This Week's Chicago Deal Sheet
Multi-story office buildings are almost deserted, and as tenants look for a safe way to return, an increasing number see single-story office properties as one solution. That heightened attention from tenants and investors led NAI Hiffman to launch its new Suburban Single-Story Office Report.
Single-story office space represents only 7.8% of the 284M SF of office inventory in the Chicagoland market, according to the firm’s research. But single-story properties have the lowest vacancy rate — 16.8% — in the suburbs, compared to the 21.35% rate for multi-story Class-A properties, and the 17.94% rate in Class-B buildings. The overall suburban vacancy is 18.57%.
“As tenants look more closely at the space they need, the environments they want to create and the safety they feel compelled to provide employees, the single-story office sector will benefit,” Berger Asset Management founder Jonathan Berger said. “That increased demand by tenants will further translate into increased investment activity.”
Berger acquired Concourse Chicago, a 165K SF asset, in 2018. He said it allows tenants to reach their offices without navigating a common lobby or an elevator ride. Single-story properties like this also provide dedicated HVAC systems and private bathrooms.
Single-story properties are significantly more affordable than Class-A office buildings, according to the NAI report. The Class-A buildings in the O’Hare market typically have a rental rate of $45 to $50 per SF gross. Berger said Concourse Chicago’s rental rate is between $25 and $30.
“Single story assets are no longer an afterthought of the office market,” NAI Hiffman Vice President Steve Chrastka said. “They are safer to occupy and easier to navigate than any multi-story office building.”
The McShane Cos. appointed Molly McShane its CEO. McShane previously held the position of chief operating officer. She joined the Rosemont, Illinois-based real estate development and construction services firm in 2002, and led efforts to expand its reach into new markets, as well as diversify the workplace.
Janet Protas joined Conor Commercial Real Estate as senior vice president – multifamily. Protas is a 30-year veteran of the real estate industry, and she has worked in several U.S. markets on multifamily and mixed-use developments. Prior to joining Conor, Protas oversaw the Midwest development portfolio at RPT, where she redeveloped obsolete shopping centers into multifamily and mixed-use projects.
JLL hired Travis McCready as executive director and national practice leader in the firm’s life sciences practice. He has more than 25 years of experience in private, public and nonprofit institutions. McCready joins JLL from The Commonwealth Project, a startup medical research and development company.
Bridge Development Partners brought on Sean Zasche as its new chief financial officer. Zasche was previously executive vice president of investment management at CA Ventures, and before that was a vice president at M3 Capital Partners. Zasche’s predecessor, John Maduros, has been named the company’s new chief accounting officer.
Bob Flannery joined Redwood Capital Group as executive vice president and chief operating officer, a newly created position and part of the company’s strategic plan to double in size in the next five years. He is also serving as the president of Redwood Residential. Flannery most recently served as president of CA Residential, the multifamily development platform of CA Ventures.
Itasca-based ML Realty Partners promoted John Benson, Shari Crivello and Matt Novak. Benson joined the firm in 2016 and was promoted to senior director of development. Crivello joined the firm in 2010 and was promoted to senior director. Novak joined the company in 2015 and was promoted to leasing manager.
Venture One Real Estate, through a partnership with Kovitz Investment Group, closed on the acquisition of a 126K SF, four-building industrial portfolio at 401 Eastern Ave., 501 Eastern Ave. and 1231 Ellis St. in Bensenville and 635 Remington Road, a multi-tenant building in Schaumburg. 635 Remington is 82% leased, and Venture One will soon complete improvements to its vacant space. The other three buildings are fully leased single-tenant properties. Cushman & Wakefield's Eric Fischer represented the seller and will market the vacancy.
A local investor bought 2400 Ogden Ave., a 121K SF office building on 10.39 acres, for an undisclosed price from an institutional investor. At the time of the sale, it was 71% leased to two tenants: ARRIS Solutions Inc., a global communications technology company, and Automated Logic, a building automation system manufacturer. Colliers International | Chicago’s Alissa Adler and John Homsher arranged the sale.
MedProperties Group of Chicago sold the Salt Creek Medical Campus, a four-building office portfolio at 8 Salt Creek Lane, 12 Salt Creek Lane, 907 Elm St. and 901 Elm St. in west suburban Hinsdale to an undisclosed buyer. The campus totals 156K SF and is 88% leased to several healthcare providers. CBRE's Chris Bodnar, Lee Asher, Ryan Lindsley, Jordan Selbiger and Gary Fazzio acted as MedProperties’ advisers.
Bridge Development Partners signed a long-term lease of 42K SF within 1150 West Devon Ave. in Itasca, one of the three newly constructed buildings in its Bridge Point Itasca development. JLL's Sam Durkin represented the tenant, Concordia International Forwarding Corp., and Chris Nelson and Jeff Janda of Lee & Associates represented Bridge.
JLL Capital Markets arranged a Shariah-compliant joint venture equity partnership and $22.9M in debt financing for the acquisition of a five-property, 557K SF industrial portfolio spread across four Midwest states. JLL worked on behalf of the Chicago-based Brennan Investment Group to arrange the partnership with Saudi Arabia-based Arbah Capital. JLL also placed a five-year, floating-rate loan with Wintrust Bank.
The portfolio consists of 4050 Ryan Road in Gurnee, Illinois; two facilities in the Grand Rapids metro area; 7550 49th Ave. in New Hope, Minnesota, and 1100 East LeClaire Road in Eldridge, Iowa.
The JLL team was led by London-based Claudio Sgobba and Chicago-based Christopher Carroll, along with David Berglund, Matthew Schoenfeldt and Doug Childers.
CONSTRUCTION AND DEVELOPMENT
Cannabis Facility Construction started construction on a new Mission Dispensaries recreational and medical dispensary for 4Front Ventures Corp. at 1330 Torrence Ave. in south suburban Calumet City. The builder expects to finish the 3K SF outlet in mid-December. Northbrook, Illinois-based Cannabis Facility Construction has built more than 30 cultivation centers, processing laboratories and retail dispensaries across 10 states.
General contractor Skender completed construction on a 34K SF expansion to Upwork’s office space at 525 West Van Buren St. in Chicago, which was also built out by Skender two years ago. Upwork, an online service that connects companies to freelancers, will shift to a remote-first model, and the Chicago office will allow in-office workers to observe socially distant guidelines. Skender collaborated on the project with architecture and engineering firm CannonDesign and tenant rep Cresa.
THIS AND THAT
Anixter Center once again decided to put its 140K SF facility at 2032 North Clybourn Ave. in Lincoln Park up for sale. The Chicago nonprofit, which serves developmentally disabled individuals, first tried to sell the property, located near Sterling Bay’s new Lincoln Yards development, in 2017. Anixter Center CEO Rebecca Clark said that with the Lincoln Yards’ redevelopment now underway, the group has better prospects for a sale. Cushman & Wakefield’s Eric Sorensen, Kathleen Nelson, Dirk Riekse and Larry Goldwasser are representing Anixter.