CRE News: What We’re Reading the Week of April 14

By BOMA/Chicago

Each week, The Elevator Speech summarizes news related to some of the key industry trends, buildings, deals and dealmakers that shaped headlines. Below are articles that caught our attention the week of April 14.

CareerBuilder Consolidation
CareerBuilder LLC has announced plans to consolidate office space that it currently rents in multiple buildings. The Chicago-based job search website will vacate 40,686 square feet at 180 N. LaSalle St. and add 47,466 square feet to its headquarters at 200 N. LaSalle St. After the move, CareerBuilder will rent a total of 195,000 square feet at 200 N. LaSalle under a lease that expires in 2019. The move will take place in 2015.

Space Purchased Within 55 W. Wacker
Taipei Economic and Cultural Office in Chicago (TECO-Chicago) has purchased the 12th and 13th floors at 55 W. Wacker, a space that totals 20,315 square feet. The Taipei Economic and Cultural Representative Office in the US oversees TECO-Chicago, which serves Taiwanese citizens in the Midwest states and represents the interests of the Republic of China, also known as Taiwan. TECO-Chicago will move from its current location at Two Prudential Plaza this spring.

Increased Tourism Reason Behind Riverwalk Construction
In attempt to attract more tourism and tourist dollars into the loop area, Chicago secured a $100 million loan from the U.S. Department of Transportation to expand the downtown Riverwalk. Construction is kicking into high gear this spring for a continuous pedestrian path all the way from State Street to Lake Street, where each block of the park will have a distinctive theme. According to original estimates, the project will take 1.5 years to complete. The Chicago Department of Transportation estimates that the new and improved Riverwalk will receive about 2.8 million visitors a year.

River Point Secures Third Tenant
After losing a top-floor tenant earlier this year, River Point has secured a new 10-year lease with Sydney-based Servcorp Ltd. for 25,500 square feet. River Point, a 54-story tower being developed at 444 W. Lake St., now has three tenants on board, Servcorp, DLA Piper LLP, which is leasing 175,000 square feet, and McDermott Will & Emery LLP, which is leasing 240,000 square feet.

Riverside Sale and West Loop Blueprints
Owner Joseph Mizrachi is currently seeking bids for the almost fully leased 300 S. Riverside Plaza as he simultaneously plans to build a hotel and office tower in the West Loop. In 2012, Mizrachi and investor David Werner took ownership of the West Loop parcel at 540 W. Madison St. where they now plan to build a 1 million square foot hotel and office tower. In plans that Mizrachi and Werner are showing potential investors, the tower houses 338 hotel rooms and 616,000 square feet of offices.

What CRE or Chicago news headlines from the past week captured your interest? Leave us a comment and let us know.

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CRE News: What We’re Reading the Week of April 7

By BOMA/Chicago

Each week, The Elevator Speech summarizes news related to some of the key industry trends, buildings, deals and dealmakers that shaped headlines. Below are articles that caught our attention the week of April 7.

Another Slice of the Meatpacking District for Sterling Bay
Sterling Bay Cos. recently purchased the 11,308 square foot Pittsburgh Paints building located at 345 N. Morgan St. This acquisition is one of more than 20 buildings Sterling Bay has bought in Chicago’s meatpacking district. According to Crain’s Chicago Business, Sterling Bay may have plans to incorporate the Pittsburgh Paints building into a hotel development it is planning next door. 1000 W. Fulton Market, owned by Sterling Bay and where Google Inc. will move to in 2015, is across the street from the Pittsburgh Paints building.

More Transit Improvements Underway?
A Chicago coalition of transportation advocates launched a campaign earlier this month named “Transit Future” in attempt to raise billions of dollars for mass transit improvements. The proposed improvements involve extending and modernizing the existing CTA system, creating new rail lines that entirely bypass downtown, a bus rapid transit corridor running the length of the city and the creation of a high-speed bus service that would extend deeper into the suburbs. Mayor Rahm Emanuel and Cook County President Toni Preckwinkle support the coalition and recommend raising new tax money in Cook County to help pay for the mass transit improvements.

Newcastle Purchase in River North
Newcastle Ltd. has purchased 615 N. Wabash Ave. in River North for $5.2 million. The 4-story office building houses 15,469 square feet of space and sits on a 8,900 square foot lot. As Newcastle searches for new tenants, the building could be demolished. Zoning specifications would allow Newcastle to build up to 100,000 square feet, but Newcastle representatives deny the pursuit of placing a high-rise on the parcel and are instead trying to lease space to retail or restaurant tenants.

