This Week's Chicago Deal Sheet
The direct vacancy rate of the top office buildings in Chicago’s Central Business District increased by 1.9 percentage points to 10.6% since Q4 2020, according to a report by MB Real Estate. Each quarter, the company tabulates the vacancy rate in the CBD’s 30 newest buildings of more than 300K SF. The list contains much of the downtown’s most desirable space and serves as an indicator of market conditions.
The total vacancy rate of the top 30, including available sublease space, is 13.6%.
MB Real Estate added two recently completed buildings to its list this quarter: Bank of America Tower, the 1.5M SF development by Howard Hughes Corp. and Riverside Investment & Development at 110 North Wacker Drive, and Shapack Partners’ 642K SF building at 167 North Green St. in the Fulton Market neighborhood. The additions increased the amount of direct vacant space on the list by 616K SF and replaced 1 North Franklin St. and 500 West Monroe St., two well-occupied buildings that had only 92K SF of direct vacant space between them. That switch caused most of the jump in direct vacancy, according to MB Real Estate.
The overall direct vacancy rate for the CBD increased by 79 basis points to 14.2% at the end of Q4, leaving a 3.7-percentage-point gap between the entire CBD and its top properties. The total vacancy rate for the CBD, including available sublease space, was 17.8% at the end of Q4.
Only one large deal was signed in one of the top 30 buildings since MB Real Estate’s last report. BenchPrep leased 28K SF at 111 South Wacker Drive. None of these properties was sold in Q4.
“The lack of leasing and sales activity is indicative of the ongoing uncertainty in the market due to the COVID-19 pandemic,” according to the MB Real Estate report.
Black Bear Capital Partners expanded its Chicago office by adding real estate finance adviser Suraj Desai, who joins as a senior managing director. The newly formed Chicago office includes Eric Trombly, Matthew Stearns, Raymond Zanca, Scott Modelski, Zach Fitzgerald and Sam Koziol. Desai will source and execute structured debt and equity transactions with a focus on hospitality. Desai previously held senior positions at Chicago-based Alpha Capital CRE and Mag Mile Capital.
Ann Lyon, Jeff Folker and Kim Campbell of Lyon Folker Campbell Partners joined @properties. The team comes to @properties from Berkshire Hathaway HomeServices Chicago. Lyon Folker Campbell Partners was the top team in Lake Forest in 2020, with nearly $60M in closed sales volume, according to data from BrokerMetrics LLC.
@properties also named @properties agent Tom Downing vice president of brokerage services and managing broker for the firm’s Winnetka office.
Interra Realty promoted Max Grossman from associate broker to director. Grossman has brokered or assisted with more than $125M in middle-market multifamily transactions since joining Interra in June 2018. Grossman’s recent transactions include the $1M sale of 4040 South Prairie Ave. and the $1M sale of 4139-41 South Prairie Ave., both eight-unit apartment buildings in Chicago’s Bronzeville neighborhood.
Michael Marrion joined Cresa Chicago as a senior vice president with the firm’s downtown tenant representation group. Marrion will focus on business development and client services, assisting office tenants with long-term strategies. He was most recently a senior vice president with Colliers International Chicago. Joining Marrion at Cresa are two new advisers, Sterling Pompey and Jack Brown. Gregg Witt joined the firm in December.
Lee & Associates of Illinois welcomed Grant Bollman to its office team. In his new position, Bollman will focus on the I-88/East-West Corridor and the I-90 Northwest submarket. He will specialize in office tenant representation and investment, acquisition and disposition of office properties. Prior to joining Lee & Associates, Bollman worked as a senior associate at Cawley Chicago.
The BOMA/Chicago Foundation announced new and reappointed members of its board of directors. The new officers are Hines’ Lance Knez as president, L.J. Sheridan’s Bridgette Battle as vice president and Chicago Symphony Orchestra’s Joseph Sherman as treasurer. The new directors elected to the board are Taft Stettinius & Hollister LLP’s Graham Grady, Zeller’s Derrick Johnson and JLL’s Blanca Lopez. Directors reappointed to the board are AmTrust Realty’s T.J. Brookover, JLL’s Susan Hammer, M&J Wilkow’s Rebecca Miles, MB Real Estate’s David Myles, CBRE’s Paul Rades, Parkside Realty’s Katherine Scott and Zeller’s Robert Six.
