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Real Estate Bisnow
The largest commercial real estate publication in the United States.
   
January 5, 2011 
 
 
Industrial Good News

 
It’s not only the extra-large industrial facilities that have companies clamoring. Wanna know more? Join McShane Development Co COO Mark Saturno at Bisnow’s Chicago Industrial Summit, Jan. 19 at the Stephens Convention Center. Register here!
 
McShane Development Co COO Mark Saturno
McShane is developing a 362k SF new HQ and distribution center for Edward Don & Co in Woodridge. Mark says that despite an industrial vacancy rate above 10%, Edward Don is willing to sign a 20-year lease on a new build-to-suit to assure that its essential needs are met. As one of the world’s largest distributors of restaurant and food service supplies, the 90-year-old company wants a facility expressly designed to its high standards. (Think forks, rows and rows of forks.) The building is state-of-the-art and the location is Main and Main (on I-355, with direct access to I-55 and I-294). Mark says it’s a big plus for Chicago that Edward Don is making a long-term commitment to keep its HQ here. Construction, started in October, will be complete by mid-year.

Bisnow
Piedmont's Patience Paid
 
35 w. wacker
The $387M pre-holiday sale of 35 W Wacker by Piedmont Office Realty Trust to a UBS advised investor was a boon for the Atlanta-based REIT (repped by Eastdil's Stephen Livaditis). In ’03, it paid $285M for its 96.5% interest in the 1.1M SF tower. (You don't need an abacus to figure out that's good stuff.) The deal also reflects the continued demand for trophy core assets, says JLL managing director Bruce Miller. Earlier in ’11, 70 W Madison sold for $345M and 22 W Washington for $185M. The grand total of $2.1B in downtown office sales last year surpasses the $60M recent trough of ’09 but doesn’t reach the $5.1B peak of ’07.
Colliers EVP Brian Nagle
Colliers EVP Brian Nagle tells us that the lease extensions Piedmont snagged with anchors Leo Burnett (600k SF, 7 years) and Winston & Strawn (400k SF, 10 years) were key to the property valuation and success of the sale. While Piedmont did well with 35 W Wacker, it came at a cost; perhaps $70/SF for each lease renewal to cover TI and broker fees. Downtown, office tenant demand is bringing the vacancy of Class-A trophies to 13%. The overall vacancy rate for all downtown offices is 15%, still a ways from equilibrium (usually considered 10% or less).
 
RCA's Dan Fasulo
Real Capital Analytics managing director Dan Fasulo sees another factor at play in Chicago’s recent trophy sales. As the top markets (NYC and DC) have become expensive, investors are willing to move out to second tier CBDs like Chicago, Denver, and Seattle. They consider these cities safe with bright prospects. (Plus they are much closer to good skiing.) Yet even Piedmont, which still owns the AON Center and 400 W Monroe, wants to redeploy some capital to coastal markets. Still, Piedmont’s patience proved a virtue. It previously marketed 35 W Wacker for $300M in August ’07.

Bisnow
"El” Real Estate Elevating Revenues
 
CTA is installing Redbox kiosks
Notice anything new at your “El” stop? Hint: it’s tall, red, and entertaining. The CTA is installing Redbox kiosks renting DVDs and games at 11 stations. They offer riders more creature comforts and the CTA more opportunity to cash in on non-fare revenue generated by its real estate assets. Pick up Angelina Jolie from a kiosk at UIC-Halsted, take her on a ride to the airport, and drop her off in LA, Denver, or New York.
 
say JLL managing director Kurt Little and analyst Lindsey Fahey
But El real estate can offer more than fun and games, say JLL managing director Kurt Little and analyst Lindsey Fahey. Since '09, JLL has helped the CTA generate at least $35M in revenue from its real estate. Besides Redbox, they’ve signed retail leases for coffee shops, juice bars, restaurants, and ATMs. They’ve arranged parking agreements and sold CTA property. Kurt attributes some of their success to a leasing process that reduced the required documentation from 30-plus pages to one. And no, they didn't just change the size of the writing.
 
Feel free to flood us with documents containing your news. Send ideas to Susan Diesenhouse, susan@bisnow.com; or amanda.metcalf@bisnow.com
 
 
 
 
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