Chicago Pension Reform Proposal
The Illinois State Legislature is continuing to consider and revise legislation proposed by Mayor Rahm Emanuel to address the near $20 billion dollar pension crisis in Chicago. The Mayor’s proposal contained both new revenue and significant reform of the pension system to address the pensions of municipal workers and laborers. While no solution is going to be easy or painless, BOMA/Chicago and the business community are supporting the proposal as a way to protect the viability of Chicago and its credit rating, and to provide leverage for dealing with an already existing $600 million mandate for police and fire pensions.

Proposed Expansion of Special Service Area
The Chicago Loop Alliance (CLA) is moving forward with a proposal to renew and expand the existing State Street Special Service Area (SSA). An SSA is a special taxing district that levies an additional rate on properties within the boundaries in order to provide services beyond basic ones provided by local government. CLA, which manages the current SSA, is proposing to expand the district to include Wabash and parts of Michigan Avenue from Congress Parkway to the Chicago River. To adequately prepare members to be meaningfully engaged in the process, discussion and decision to renew and expand the SSA, BOMA/Chicago will hold an informational meeting on April 22, 2014 at 10:00AM in the Aon Center. Buildings in the proposed SSA will be contacted with details. Questions about the SSA can be directed to Ron Tabaczynski, BOMA/Chicago Director of Government Affairs.

What CRE or Chicago news headlines from the past week captured your interest? Leave us a comment and let us know.

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No Small Plans for the 2014 Ollie Scholarship Recipients

By BOMA/Chicago

Time and again, BOMA/Chicago members spring to life to support initiatives that strengthen the commercial real estate industry and the professionals who comprise this industry.

After 111 years of spearheading projects to advance CRE in Chicago, BOMA/Chicago continues to notice that our members not only rally behind each of our initiatives, but that their support grows with each passing year. The most recent case in point is the tremendous support we received leading up to and during the 2014 Diversity Celebration held on April 3 at the Pritzker Military Museum & Library.

The purpose of this annual Celebration is to promote the Reginald L. Ollie Inclusion and Outreach Scholarship and to support diversity in the industry. Due to the hard work of BOMA/Chicago’s Diversity & Corporate Social Responsibility Committee along with patronage of our entire membership, this year’s event was historic for many reasons.

The Ollie Scholarship was created nine years ago in an effort to recognize and develop minority leaders in the commercial real estate industry. The scholarship provides full course tuition (a value just under $10,000) to achieve the Real Property Administrator (RPA) designation. Since 2005, at least one minority applicant has been awarded the Ollie Scholarship. Due to the growing pool of Ollie Scholarship applicants and the outstanding qualifications of these applicants, the BOMA/Chicago Foundation approved the Ollie Scholarship Selection Committee’s recommendation to award two Ollie Scholarships in 2014.

Silent auction items in the Pri

Silent auction items in the Pritzker Military Museum & Library on April 3.

The decision to award two scholarships is not the only reason the April 3 event was historic. A total of 32 Affiliate and Building Members contributed to the Celebration by helping us raise a record-breaking $46,000 in sponsorship and silent auction/raffle prize donations. The silent auction included a wide-range of items from framed hockey pucks autographed by Chicago Blackhawks champs, Jonathan Toews and Patrick Kane, Vegas getaways, Broadway in Chicago tickets, golf outings and more.

Soon after each of our 200 guests settled into the evening with food and drinks provided by ParaMount Events, George Kohl, BOMA/Chicago President and member of the Diversity & Corporate Social Responsibility Committee, kicked off the evening by giving a background of the Ollie Scholarship and thanking each of our sponsors.

Kohl then introduced the evening’s honorary guest and namesake of the Ollie Scholarship – Reggie Ollie, a devoted BOMA/Chicago member who served as the Chair of the Diversity Committee for more than 10 years. Reggie took the microphone and described how proud he was to award not one, but two scholarships to rising stars in the industry who hail from a diverse background – Angela Oh and Yordanos Ghdey.

Angela Oh,

Angela Oh (left) and Yordanos Ghdey (right).

