radius of where the labor is at and kind of color code it so people, when they see that, they know that there is labor that they can obtain.
George Cutro: The other thing that I notice more now, and this used to be an office trick, but now it's trickled over in the industrial side, they're showing where the amenities are. Another thing to keep the employees at your company, is making sure you are nearby amenities. You know, grocery stores, restaurants, so if someone wants to go out at lunch and pick up something, they now know they can because they're in an area that will support that type of need for their employees so they're also looking for that as well. And those are the two biggest things I've seen being added to the market schemes on today's industrial properties.
Chris Arnold: Yeah. Yeah, Chad, what about you?
Chad Buch: Well on the property marketing side we're using some great technology because largely everything is marketed via the web and via the broker. Broker to broker community we also put a sign on the building. But the odds of you getting a legitimate prospect off of a sign call are sometimes slim. But, you know, one of the best things that we're doing is using the Matterport camera, which is 3D movable camera that you can be positioning in a couple different corners of the building and when we make a custom branded webpage for any of our marquee listings, we're embedding that footage into these websites so you can send the brochure and a link to the website to a prospect and they can virtually tour the building without getting in their car and going to see it.
Chad Buch: So, a great example of that is we'll put a camera right inside the front door, right by the lobby or the entrance. Get a quick view of the layout in the office and a conference room layout, we'll get a second photo area of the middle of the warehouse. You'll do a 360 degree view to see how the docks and the column spacing lays out. You'll be able to look up and see the ceiling height and say "okay, this is the inside of the box looks good tome," and then we'll put another camera kind of on the outside maybe around the loading docks just so you get a good view of the truck court and the docks ...
Chris Arnold: So, it is like a virtual tour of the...
Chad Buch: A virtual marketing tour...
Chris Arnold: Right, right, right.
Chad Buch: Do it all from your computer. And then it really saves a lot of time if you're doing a market survey and it helps, it's just more attractive marketing, it makes your project more attractive if somebody can see it.
Chris Arnold: Right. I'm in agreement, I'm nodding my head over here. The Matterport is a great tool and it's a tool that our team has started leveraging as well. And being able to put prospective buyers and customers in the space without them necessarily needing to be in the same city or in the same location or room with you is a huge bonus and especially now with the transition to so much mobile traffic and people being on their phones all the time, being able to see a shot of that atrium as you eluded to on their phone and kind of look around is a huge key to, I think, marketing, and it sounds like that's trickling into industrial as well.
Chad Buch: Yeah, absolutely. At JLL, a lot of our client base is sort of corporate institutional. You may be sending this to a real estate director who is on the other side of the country so it really helps make his job easier if he has this virtual information right at his fingertips. It saves him a trip out to go see it.
Chris Arnold: Yeah, how 'bout anything on the video side? Do you find videography or aerial footage, drone stuff, are things like that that important in the marketing aspects of these industrial projects today?
George Cutro: They are. With our development community. So a developer will come and buy some land and they're going to build a speculative building. A speculative building meaning they're building it without a tenant in mind, but knowing demand is there and they can capture that demand. So they'll build this building on a speculative basis and what they'll do is they'll take drone footage and show construction as it goes. In addition to that, they'll slap a camera on a pole so now anybody that goes to their website can see the actual live footage of their building being built. So, another great way to show the community, "here's what we got, you can now see it's a real building, we're not saying we're going to build it, you can see the construction live as it's going on.
Chris Arnold: Right. Chad, George, as we begin to wrap up, I want to kind of open the Pandora's box here and hear from you both what you think is coming next in the industry, what we need to be aware of, and anything else that comes to mind as you're seeing it with your industry evolving?
Chad Buch: Well, we continue to be in a good part of an expanding market cycle. There's certainly some economic turmoil out there, but we largely feel pretty healthy. Chicago's a good bell weather for the national economy so we're not overly reliant on one particular industry, we're very diverse here, so, as well, with Chicago being such a key transportation network a lot of these clients are really drawn to the region, they're focused here, this is a major population center, so we continue to see that the fundamentals look very good for Chicago.
