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.

Source: rejournals.com

Partnering with Best Companies Group, Crain’s surveyed 8,800 employees at Chicago-based companies to find the top places to work. Glenstar made the list, coming in at #56.

Source: chicagobusiness.com

Angelo Gordon is entering Chicago’s hottest suburban office submarket. The New York-based investor agreed to buy Presidents Plaza for $148M, Crain’s Chicago Business reports. A joint venture of Glenstar Properties and PGIM Real Estate acquired the 835K SF property in 2006 for $129M, according to Cook County records. GlenStar will retain a minority stake in the buildings and continue to handle leasing duties on behalf of ownership. The GlenStar-PGIM JV is cashing out at a time where office space is tight, and investor interest is at a premium, near O’Hare. For Angelo Gordon, Presidents Plaza offers an opportunity to dramatically increase rent spreads. According to a marketing flyer from JLL, the property is 92% leased, but in-place rents are 13.1% below market value. Overall Class-A office vacancy in the O’Hare submarket ended the year at 12.9%, while Class-A office rents rose to $25.47/SF, according to MB Real Estate’s Q4 2017 suburban market overview. Presidents Plaza benefits from many of the same factors driving downtown office investment. It has good ownership in place, spent $6M to upgrade landscaping and common areas, and is a transit-oriented development, with the Cumberland Avenue Blue Line ‘L’ station a few blocks east. Anchor tenants include True Value, Property Casualty Insurers Association of America and AIM Specialty Health.

Read more at: https://www.bisnow.com/chicago/news/office/angelo-gordon-is-paying-148m-for-one-of-ohares-premium-office-properties-86760?utm_source=CopyShare&utm_medium=Browser

Source: bisnow.com

The shopping mall food courts of old that housed the same old national fast food chains (“hey, let’s grab a gray pad of meat on a bun followed by corporate cookie”) begat a blitz of lively, delightful and convenient food destinations called food halls.

In typical Chicago fashion, we improved the concept by riffing on America’s great market halls (Boston’s 1742 Faneuil Hall and the century-old Grand Central Market in LA, for example), added just a smidge of mall food court – for convenience and speed – and filled the spaces with the inimitable eats of both established, emerging and one-off Chicago eateries.

Chicagoans and visitors now find themselves saying, “Hey let’s grab labneh on local bread with a side of greens” or “I must have some Southern fried catfish and collard greens.” Wander Forum 55, Revival Food Hall, Wells Street Market, Chicago French Market or Foodlife in Water Tower Place. 

Some of the eating atriums don’t necessarily house offspring of Chicago restaurants (see the ethnically specific Eataly, Mitsuwa or Seafood City for Filipino food lovers) but they are just as fun, even more surprising and serve as a mini-international travel jaunt. The trend hasn’t peaked, either, with largest food hall opening in 2019 in the Fulton Market district. 

Source: 10best.com

Portions of the suburban office market may be in the doldrums, but a set of well-located, elite properties are in high demand, and the owners are willing to spend what it takes to retain top tenants. 

GlenStar Properties and its joint venture partner Angelo Gordon & Co. have launched a $20M renovation campaign at President’s Plaza, a two-building, 830K SF complex at 8600 and 8700 West Bryn Mawr in Chicago’s O’Hare submarket. The owners expect to complete the project in the second quarter. 

The previous ownership team, which included GlenStar, already spent $15M on recent renovations, but company officials have set their sights higher. 

“At the end of the day, we want to have the best buildings in the O’Hare submarket, maybe even the best in the suburbs,” GlenStar principal Michael Klein said. GlenStar and Angelo Gordon bought the buildings for $147M earlier this year. 

Source: bisnow.com

GlenStar Properties, LLC and its joint venture partner Angelo Gordon & Co., L.P., have launched a $20 million dollar renovation campaign at the two-building, 830,479-square-foot President’s Plaza located at 8600 and 8700 W. Bryn Mawr in the Chicago O’Hare submarket. Ownership expects the project to be completed in the second quarter 2019.

“We have an exceptional opportunity to capitalize on the property’s unique ‘urban/suburban’ location with a contemporary refresh of the buildings,” said GlenStar principal Michael Klein.

President’s Plaza is one of the most well-connected properties in the metro area when it comes to transportation and accessibility. It is served directly by the CTA Blue Line and is less than one mile from O’Hare International Airport. With the convergence of multiple expressways at its location, President’s Plaza is easily reachable from the city and all of suburban Chicago.

GlenStar’s extensive rehab includes a full gut lobby refresh at both buildings, renovation of the fitness center operated by Midtown Athletic Club and a refreshed deli operated by Compass Group. A new tenant lounge will feature a full-service coffee café and beer/wine bar for tenant use. It will connect to the patio for indoor/outdoor entertaining/functions/activities. Other areas that will be improved include passenger elevator interiors, restrooms, corridors, a new lobby stairwell and the conference center, which will under go a physical and technological overhaul.

“At a time when tenants are flocking to buildings with significant amenities packages, we have a property with terrific bones that we can transform with a modern and inviting interior aesthetic while at the same time build a complete work/life community,” said Klein.

Major President’s Plaza tenants include True Value, American Imaging Management and Lafarge North America. Occupancy today stands at 94.4 percent. The O’Hare office market is one of the tightest in the metro area with vacancy at Class A trophy assets at 5.6 percent. Rent in those same buildings has grown 23 percent since 2015.

Source: rejournals.com