To MB Real Estate president and private investor John Murphy, "B" is beautiful: he just purchased a Class-B Central Loop office building and refinanced another in the West Loop. Also enticing is the rare breed of upscale condos: He's completing construction of a super-luxury high-rise in Lincoln Park. (If there was ever a Match.com for investors and buildings, John would definitely have a "type.") We sat down with him to learn more.
|Last week, John led a team of investors that closed on the $12.5M off-market purchase of 100 W Monroe, a 140k SF, 85-year-old Class-B office that’s 98% occupied. He tells us the idea of a dramatic conversion of use has been raised, but he sees an opportunity for a well-located, well-occupied Class-B office such as this. In fact, a couple of weeks ago, he completed the $58.5M refi of 200 W Jackson, which valued the 500k SF, 91%-occupied building at $92M. (In ’05, he led the group that acquired it for $47M.) Tenants include AC Nielsen and Enova, which leases 135k SF. Rents now range from $16/SF to $18.50/SF NNN, up from $11/SF to $13/SF in '05.|
|MB EVP Gary Denenberg, hard at work, directs leasing for the company, including John’s investment properties. John says that prospects for Class-B properties like his are brightening as the market tightens. During the slower market over the past few years, the flight to quality meant increasing vacancies for Class-B buildings. But as the market improves, occupancy is rising and rents are appreciating. Signs for the future are good, he says: White-collar employment is stabilizing and starting to increase, while the migration of companies to the city continues. At the same time, the cost of construction has never been higher. To him, that means a new 1M SF tower won't likely be delivered for 30 to 48 months, which will intensify demand for existing offices.|
|MB Chairman Peter Ricker and John are partners in Ricker Murphy Development, which is building Lincoln Park 2520, a 253-unit super luxury condo overlooking Diversey Harbor and Lake Michigan (reported to be a $375M project). Construction is slated for completion in June. The units, priced from $1M to $17M, are 50% pre-sold and that activity is getting stronger as the building opening approaches, according to reports. As far as John knows, no other condo projects of this scale are under construction in the city, and Lincoln Park buyers haven't been offered a new high-rise in 40 years.|