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Delicious Happenings at MetraMarket
October 2, 2013

Delicious Happenings at MetraMarket

Amid the bustle and baguettes, it's easy to forget that there used to be loads of vacant space underneath the Metra tracks at Ogilvie Transportation Center. Since opening in December '09 during the pit of the recession, the $35M MetraMarket has ballooned into a high-traffic restaurant and retail destination, highlighted by the 15k SF French Market.

Developed by US Equities Realty, the 100k SF project was a challenging labor of love, vice chairman Camille Julmy tells us. We met Camille for a nosh-filled French Market tour, taking in the new faces in the just about fully leased market. (The lines were predictably long at Stephanie Izard's latest, Little Goat Bread, but they were also long everywhere else.) As US Equities envisioned it over a decade ago, MetraMarket removes the big underutilized Chinese wall between the West Loop and CBD, serving about 100,000 daily commuters, 500,000 area office workers, and 40,000 residents, he tells us.
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The French Market, which can be entered at 131 N Clinton or from Metra's suburban concourse between Washington and Randolph, is a JV with the French Bensidoun family, renowned for their outdoor markets in Paris, Chicago, and New York, Camille says (snapped serving up "the best pastrami in the world" at Fumare). Gourmet sandwich shop Pastoral was one of the first to sign on, but early leasing was difficult in the midst of the downturn, proving the time and patience required to build business and co-tenancy. A rapidly growing neighborhood office population is helping to accelerate leasing activity, including Sterling Bay's recently announced repositioning of River Center, Hines' under construction River Point project, and John O'Donnell's proposed riverfront office tower at 150 N Riverside. Typical French Market license agreements are three years, Camille tells us, at $60/market day for 13' of table space and $90/market day for 13' of corner space.

Challenges ahead: staying patient and picking the right restaurants and operators for the remaining 20k SF of vacant space across MetraMarket. While outposts from any of the latest foodie hotspots are targets for the corner spaces, the development could also host service companies, a wine bar, a bank, and tech stores, Camille says, and high-profile publicity should help the process. The French Market, which attracts about 7,000 people per day, was written up in both Cosmopolitan and Bon Appetit (how many real estate execs can say that?), plus the New York Times travel section; the area played host to 15,000 people at Pastoral's third annual Artisan Producer Festival in April, above; and an indie flick on Andy Warhol just wrapped shooting at tenant Ovie Bar & Grill.

What The Shutdown Could Mean

Sure, we're bummed we'll have to postpone our visit to Abraham Lincoln's home in Springfield thanks to the government shutdown, but we decided to focus our energy on what this might mean for Chicago area GSA leasing. JLL SVP Lucy Kitchin tells us we're unlikely to see a huge ripple effect outside DC, where government's the main industry and the shutdown and its psychological implications will only slow deals in the pipeline even further. (If you think that's an oversimplification, watch House of Cards immediately. Kevin Spacey will explain everything.)

In Chicago's much smaller federal market, about 2.5M SF of current GSA leases, landlords will still get paid, though some open deals may be delayed depending on how long the shutdown lasts. And the market will continue to be impacted by national trends, as the federal government tries do reduce the amount of square feet it leases by 20% within each of its agency portfolios, Lucy says, not unlike law firms and the rest of the private sector. "As they try to figure out how to operationalize that space reduction, there could be delays and some short-term extensions," she adds.

As net new growth within the federal government becomes a distant memory, what are the answers? Compressing per person space utilization rate (industry speak for shrinking and/or disappearing cubicles and not human shrink rays... yet), open floor plans, and less private office space. While the federal government typically doesn't sublease or sublet space, they do search their existing inventory and look for opportunities to take leased space into federally owned space (like the Dirksen Federal Building, above), Lucy says.

Come to Our National Data Center Event!

We're holding our big national data center event this year at the Ritz Carlton in Dallas on Nov. 13—350 top data center users, owners, developers, investors, lenders, and designers from around the country. (We call it DICE, which stands for something with the words "data center" in it.) Hear amazing speakers from Digital Realty Trust, T5 Data Centers, QTS, Compass Datacenters, Carter Validus, Cisco, 451 Group, and many others. Oh, and a Casino Night thrown in! Sign up now.

Aviv Adds In Ohio And Indiana

Chicago-based Aviv REIT just acquired four post-acute and long-term care skilled nursing facilities in Ohio and Indiana for $35.9M, continuing its strategic growth through strong operator relationships. (It's who you know, as they say in Hollywood and over-competitive youth sports.) The properties are NNN leased to Diversicare Healthcare Services, an existing Aviv operator (15-year lease with an initial cash yield of 10%)—the REIT's closed three transactions with Diversicare totaling $55M in the past year. With healthcare reform's future still uncertain, Craig tells us the demographics for skilled nursing facilities are overwhelming (remember the Silver Tsunami?) and their need-driven, low-cost nature puts them on the right side of the solution. Read our profile on Craig here.

We asked for your invention ideas, and O'Neil Building Corp's Ernie Santi told us we'd make a fortune inventing a golf ball with GPS. We've already started tinkering in our basement...Today, what would you do with a day of furlough? Send your answers, which don't have to be within the realm of possibility, or gravity, to marissa.oberlander@bisnow.com and we'll publish the best ones.

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