Oh, a JLL Property Administrator at 71 South Wacker and Ghdey, a Property Management Assistant for Riverview Realty Partners at 330 North Wabash, took the stage and gave very personal and eloquent acceptance speeches. Oh thanked her entire team at 71 South Wacker for their support and expressed her gratitude for the opportunity to earn her RPA in what she believed to be the strongest CRE market in the world – Chicago. Ghdey also thanked her property management team and noted that she had already received an outpouring of support from our members via email and phone calls to offer their help and mentorship.

Ollie, who never fails to give each scholarship recipient a gift that has both a personal and industry-related touch, gave both Oh and Ghdey a framed quote by Daniel Burnham that states:

“Make no little plans. They have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone will be a living thing, asserting itself with ever-growing insistency.”

With the echoes of this quote, Ollie encouraged Oh and Ghdey to earn their RPA and to leave a permanent legacy within the CRE industry.

Members of the BOMA/Chicago Diversity & Corporate Social Responsibility Committee at the 2014 Diversity Celebration

Members of the BOMA/Chicago Diversity & Corporate Social Responsibility Committee at the 2014 Diversity Celebration

BOMA/Chicago would like to once again thank each member of the Diversity & Corporate Social Responsibility Committee for helping to plan this event, secure sponsorships, collect silent auction donations and for their everlasting commitment to supporting workplace diversity. A special thank you also goes to Brian Staunton, the Diversity Celebration Event Chair, and Paul Rades, Property Manager for J & J ARNACO LLC at the Monroe Building. Rades has generously offered the space for the Diversity Celebration for two years in a row. On top of donating the space, the Monroe Building was also the exclusive Platinum Sponsor of the event and funded the $500 grand prize raffle.

This year’s Diversity Celebration was also special in that the speeches given by Oh and Ghdey truly sparked an understanding and a deeper glimpse into why the Ollie Scholarship is so important to BOMA/Chicago and the industry. Oh and Ghdey’s sentiments are reflected in the experiences of the members who comprise the Diversity & Corporate Social Responsibility Committee.

Anamaria Spiteri, Business Development Manager at AlliedBarton Security Services, has served on the Committee for two years. As a second generation immigrant, Spiteri states that she understands the challenges that minorities can face in their professional lives and that volunteering on BOMA/Chicago’s diversity initiative is a way for her to help future leaders like herself.

Jeff Tigchelaar, Senior Real Estate Manager for CBRE, has sat on the Diversity & Corporate Social Responsibility Committee for the past five years. In attending the recent Diversity Celebration, Tigchelaar realized that in helping to grow a talent pool comprised of people with diverse backgrounds, the industry will be exposed to fresh and innovative ideas.

Lourdes Becerra, Marketing Manager at Landscape Concepts Management, has spent one year on the Committee. According to Becerra, she felt compelled to sit on this Committee because she has yet to find another group or association that offers scholarships and opportunities to diverse individuals who want to grow professionally.

Becerra touches upon a point that brings much pride to BOMA/Chicago – that we are the only BOMA local in the world to have a Diversity & Corporate Social Responsibility Committee, a scholarship to support diversity and an event solely dedicated to celebrating diversity in the industry.

Applications for the 2015 scholarship will be available in the fall of 2014. Please visit the Ollie Scholarship webpage on the BOMA/Chicago website for more information and to learn about the requirements to apply.

Thank you again to our sponsors and to all of the BOMA/Chicago members who attended the April 3 Diversity Celebration. Click here to check out photos from the event.

Leave us a comment below regarding your thoughts on our diversity initiative or tips for success for Angela and Yordanos.

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CRE News: What We’re Reading the Week of March 31

By BOMA/Chicago

Each week, The Elevator Speech summarizes news related to some of the key industry trends, buildings, deals and dealmakers that shaped headlines. Below are articles that caught our attention the week of March 31.

Rise in Vacancy Rates Expected to Decrease Throughout 2014
According to a report by CBRE, Downtown Chicago office vacancy rates rose .3% from 14.4% to 14.7% percent during the first quarter of 2014. The reason behind this rise may potentially stem from some tenants shrinking their space. Vacancy rates are expected to lower again throughout 2014, as technology firms, such as Google, are increasing their space and major corporations are moving their headquarters to Chicago, such as Archer Daniels Midland Co.

Washington and Wabash Station Underway
Construction of a new $75 million CTA transit station at Washington and Wabash are slated to begin in August of this year. This station was originally due to begin construction in April, but plans were delayed due to an environmental study. Once completed, the Washington and Wabash station is predicted to have roughly 13,375 entries per day, which will make it one of the busiest Chicago stations.

