This Week's Chicago Deal Sheet
Analysts expect new leasing in the downtown office market will largely freeze in the second quarter due to the pandemic, even as developers ready millions of square feet in new buildings.
Altogether, about 3.7M SF of new downtown inventory in large developments will deliver in 2020, according to MBRE’s first-quarter market overview, including Sterling Bay’s 553K SF 333 North Green St. in Fulton Market, which it completed in the first quarter. Another 500K SF will come from smaller developments, primarily in Fulton Market.
Activity in the first three months of 2020 was robust, even with the shutdowns beginning in mid-March. There was 625K SF of positive absorption in the central business district in the first quarter, MBRE found. The overall direct vacancy rate decreased by 11 basis points to 12.69%.
Tenants signed 27 deals larger than 15K SF, totaling 2.2M SF, according to MBRE. Chicago’s CBD sublease market increased by 435K SF, bringing the total amount of available sublease space to 3.2M SF.
Rental rates were also on the rise until the pandemic shutdown. The average initial net rent for new deals in the past year was $27.38 per SF, up from $26.57 the prior year. Average renewal net rent across all classes was $26.25 per SF, up from $23.42 the prior year.
Lisa Krumwiede joined ML Realty Partners as director of asset management and will oversee portfolio operations and negotiate leases. Krumwiede has held senior positions with Liberty Property Trust, CBRE and Prologis.
The Skender Foundation appointed Monica Bomani and Kathleen St. Louis Caliento to its board of directors. Bomani serves as director of community giving and engagement at Assurant, where she manages social responsibility programs, including volunteer initiatives. She has more than 18 years of experience in various nonprofit, philanthropic and corporate citizenship roles, including time spent at McDonald’s Corp.
Caliento is the chief learning and design officer of the Academy Group. Previously, she held several leadership positions at Spark, including executive director in Chicago. Prior to that, she was chief program officer for Project Exploration, director of program investments for the Chicago Public Education Fund and a teacher in New York City.
A private investor sold Geneva Park Apartments, a 56-unit apartment property at 7 Simpson St. in west suburban Geneva. Andrean Angelov and Ryan Engle of Marcus & Millichap’s Chicago-Oak Brook office marketed the property for the seller. They also secured and represented the buyer.
Drexel Properties purchased a three-building, 36-unit portfolio in Chicago's Portage Park neighborhood for $3.5M from a longtime Chicago landlord. The value-add portfolio consisted of 3905-11 North Linder Ave., a 10-unit building; 3514-18 North Long Ave., a 16-unit building; and 3816-24 North Long Ave., a 10-unit building. Kiser Group’s Rick Ofman was the sole broker. The portfolio features mostly two-bedroom units with a few studios and one-bedroom units, Ofman said. The average two-bedroom rent is $1,200 per month and the average one-bedroom rent is $950.
Provender Partners acquired two Chicago-area food processing facilities totaling more than 220K SF, adding to its portfolio of more than 5M SF of refrigerated real estate throughout the U.S. The first is at 5420 St. Charles Road in west suburban Berkeley. Preferred Meals Inc., a provider of meals to schools, leases 100% of the 141K SF facility.
In the second transaction, Provender acquired an 80K SF meat processing facility at 525 West Crossroads Parkway in Bolingbrook. It includes production, cooking, smoking and freezer space and sits near companies such as Mars, Wrigley and ConAgra. It is available for lease.
IHC Construction Cos., a 114-year-old general contracting business, purchased a 31K SF, single-story office building at 385 Airport Road in Elgin and will move its headquarters into approximately 11K SF in the building.
Colliers International | Chicago’s John Homsher and Alissa Adler represented the institutional client in the sale. Built in 1988 by Hamilton Partners, the multi-tenant, Class-B building sits on 2.9 acres off the Route 31 exit at the I-90 four-way interchange. Three tenants leased 28% of the space at the time of sale. Lee & Associates’ Ken Franzese and John Cassidy represented IHC.
A private investor sold Evergreen Park Towne Center, a nearly 8K SF retail property at 8730 South Kedzie Ave. in Evergreen Park, for $1.4M to a local 1031 exchange buyer. Austin Weisenbeck and Sean Sharko of Marcus & Millichap’s Chicago-Oak Brook office marketed the property for the seller.
Pre-leasing is underway at The Darlington Apartments, a 48-unit rental community at 4700 North Racine Ave. in Chicago’s Uptown neighborhood. Developed by Elmdale Partners with Chicago-based Spaces Real Estate serving as the exclusive leasing agent, the gut rehab of the former Darlington Hotel will welcome its first residents June 1.
Monthly rents for the studio and one-bedroom apartments range from $785 to $1,400. Elmdale Partners acquired the property through a transaction brokered by Spaces Invest, a division of Spaces Real Estate.
Budd Van Lines signed a long-term lease transaction for a 116K SF industrial building at 6200 Regency West Drive in Racine, Wisconsin. John Sharpe and Jeff Janda of Lee & Associates’ Illinois office, along with Dallas-based Reid Bassinger, represented the tenant. The owner was represented by Todd Hendricks of Darwin Realty.
Bissell, a Grand Rapids, Michigan-based home cleaning company, will occupy more than 7K SF at Twelve01West, McCaffery’s Fulton Market office development. JLL’s Brad Despot and Michael Curran represented Chicago-based McCaffery in the deal. This will be Bissell’s first permanent office in Chicago. McCaffery moved its headquarters to the seven-story Twelve01West in Q1 2019 and has welcomed The Coca-Cola Co. and ServiceNow as office tenants and Heritage Bicycles and Coffee as a ground-floor retailer.
Goldies Baking leased 15K SF at 760 Lakeside Drive in north suburban Gurnee. The company will expand and relocate from nearby McHenry. Entre Commercial Realty’s Brian Bocci represented the tenant, and Eric Fischer and Marc Samuels of Cushman & Wakefield represented the building owner.
CONSTRUCTION & DEVELOPMENT
Skender reached the final height on a new 36K SF, six-story supportive housing facility in Chicago’s Uptown neighborhood for Sarah’s Circle. The nonprofit serves women who are homeless or in need of a safe space by providing services such as food, clothing, shelter, housing and clinical services for domestic violence and trauma.
Located at the intersection of Sheridan Road and Leland Avenue, the steel and precast building will include a basement, 38 long-term housing units and emergency overnight space for 50 people. It will also feature a food hall, walk-in commercial freezer and hot room. Skender is working in collaboration with design firm Perkins+Will and owner’s representative Brinshore Development.
THIS & THAT
In April, student groups from seven universities competed in the 10th annual Harold E. Eisenberg Foundation Real Estate Challenge. The Harold E. Eisenberg Foundation partnered with Moody Bible Institute and asked students to create a 7.9-acre redevelopment plan for Moody’s North Side campus. River Coast West, a proposal by DePaul University’s Mark Solak, Vincent Casambre, Alex Hernandez and Greg Mclellan, was awarded first place.
The winners suggested a mixed-use development that would include four multifamily towers, an upscale senior living tower, a student housing tower, a co-living building, a rehabilitation medical office center, 20K SF of administrative office space, a sports facility and two retail buildings. Additionally, the team’s proposal included a new park, church, recording studio and a nonprofit accelerator aimed at expanding MBI outreach.