Chad Buch: We're coming off a really record 2017, 2016, and 2018 so the big picture may be slowing down a bit but we don't see any market crash or market recession. We feel optimistic about going forward, we see a lot of development and vacancies are low and absorption and tenant demand is still relatively healthy forums.
Chris Arnold: George, how about you?
George Cutro: The big thing I think of are our employees and employee cycle. I'm looking at them especially with these fulfillment centers. They're going to become more automated. They're going to be less people involved in that process and I believe that's a good thing because that type of worker, they don't need a college degree or skillset to work in that environment because its manual labor and I would love to see us going forward put more oneness on how to retrain that workforce because there are a lot of high end manufacturers looking for quality candidates. And in today's environment, most of the high schools are graduating kids who don't go to college, they end up doing these types of jobs, which really, at the price point they can pay them, is not life sustaining. So I'd love to see us going forward think that through and get more technical school training because those jobs are right now in high demand and they also pay a living wage.
George Cutro: So, I think going forward as we automate more, we need to retool our employment industry for their future.
Chris Arnold: Yeah. No, I love that. I think that brings everything full circle on the industrial side and cost of healthcare, cost of living, that long term security for especially raising a family and having a nice way to live is I think extremely important for a lot of those candidates in those positions.
Chris Arnold: So guys, we're wrapping up here. I always like to ask this final question because you obviously both know a lot about this space and it's fairly new to me so again thank you for your time today. I always ask this, I'm curious who you feel is doing groundbreaking or inspiring work that you both look to in your daily lives?
Chad Buch: Chris, we have a good friend of the firm and a guy we have partnered with, his name is Haven Allen, he's the Executive Director of mHUB. They are an incubator and workspace and kind of digital manufacturing lab in downtown Chicago. We met with him about a year ago on the podcast and picked his brain on a lot of industrial technologies. He's got a great organization and somebody we've worked with as a JLL client. He'd be a great guy to talk to, Haven Allen at mHUB in Chicago.
George Cutro: And the second person I'm going to mention, his name is Ben Breslau. He heads up the research for JLL worldwide. And I worked with him, with Ben, in a different life in another firm and he is a true visionary and when he got to JLL to head up the research department he's really changed the landscape of who's thought of as the number one research group for real estate around the world. And he's really been the person that has driven that for JLL. And he continues to push the envelope and continues to open up our eyes and ears to outside of just collecting data, so I really think he's another visionary in our industry.
Chris Arnold: Yeah, that's great. Does anyone else come to mind for either one of you?
Chad Buch: No (laughs) ...
Chris Arnold: Well, let's pivot into what you two are up to and where listeners can find you online because I know that there's a podcast, there's lots of fun stuff in your world so why don't you plug that before we wrap up?
Chad Buch: Yeah, we host JLL Chicago Industrial Real Time. We are on Apple's iTunes podcast app, we have a sound cloud for JLL Chicago Industrial Real Time. We are on JLL Chicago twitter and obviously we share this out to our LinkedIn network and all our research reports can be downloaded off of our JLL Research website.
George Cutro: Right. Go to JLL.com and you get our latest reports. We post everything that we produce White Papers to Quarterly Market Reports online at JLL.com.
Chris Arnold: Fantastic. Guys, I'm going to be linking all of this in the show notes and once again George and Chad, thanks so much for your time today.
George Cutro: Chris, thanks.
Chad Buch: Yeah, thanks. Great opportunity.
Chris Arnold: Transforming Cities is brought to you by Authentic Form and Function, the digital design and development team that just might be a perfect fit for your next urban project. If you're a new listener, you can follow along at authenticff.com/transformingcities or you can simply subscribe through your favorite apps, including iTunes, Spotify, or Stitcher.
Chris Arnold: Thanks for joining us.
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