Continental Towers set to undergo $15M capital improvement plan

Chicago-based developer/investor, GlenStar, and real estate investment adviser, Rubenstein Partners, have announced plans for a $15 million capital improvement campaign at Continental Towers, a 910,796-square-foot office complex located at 1701 Golf Road in Rolling Meadows, Illinois. It’s the second of a two-phase redevelopment project initiated in 2015.

“Our modernization and capital improvement plan for Continental Towers is intended to comprehensively update and reposition an already exceptional asset,” said Peter Gottlieb with Rubenstein Partners. “We feel we have a unique opportunity to further enhance a well-located building in the attractive northwest Chicago suburban office market and ensure that it continues to stand out from other properties in the region for years to come.”

At the heart of phase two is a reimagined outdoor terrace that will transform the concrete plaza into nearly an acre of multi-level landscaped space featuring a lounge, grilling and gathering areas, fire pits and a synthetic lawn area for health and wellness activities. In addition, the property’s café and amenity center is also getting a top to bottom makeover and will be connected to the new terrace, creating a unique indoor/outdoor entertainment space. New lobbies, elevator cabs and landscaping at the buildings will also be a part of phase two.

“We are building on previous campaigns to ensure that our tenants have the most up-to-date, activated amenities in the suburbs,” said GlenStar’s managing principal, Michael Klein.

The new campaign follows completion of phase one, a $30 million project that saw construction of new 734-stall parking garage; exterior improvements including new drive-ups, drop-offs, canopies and lighting; a full renovation of the 22,000-square-foot, on-site fitness center run by Midtown Health Club; corridor and restroom renovations and various mechanical upgrades.

Work began on phase two in June and is scheduled to be complete by the second quarter of 2020, by which time, GlenStar will have invested more than $200 million over the past five years repositioning and modernizing office projects, with a focus on unique amenities and programs that enhance and redefine the tenant office experience. GlenStar’s portfolio currently stands at over 8 million square feet.

Rubenstein has invested in more than 21 million square feet of office real estate assets throughout the United States since 2005. The firm, including its predecessor company, has nearly a 50-year history as a vertically integrated owner and operator, with the office asset class serving as their exclusive investment focus over the last 20 years.

Continental Towers is a three-tower office complex located in northwest suburban Chicago. The buildings sit on a 34-acre corporate campus that provides tenants with unobstructed views in all directions, easy access to the Woodfield Mall and high visibility along I-90. GlenStar originally acquired the property in 2013 and recapitalized the project in 2018 with Rubenstein.

Source: RE Journals

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GlenStar Properties Spreading Its Wings Beyond Chicago As It Tinkers With After-Hours Appeal

Developer GlenStar Properties is best known for revamping older office properties that need an extra kick to compete for Class-A tenants, and it recently decided to bring that strategy to the Dallas metro area, its first operation outside the Chicago region.

Along with partner Singerman Real Estate, GlenStar just doubled its Dallas portfolio by acquiring an eight-building office campus, called The Terrace at Solana, in Westlake, Texas, a Dallas suburb.

Although GlenStar officials were impressed with the Dallas-Fort Worth economy, and the health of the local office market, assembling a portfolio down there happened almost by accident.

“About three years ago, Matt Omundson from our office was relocating down there, and he asked whether we would ever consider opening a Dallas office,” Managing Principal Michael Klein told Bisnow.

The answer was a definite yes, and Omundson, one of the firm’s principals, starting looking for properties that fit the GlenStar approach.

In 2017, along with USAA Real Estate, the company purchased the 14-acre, 1M SF Energy Square campus in North Dallas, and began pouring $70M into a complete renovation, including the construction of a new boulevard linking its towers together. The company will complete that project later this year.

Klein added that GlenStar would never have considered acquisitions in a market so far from Chicago unless it had an established presence, as renovating older office properties such as Energy Square, built between the 1950s and the 1980s, typically requires a lot of care and attention.

“We’ve got a good feel for the market in Chicago, but now we also feel that Dallas is a second home,” he said.

The move to Dallas doesn’t mean the firm will stop expanding in Chicago. GlenStar still has a long list of projects underway in the Windy City, especially in the suburbs, where it has ownership stakes in a number of properties once considered moribund.

By the end of 2019, GlenStar will have invested more than $200M over five years repositioning and modernizing office spaces, including a $20M reboot of President’s Plaza in Chicago near O’Hare International Airport, which it will finish this summer, and the renovation of Continental Towers, a 911K SF complex in Rolling Meadows, Illinois, where occupancy rose from just over 50% to 93%.

It also recently purchased 10 acres near President’s Plaza, and launched a 150K SF build-to-suit on a portion of the site for an unnamed buyer. Klein said GlenStar could use the remainder for up to 600K SF of office if it finds the right tenants.

