If you don't see images, click here to view
Story Ideas  .  Events  
Facebook Twitter LinkedIn More...
  Subscribe for Free
To ensure delivery, please add newsletter@bisnow.com to your address book, learn how
Life After Google
Auction (DePlaines) L-CHI
   
October 16, 2013
 
 

Life After Google


Butler Burgher Group (BBG) is hard to miss these days. With 21 offices nationwide, BBG still offers personalized attention through a single point of contact, and a sole focus on valuation, advisory and assessment services. Learn more here.

What happens when the last Googler leaves the building? (Besides sadtrombone.mp3 playing in the distance.) The owners of 20 W Kinzie say the coming exit of Chicago's trendsetting tech tenant is a unique opportunity to feed the frenzied River North office market rare large blocks of space.

MattWard_BISNOW-1024x1024
Google will vacate its 150k SF Chicago HQ at the end of 2015, making a highly-publicized move to Sterling Bay's 535k SF 1K Fulton project in burgeoning Randolph/Fulton Market. The wheels are already in motion to backfill the space, owner The Alter Group's Matt Ward, above, tells us. Alter just brought on MB Real Estate EVP/managing directors Gary Denenberg and Mark Buth, with VP Kathleen Bertrand, to lead leasing at the 385k SF Class-A building (also home to Keefer's Restaurant). Prospects look good in the River North submarket, with 5% Class-A vacancy and high-end multifamily supply that's set to explode in the next few years.
CohnReznick (Think2) MCHI

20WKinzie_Ext
Companies like Google helped create the buzz, and now the 24/7 neighborhood has reached a tipping point, Matt says. The plan is to break up the space into two large leases of at least 50k SF tenants (many are already looking at late '15 and early '16). The contenders? Anyone from the obvious tech tenants to a more traditional insurance company or bank. Looking to rebrand, boost productivity, and attract young talent, these "not typically progressive" tenants are starting to shirk vanilla box office spaces in plain-Jane office buildings in favor of more collaborative, open-plan spaces, Matt tells us.

Screen Shot 2013-10-15 at 6.13.27 PM
While Google will act as an office magnet in its new neighborhood, it spent a large part of its life cycle at 20 W Kinzie—from 20k SF to 150k SF. Randolph/Fulton Market is five to 10 years away from being a more livable area of the city, and most companies are looking to play it safe in an area that's already hot as a pistol, Matt says. And they're willing to pay a premium (building rents are mid to high $20s/SF net) and plant roots with longer-term leases, he adds. As always, amenities are still king: The property plans to stand out with a covered bike area, fitness center, and planned rooftop deck (above, and not a sushi platter like we thought at first glance).


State Of Smietana's Market

DSC02172
HSA Commercial Real Estate is building industrial, healthcare, and retail properties across the Midwest, so we're asking CEO Bob Smietana's for his well-rounded outlook at Bisnow's Chicago State of the Market on Oct. 31. (Is that putter just for show, or do you wanna play closest to the pin at the mini-golf course afterwards?) In industrial, HSA's leading a spec resurgence, with two projects under construction and a third that broke ground in Plainfield, Ind. yesterday. Bob calls is it a perfect storm: The market demand finally caught up with the availability of land for new product, the financial markets are warming up to funding spec again, and institutional investors are eyeing spec as a way of getting Class-A industrial space without overspending and hitting sub-six cap rates (on fully-leased, well-located Class-A), he says.

Hawthorn1
For healthcare, the latest fashion is hospital systems going out to the customers' neighborhoods with ambulatory care centers, a trend that bodes well for developer/owners like HSA, Bob says. (Above, HSA's 15k SF Hawthorn Surgery Center under construction in Vernon Hills.) On the retail side, HSA's working on the Mayfair Collection (below); it's an adaptive reuse of Roundy's former warehouse on 70 acres in Wauwatosa, Wis. The project's over 70% leased to tenants including Nordstrom Rack and Saks Off 5th, with shops slated to open next spring. (When they open, we'll be "too sick to work" that day.) Bob calls it a creative solution for outdated industrial properties, whose clear heights adapt well to retail, and it's just the first phase of a site that should keep HSA busy for the next five to seven years.

IMG_1512
Hot retail topic: How will Dominick's exiting Chicago affect local grocery? Current players like ever-expanding Mariano's or Jewel might quickly move into the 60k to 70k SF spaces; new players like Kroger could enter the market; ground-up development could slow with the boost in existing available space; and centers with newly vacant anchor spaces might not trade as quickly, Bob predicts. He expects HSA to start on a new industrial project in Southeastern Wisconsin in the next year, in addition to some more healthcare development and acquisitions. A big CrossFit fan, he says the fitness program's message works well for real estate: Train and prepare for the unexpected with the workout/market trends.


Building Materials Are Back

grays
With the recent uptick in multifamily construction, as well as some bright spots in medical office, senior living, and industrial, building material companies are showing signs of life after a long slump (which proved fatal to smaller retailers), Entre Commercial Realty's Brian Bocci tells us. (The nails will rise again!) He and colleague Nick Walby just repped both sides in Edward Hines Lumber's lease of a 40k SF building at 939 Route 83 in Grayslake. As the market stabilizes, Brian expects demand for new product in Lake County and Southern Wisconsin to fuel the return of build-to-suits. Brian's just back from a trip to Costa Rica, where he got up to 50 mph ziplining through the jungle.

We're still looking for your serious and satirical predictions for student housing's next wave of amenities. Personal chefs to whip up late-night Easy Mac? Tell marissa.oberlander@bisnow.com what's on tap next and why. We'll post your answers here tomorrow, and the best ones will win a free ticket to our 5th annual Chicago State of the Market on Oct. 31 (costume optional)

Subscribe for Free


 
 
Butler Burgher (Map) CHI
 
Friedman (River North)
 
Chicago Title (Peace)
 
NewAcre (300k) CHI
 
Bisnow (DICEWII-2) CHI
 
Arent Fox (REI) CHI
 
Bisnow (Sales2)
 
 
CONTACT EDITORIAL                             CONTACT ADVERTISING                              CONTACT GENERAL INFO

 

This newsletter is a journalistic news source which accepts no payment for featured interviews. It is supported by conventional advertisers clearly identified in the right hand column. You have been selected to receive it either through prior contact or professional association. If you have received it in error, please accept our apologies and unsubscribe at bottom of the newsletter. © 2013, Bisnow LLC, 1817 M St., NW, Washington, DC 20036. All rights reserved.