A Florida-based limited liability company bought for $7.2M a 10K SF, net-leased CVS property at 1400 East Roosevelt Road in west suburban Wheaton. Matt Emerick, Austin Weisenbeck and Sean Sharko of Marcus & Millichap’s Chicago Oak Brook office had the exclusive listing to market the property on behalf of the seller, a Chicago-based private investor. The buyer was secured and represented by Alex Zylberglait and Ruy Guedes Teixeira of Marcus & Millichap’s Miami office.
Chicago-based Dayton Street Partners acquired from Southfield Corp. a 7.81-acre site at 2217 South Loomis St. in Chicago. The site includes several buildings totaling 66K SF, including a separate office/showroom and a truck scale. The surrounding neighborhood is home to LTL carriers, trucking companies, distributors and manufacturers, including Amazon, FedEx and Lineage Logistics. Burr and Temkin’s David Lane, along with Paine Wetzel’s Ed Wabick, Terry Lynch and Mark Hale, will lead the marketing and leasing efforts.
An undisclosed e-commerce tenant signed a 10-year lease to occupy the 203K SF building at 16750 Vincennes Ave. in south suburban South Holland. JLL’s Michael Conway and Gavin Stainthorpe represented the tenant. The landlord, The Rosdev Group, was represented by Cushman & Wakefield. The building, formerly occupied by XPO Logistics, gives the tenant immediate access to Canadian National’s Chicago Intermodal Terminal.
The Chicago office of mortgage banking company Merchants Capital secured funding for the development of Montclare Senior Residences at 9401 South Stony Island Ave. in Calumet Heights, Chicago’s historic “Pill Hill” neighborhood. Financing was obtained through the U.S. Department of Housing and Urban Development 221(d)(4) program. The project was completed in partnership with MR Properties and Patti Ann Charitable Services. It serves individuals 62 years and older in 134 one- and two-bedroom units, with 104 units reserved for extremely low, very-low and low-income households earning no greater than 60% of the area median income.
JLL Capital Markets arranged a $153M refinancing for 123 North Wacker Drive, a recently repositioned, 550K SF office tower in Chicago’s West Loop. JLL worked on behalf of the borrower, LaSalle Investment Management’s Income & Growth Fund Series, to secure the five-year, floating-rate bridge loan. The 33-story office tower has undergone over $33M of capital improvements in the past few years. JLL’s team was led by Keith Largay and Lucas Borges.
CONSTRUCTION AND DEVELOPMENT
Lemont, Illinois-based Englewood Construction was tapped by The Herbal Care Center to build an 8K SF recreational dispensary at 222 South Halsted St. in Chicago’s Greektown neighborhood. Designed by Chicago-based architect Studio ARQ, the location is the adaptive reuse of a former restaurant. Construction will be completed this spring. Englewood has already completed two Chicago-area dispensaries this year for Windy City Cannabis and is now building out Windy City Cannabis locations in Highwood, Carpentersville and Macomb. Des Plaines, Illinois-based Camburas Theodore was the project architect for those three 5K SF locations, which are all on track to be completed in March.
J.C. Anderson completed an office build-out at 200 West Adams St. in Chicago for Midwest-based managed services provider Ascend Technologies LLC. Headquartered in Chicago, Ascend relocated from 222 West Adams St. and employs more than 100 U.S.-based technical professionals. J.C. Anderson’s construction team was led by John Angelovich, Kayla Mckinney and Mark Zawadka. GARNETT provided architectural services.
THIS AND THAT
Frontline Real Estate Partners, Carr Realty Advisors and Stillwater Advisory Group, all Chicago-based firms, have formed a new joint venture, Frontline Real Estate Partners - Shopping Mall and Lifestyle Division. The joint venture will provide its clients with receivership, property and asset management, leasing and disposition services for shopping malls and lifestyle centers.
The Boulder Group released its Net Lease Auto Report. In Q4, the national asking cap rates in the single-tenant auto sector decreased to 5.89%, according to the report. This represented a 48-basis-point decrease compared to the prior year. The auto sector, for the purpose of this report, consists of various auto-related tenants in the parts, service and collision sectors.