The company is known for adding modern amenities to bland properties, including new health clubs, yoga centers, glass-walled atriums and new restaurants.

Klein said it now wants to do more, both in Chicago and Dallas, and provide tenants and their employees with active communities that will attract people outside work hours. That means GlenStar properties will increasingly host book clubs, wine tastings, financial advice seminars and other events.  

“That’s what we’re spending a lot of our time on now,” Klein said.


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Huge Westlake Office Campus Sells To Chicago Investors

Two Chicago investors have teamed up to buy a huge Westlake office campus.

GlenStar and partner Singerman Real Estate have acquired eight buildings in the Solana business park on State Highway 114.

The purchase includes more than 1 million square feet of offices along with the Solana Fitness Club and land for additional development.

The Solana development, originally built for IBM in the 1980s, has been up for grabs since last summer.

The landmark property was sold by Blackstone Group and its affiliate, Equity Office Properties, which purchased the development in 2014.

“With the recent corporate relocations and significant construction activity in the market, this was a unique opportunity to acquire an office campus in a high-growth area and deploy our proven redevelopment strategy,” GlenStar principal Matt Omundson said in a statement. “We are looking forward to repositioning and rebranding the asset.”

Terms of the sale were not disclosed. Holliday Fenoglio Fowler LP marketed the property for sale.

When the buildings hit the market in 2018, they were less than 40% leased.

Major business tenants include Sabre Corp., Verizon, Goosehead Insurance and Marsh & McLennan.

The just-sold office complex called the Terrace at Solana has six five-story buildings with 375,000 square feet, a 309,000-square-foot, six-story building and a three-story, 129,000-square-foot building.

The new owners say they plan to “inject significant capital to create a truly contemporary campus setting with enhanced tenant amenities and activated outdoor corridors.”

Redevelopment plans include a new conference center, a tenant-only fitness center, a tenant lounge, and patios and entertainment space.

“Today’s discerning tenants want more from their office locations,” Omundson said.

The previous owners, Blackstone Group and Equity Office Properties, already invested about $50 million to upgrade the entire Solana development. The sale also includes about 20 acres for additional construction.

When Solana was started in 1986, the business park was on the edge of North Texas’ urban growth.

Award-winning Mexican architect Ricardo Legorreta originally designed the campus, and almost 3,000 IBM employees were housed at Solana when it opened.

The project is now between DFW International Airport and Alliance Airport in one of the fastest-growing areas of North Texas.

Charles Schwab and TD Ameritrade have large new office campuses nearby. And Sabre Corp., Deloitte and Fidelity Investments have thousands of workers in the same area.

The Solana purchase is GlenStar’s second major property investment in North Texas. The firm is renovating the more than 1 million-square-foot Energy Square office complex on North Central Expressway in North Dallas.

During the past decade, GlenStar has bought more than 8 million square feet of U.S. office, retail, residential and medical buildings.

Singerman Real Estate is making its first Dallas-Fort Worth acquisition with the Westlake deal. Since 2010, the company has been part of $2.5 billion of investments in office, retail, hotel, industrial and multifamily projects.


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Glenstar Achieves Wiredscore Digital Connectivity Certification For Suburban Class A Office Portfolio

WiredScore, the international standard for cutting-edge internet connectivity in office buildings, announced that GlenStar is the first landlord to achieve certification across a portfolio of Class A commercial office properties in the Chicago suburbs.

Schaumburg Corporate Center in Schaumburg, Illinois and Presidents Plaza in Chicago earned the Wired Certified Gold designation while Continental Towers, a three-building office complex in Rolling Meadows, Illinois, earned a Wired Certified Platinum and two Wired Certified Gold designations. Designations for the 2.7 million square feet are based on the buildings’ best-in-class connectivity, technological infrastructure and readiness to adopt to emerging technologies. They join more than 1,700 Wired certified buildings worldwide offering top-notch tech capabilities.

“In order to attract and retain tenants in the suburban markets, we understand that, as owners, it requires more than just having the physical amenities that are becoming commonplace for today’s tenants,” said GlenStar principal, Michael Klein. “Prioritizing connectivity and incorporating it into our overall tenant experience is essential for us to deliver value and differentiate our properties in the market.”

In pursuing Wired certification, the properties underwent a comprehensive certification process that evaluated the aspects of digital infrastructure that enable a seamless connectivity experience in which office tenants are able to stay online and maintain productivity levels.

Upon review of the project’s technical elements—including internet service providers available to tenants, infrastructure redundancy, connection access points and readiness to meet future tenant needs—a Wired certification level is assigned based on the official standards developed by WiredScore and its connectivity advisory board.

GlenStar Properties pioneered Wired certification in Chicago’s CBD, rolling out the rating system at 141 W. Jackson, which attained Wired Certified Platinum, and 55 E. Monroe, which achieved Wired Certified Gold. With the suburban offices, GlenStar has now certified nearly six million square feet of office space across Chicago’s downtown and suburban markets.

