Exclusive: Michael Drew Talks Structured Development's Latest Clybourn Corridor Sale
Structured Development led the transformation of the Clybourn Corridor's lower portion into what is now known as the "Halsted Triangle" through a quarter century of patient development. Now Structured is reaping the spoils.
Structured announced the $27.8M sale of 1333 North Kingsbury, a 100k SF loft office building, to a fund representing Credit Suisse. This is Structured's second office building disposition in the Halsted Triangle in less than a year to a foreign investor. A German group represented locally by LaSalle Investment Management bought 1460 North Halsted in a $130M deal last May.
Structured Development founding principal Michael Drew said this interest in commercial real estate outside of the downtown core, and especially in the Clybourn Corridor, would have been unheard of a decade ago. But a flurry of activity has made the Halsted Triangle Chicago's second-most active retail district outside of Michigan Avenue. With that has come increased interest in office, multifamily and mixed-use development, most notably Structured's NewCity, across the street from 1460 North Halsted.
Drew said that 1333 North Kingsbury — one of Structured's earliest Halsted Triangle acquisitions — provided a good challenge. Structured bought the building, formerly a manufacturing plant for a waterbed company, in 1990 and converted it into loft offices. Its most notable tenant for years was bike parts manufacturer SRAM, which gave notice it was moving to 1K Fulton two years ago. At that point, 1333 North Kingsbury was a Class-C office building in a market that shifted from small service businesses and office tenants to larger, high-credit companies.
Drew said once SRAM announced its departure, Structured decided to upgrade the building to meet the changing tenant base entering the market. Capital improvements to the building included complete upgrades to its mechanical systems, new glazing, waterproofing the building's envelope, and modernizing bathrooms and common areas. Structured spent $9M in improvements and repositioned the building from Class-C to Class-B.
Structured found tenants to fill SRAM's former 43k SF footprint. TrueBlue signed a 30k SF lease, while the National Collegiate Scouting Association moved from 1415 North Dayton to fill the remaining space. Drew said the combination of larger credit tenants, locked into long-term leases, enabled Structured to market 1333 North Kingsbury to a different type of buyer. The building's five tenants have an average remaining lease length of six years.