This Week's Chicago Deal Sheet
Chicago tied with Los Angeles for the fourth-most-active office construction market in the U.S, with 7.4M SF under construction, according to Avison Young’s Mid-Year 2019 Global Office Market Report. Nearly half of that space is pre-leased. New York ranked as the top market, with 14.6M SF underway, followed by Washington, D.C., with 10.9M SF, and Dallas with 7.8M SF.
“Chicago has seen a significant office construction boom in recent years, particularly in the West Loop and Fulton Market areas,” Avison Young principal Jeff Lindenmeyer said. “This continues to create opportunities for tenants, but also raises issues for landlords in competing submarkets, where many financial services firms and law firms have vacated to move into the new buildings. Many of those landlords are going to have to reposition their buildings to attract new tenants.”
But the growing fears about a possible recession are creating headwinds for all of these markets.
“There is a lot of uncertainty permeating the market, however, given the upcoming election and the inversion of the yield curve, which has raised concerns about a downturn,” Lindenmeyer said. “Certain tenant sectors are creating the absorption necessary to maintain positive momentum for new and redeveloped buildings as we head into 2020.”
According to Avison Young, developers have 16 Central Business District properties under construction, and the higher rents have not so far been a deterrence.
“What tenants are doing is rightsizing, adjusting their approach to workflow, and going into more efficient spaces,” Lindenmeyer said. “With a smaller footprint, they can afford the higher rents in the new buildings.”
W.E. O’Neil hired Damian Eallonardo as its senior vice president of operations. Eallonardo joins the company after leading several large Chicago construction firms, and overseeing more than $1B in construction over the course of his career. The 33-year industry veteran has worked with clients such as Sterling Bay, Draper and Kramer and Convexity Properties.
CRG, Clayco’s real estate development and investment firm, hired former city of Chicago Planning and Development Commissioner David Reifman as partner and senior vice president for strategic development initiatives. He will help expand Clayco’s design and construction businesses in existing and new markets, and focus on long-term investments in opportunity zones. Prior to joining city government, Reifman practiced law at DLA Piper for more than 25 years.
Stuart Sziklas will join LaSalle Investment Management as Chicago-based head of U.S. custom accounts. He will lead a team that manages portfolios of office, retail, multifamily and industrial investments throughout the U.S. Sziklas most recently served as senior managing director, portfolio manager at CBRE Global Investors.
Avanath Capital Management purchased two properties:
- Scotland Yard Apartments, a 156-unit affordable housing community at 4215-4261 North Broadway St. in the Buena Park neighborhood, for $28.3M.
- Renaissance North, a 59-unit, mixed-income community located between Lincoln Park and Old Town at 551 West North Ave., for $15.4M. This is Avanath’s first public-housing deal. Constructed in 2003, the property was one of the first developments built in conjunction with the Chicago Housing Authority’s reconstruction plan, and offers both market-rate and affordable units.
These acquisitions bring the company’s total holdings in Chicago to 1,063 units.
Essex Realty Group’s Brian Kochendorfer and Troy Beebe brokered the $18.5M sale of suburban Glen Ellyn’s Iron Gate Condominiums. The new owner plans to convert the 180-unit complex to rental apartments. The deal is the third suburban condominium complex sale that Essex brokered this year.
Greenstone Partners completed the $8.3M sale of Mount Prospect Center, a 192K SF multi-tenant shopping center on 16.8 acres at the corner of Dempster Street and Elmhurst Road in Mount Prospect, a northwest suburb of Chicago. Greenstone Asset Management has been engaged to manage the property for the out-of-state purchaser.
Murphy Development Group closed on the purchase of 2122 York Road, a 131K SF office building in suburban Oak Brook. The building, located less than a mile east of Oakbrook Center, had not been on the market, and was bought from a joint venture of Lincoln Property and Foxford Communities. MDG’s pipeline includes several projects in the Chicago region, including the redevelopment of the Cook County Hospital campus and the development of 318 North Carpenter St., a 100K SF office building in Fulton Market.
Marcus & Millichap completed the $7.5M sale of Comfort Inn, a 125-room hospitality property at 2120 South Arlington Heights Road in suburban Arlington Heights. Ebrahim Valliani, Michael Klar, Allan Miller and Chris Gomes, in the company’s Chicago-Oak Brook, Dallas and Austin offices, exclusively marketed the property on behalf of the seller and represented the buyer.
Blank Rome LLP will relocate its Chicago office to River Point, the 52-story, 1M SF tower at 444 West Lake St. that opened in 2017. Starting Sept. 3, the firm will occupy 12K SF on the 16th floor, enough to accommodate more than 30 attorneys and professional staff. Blank Rome entered the Chicago market in June.
CONSTRUCTION AND DEVELOPMENT
Morgan/Harbour Construction broke ground on a 135K SF, four-story office build-to-suit for Hub Group. The new building on Clearwater Drive in suburban Oak Brook is Phase 2 for the headquarters of Hub Group, a supply chain solutions provider. Morgan/Harbour completed Phase 1 in 2014, and at the time it was Oak Brook’s first new office building since 2000. This first office building received LEED Gold certification from the U.S. Green Building Council, and features underground parking, natural habitat landscaping, ponds and walking trails. For Phase 2, Morgan/Harbour will construct a replica of the Phase 1 building.
Inland National Development Co. has completed approximately 70% of a mixed-use development located on 33 acres at 14100 West Rockland Road in Green Oaks, Illinois, according to company officials. INDC, the master developer, formed a public-private partnership with the Village of Green Oaks to develop the vacant parcel, located approximately 30 miles north of O’Hare International Airport. When completed, the project will include 35K SF of retail, a 160K SF light industrial/office warehouse developed by the Panattoni Development Co., a gas station convenience store, a restaurant and some small-scale retail shops. The first businesses should open in January.
Bridge Development broke ground on Bridge Point Itasca, a 741K SF speculative development of three industrial facilities. Lee & Associates’ Chris Nelson and Jeff Janda represent Bridge in the marketing of this project, which is set to deliver by mid-2020.
J.C. Anderson completed a headquarters build-out for Colliers International | Chicago at 71 South Wacker Drive in Chicago. The global real estate company is relocating its Chicago headquarters from 200 South Wacker Drive. J.C. Anderson’s Seth Erlich, Andrew Mott and David Panfil led the construction team, and Nelson Architects provided the architectural services.
THIS AND THAT
Los Angeles-based Stanton Road Capital awarded Colliers International Chicago the property management and engineering assignments for 200 South Michigan Ave., the former Borg-Warner building, which sits on the southwest corner of Michigan Avenue at Adams Street, overlooking Millennium Park and the Art Institute of Chicago. Colliers will also provide construction management oversight on select capital projects. SRC acquired 200 South Michigan in July.