“Technology, specifically digital connectivity, is a key component in retaining tenants and ensuring their productivity needs are met,” said Christine Torres, who leads the Chicago market for WiredScore. “As the first landlord to pursue Wired certification across a portfolio of Class A commercial office properties in the Chicago suburbs, the team at GlenStar has positioned itself as leaders in providing a tech-forward tenant experience.”


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Office Park Landlord Gives Employees Free Lyft Rides To And From Train Stations

A suburban Chicago office park landlord is offering free Lyft rides to and from local commuter rail stations for its tenants’ employees, helping address companies’ need to attract workers who live in the city.

Chicago-based GlenStar Properties is teaming up with the agency that oversees public transportation in the region to offer the perk at the Bannockburn Lakes complex north of the city, according to the Chicago Tribune.

“We knew we had to increase occupancy, and one way to do that was to make a connection to the train stations,” GlenStar’s Dave Brannigan told the Tribune.

A shuttle-bus service for the five-building complex was eliminated before GlenStar took over in 2015. At the time, the complex was 50 percent occupied, though GlenStar has since added tenants.

GlenStar didn’t want to re-start the shuttle because of costs, however, which is when the Regional Transportation Authority suggested the Lyft program. The pilot program with Lyft launched in March, and the RTA is picking up 25 percent of the cost, up to $30,000. Brannigan said the landlord would monitor the program to determine whether the service will be ongoing and could even consider launching it at other properties.

One employee told the Tribune the perk saves her $25 a day in cab or ride-sharing fares between the complex and a train station five miles away. [Chicago Tribune] — John O’Brien


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Demand Hasn’t Diminished For Suburban Class A Office Space

Leasing activity in Chicago’s suburbs slowed down in the first quarter of 2019. However, pockets of the market, including O’Hare and Oak Brook, remain tight, leading to asking rents in these areas to reach an all-time high.

According to a Q1 suburban office performance synopsis by Colliers International Chicago, the average asking gross direct rent was $21.39 per square foot across the entirety of the suburban Chicago office market. This is up from $21.32 per square foot last quarter and well above the $20.99 per square foot that landlords were asking for in the first quarter of 2018.

Mid-sized tenants continue to offer the most relocation potential. There are currently more than 100 tenants who need space ranging from 10,000 to 50,000 square feet that are actively on the hunt for offices throughout the suburban market. The bulk of these, 40 percent, have shown interest in the Northwest market.

Older and poorly located suburban office properties continue to be purchased for adaptive reuse or demolition. As an example, Somerset Development and Triangle Capital Group recently acquired the former AT&T corporate campus in Hoffman Estates, Illinois. They will develop the 150-acre property into Chicagoland’s first “Metroburb”—a self-contained urban core in suburbia, porting over the Bell Works concept that Somerset developed in Holmdel, New Jersey. Colliers will serve as exclusive broker for the project.

Other suburban office renovations include the Motorola headquarters in Schaumburg, the Aon headquarters in Glenview and the Nokia property in Naperville. McDonald’s is seeking a buyer for its former home base in Oak Brook. GlenStar recently renovated the 1-million-square-foot Schaumburg Corporate Center. with a state-of-the-art conference center, club room, new parking deck and fully updated atrium while Franklin Partners is redeveloping the former OfficeMax headqurters in Naperville, rebranded as The Shuman, aiming to create a suburban destination for multiple office tenants with downtown-like amenities.

After adding positive absorption in the fourth quarter of 2018, the suburban office market fluctuated to start the year with 448,890 square feet of negative absorption. Overall vacancy in the suburbs rose 40 basis points to 20.5 percent, exactly where it was two years ago during the same time frame.

Class A vacancy also increased 40 basis points, rising to 20.7 percent. The Lisle/Naperville area had the highest Class A vacancy last quarter at 25.9 percent while the situation was a little tighter at 12.5 percent for O’Hare Class A office vacancy.

Leasing activity, including new leases and lease expansions, totaled 1.1 million square feet in the first quarter. This is down from 2.5 million square feet in the fourth quarter of 2018. Year-to-date, the entire Chicago suburan office market witnessed a negative absorption of 448,890 square feet—more than half of which was Class A space.

Ten new leases or lease expansions of 15,000 square feet or larger were signed throughout the suburbs during the first quarter of 2019. Investment and user sale velocity continued in the suburban office market as nine assets traded hands in the first quarter of 2019, with five others currently under contract.

The Colliers Chicago report forecasts that “trophy” Class A vacancies will decline throughout the year, based on recent activity in the market. As millennials start moving to the suburbs, however, the migration of companies into the CBD may begin to slow, if not turn around altogether. Owners and developers completing renovations of dated Class A/B properties into modern workplaces are banking on a renewed interest in the suburban office market.


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