COVER STORY, MAY 2008

HIFFMAN HEATS UP
The Chicago NAI affiliate has experienced record growth of late, and the momentum is building.
Coleman Wood

Retail in Chicago has shown its resilience, and the market is active from the urban core to the far-flung suburbs. One company that is poised to take advantage of the city’s good fortunes is local brokerage firm NAI Hiffman. The Oakbrook Terrace, Illinois-based company is also highly active in the office and industrial sectors, but its retail division is experiencing incredible growth.

“There clearly continues to be an investor demand for high-quality retail centers, [specifically] suburban centers,” says Dave Petersen, COO of NAI Hiffman and CEO of the company’s asset management division. “There continues to be a high amount of interest in some of the inner city projects. We’re [also] seeing some residential infill in the CBD, and obviously the retail sector is trending with that to support the needs of all the new households.”

NAI Hiffman has been able to achieve growth by packaging its services as an all-in-one brokerage firm. The company provides comprehensive asset management services, which covers the developer from the first shovel-full of dirt to the leasing, operation and eventual sale of the center. It is able to provide all of these services in-house, rather than involve multiple companies.

“What separates us from some of the other groups out there is the ability to manage the entire process,” says Ryan Murphy, executive vice president and managing director of NAI Hiffman’s retail group.

Murphy believes the company’s superior marketing services also benefit its customer base. 

“We’re not just putting a sign up,” he says. “We’re putting together a complete marketing plan.”

Petersen adds that clients are looking for service, personal relationships and expertise in the market, and NAI Hiffman can meet all of these requirements. This dedication to its clientele is what has helped the company land some prominent Chicago retail projects.

“We have done some higher-end specialty projects that have really been good for the group,” Murphy says.

The company is providing leasing and management services for Oak Brook Promenade, a 185,000-square-foot lifestyle center located on Butterfield Road in the western Chicago suburb of Oak Brook. The project is situated on the former headquarters of Waste Management, which was demolished to make way for the retail center. The center was able to make use of the property’s underground parking structure, which was spared during site preparation. 

The 185,000-square-foot Oak Brook Promenade opened this past November in Oak Brook, Illinois.

Oak Brook Promenade, which held its grand opening in November 2007, is seeking to take advantage of strong area demographics, which includes a daytime population of more than 200,000 spread amongst the area’s 6,000 businesses. The center contains specialty retailers such as Arhaus Furniture, Jos. A. Bank Clothiers, Swoozie’s, Pendelton, Omaha Steaks and Sweet & Sassy. Joining this roster are a collection of high-end restaurants that includes McCormick & Schmick’s, Kona Grill and Grotto Italian Steakhouse. While not yet fully leased, new tenants are opening on a regular basis, and NAI Hiffman expects Oak Brook Promenade to reach full occupancy soon.

Design Pointe is an upscale lifestyle center located in Naperville, Illinois, that focuses on home improvement and decoration retailers.

Even farther west in Naperville, completion is nearing for one of the company’s more unique projects. Known as Design Pointe, the 170,000-square-foot retail center hosts a collection of tenants that specialize in upscale home improvement and decorating products.

“It’s kind of a destination point for your architects, builders and homeowners that are remodeling their homes or building new homes,” Murphy says.

Drawing on the destination center concept that other sectors of retail have been using, Design Pointe seeks to become a similar attraction for the home improvement crowd. Tenants such as Thomasville Furniture, Luna Floor Gallery, Prairie Loft and Studio 41 will cater to the high-end shoppers the center is expected to draw. Initial buzz about the development has been overwhelmingly positive, and Murphy expects that NAI Hiffman could possibly build three or four additional centers like Design Pointe across Chicagoland.

In the city’s core, NAI Hiffman is also providing asset management services for Southgate Market, a 320,000-square-foot project located on Canal Street. Prairie Market, a 587,000-square-foot shopping center located in Oswego, is currently developing a second phase, with NAI Hiffman providing management services. The center, which was developed by KDR Properties, is presently occupied by Lowe’s Home Improvement Warehouse, Wal-Mart, Best Buy and Kohl’s.

NAI Hiffman will also be marketing the retail portion of The Boulevard, a 180-acre mixed-use development located in the outer Chicago suburb of Plainfield. Phase I, which will contain more than 560,000 square feet of retail space, is expected to break ground later this summer. The development will benefit from an ideal location at the interchange of Interstate 55 and State Route 30. The Village of Plainfield is experiencing explosive growth, with population increasing approximately 130 percent from 2000 to 2006. But not all of NAI Hiffman’s growth has come from new developments.

“[Asset management’s] focus has been on chasing after a lot of third-party property management here in Chicago,” Petersen says. “Customers are reevaluating their providers, and we’ve benefited from that certainly in this past year.”

Despite economic forecasts, Chicago is still in the midst of a development boom, with as much as 12 million square feet of new retail product expected to come to market this year, according to Murphy. The company forecasts that big box development may slow some, but mixed-use and hybrid shopping center activity will remain strong for the near term.

In response to the city’s growth, NAI Hiffman has seen substantive gains across the board. The company’s portfolio as of October 2006 contained 6 million square feet of product. By the end of 2007, it had grown to 22 million square feet, and it increased to 28.2 million square feet by the end of March 2008.

“I fully expect by the end of the year to be at 35 million square feet of property that we’re managing,” Petersen says.

This kind of growth has kept NAI Hiffman optimistic about the future of the company. Murphy adheres to a simple brokerage strategy that if you have quality real estate, it is going to lease. This motto has defined the company’s actions, as it allies itself with quality developers and projects across the metro area. Chicago is alive and well, and business for the company could not be any better.

“Over the last several weeks, we’ve seen a huge push again from tenants. So, we’re hopeful that we’re going to have another record year,” Murphy says.

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