First Japanese Investor in Eight Years
The 27-story tower at 203 N. LaSalle was recently purchased by a Tokyo-based conglomerate, Sumitomo Corp., for $111.5 million. This is the first acquisition by a Japanese investor in eight years. Although the 581,107 square foot building is currently 87% leased, the largest tenant in the building, DLA Piper LLP, will vacate more than 40% of that space in three years. DLA Piper LLP signed a lease at the West Loop River Point tower, which will be completed by 2017.

Top Q4 2013 Leases in Chicago and US
According to CoStar’s Fourth Quarter 2013 Market Report, the top two offices signed during the fourth quarter of 2013 in the Chicago market are as follows:

This report also mentioned that the largest leases signed in Q4 in the nation were from:

Piedmont Office Realty Trust Scores Long Term Lease
R-T Specialty Group has signed a long-term lease at 500 W. Monroe St. for 27,000 square feet. R-T Specialty had a sublease through 2017 on the 28th floor of the 44-story building and intends to move on the 30th floor by the fall 2014. Piedmont Office Realty Trust owns and manages the building.

What CRE or Chicago news headlines from the past week captured your interest? Leave us a comment and let us know.

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Notes from a Non-Profit Newcomer

By Joe Sherman, Operations Coordinator at the Chicago Symphony Orchestra

2014 TOBY-9580

Susan Hammer (Riverview Realty Partners) and Joell Molk (Golub Realty Services) awarding me the Full Designation Scholarship at the 2013-14 TOBY/Gold Circle Awards Gala.

Earlier this year, I was incredibly fortunate to receive the 2014 BOMA/ Chicago Foundation Full Designation Scholarship. The entire commercial real estate community has been very welcoming and I’ve met a lot of interesting people with all sorts of experiences, personally and professionally. A common experience I’m finding the more that I meet people in CRE is that many of us landed in this field and in our careers indirectly, and sometimes even unexpectedly. Frankly, this came as a relief to me – I had gone to college for theatre, after all!

After earning my undergraduate degree, I spent five years overseeing the facility and operations of Botanicals, an event design firm that was located in a warehouse space at 2214 N. Elston. After years of executing special events of all sizes in countless buildings and venues throughout Chicago and the surrounding suburbs, I found myself eager to be a part of an operations team in a larger facility. My rich and varied professional experience, combined with a background in Chicago theatre, led me to shoot for a job specifically at a venue. Working at a downtown venue felt like it would be a great fit because it would combine my experience producing events and my undergrad studies in theatre.

During my tenure at Botanicals, I had overseen the installation of several events at Symphony Center. I always made a mental note of how Symphony Center was an expertly run venue with an efficient and impeccably professional environment – not to mention a product that has always performed at the highest level. So, when the Operations Coordinator position opened up in the summer of 2007, I jumped at the opportunity and was lucky enough to be chosen for the position.

Last month, my BOMA/Chicago classmate, Kristine Sorenson, posted a blog on the Elevator Speech that touched upon the importance of having a support system and the value of your peers and supervisors’ expertise. I couldn’t agree more. I was fortunate enough to have that immediately in John Maas, RPA/FMA, the Director of Facilities at Symphony Center. From my first day on the job, he was very upfront with me – if helping run a facility was something I enjoyed, I should really consider pursuing an education through designation courses offered at BOMA/Chicago. His mentoring has been essential to my success at the CSO, my experience working toward obtaining my RPA/FMA designations and my pursuit of the Full Designation Scholarship.

I’m finding that one of the main differences between the daily tasks of my peers in the designation program and my own is this: working on tenant’s needs is actually a pretty small part of our job on the Facilities team at Symphony Center. In fact, we only have one tenant, Tesori, a restaurant located inside Symphony Center at 65 E. Adams St. offering Italian-inspired cuisine. Tesori is operated by Blue Plate Catering/Applause Food Services. Blue Plate/Applause is also the exclusive caterer to Symphony Center. The Symphony Center staff works very closely with Blue Plate/Applause, as they provide all food and beverage for rental events, in-house meetings, events and the concessions for all our concert programming and third party concerts. It’s really more of a longstanding partnership than an owner-tenant relationship.

While we only have one tenant, we do have hundreds of rental clients. As a non-profit organization, the CSO is always looking for opportunities to support the bottom line. One way of doing that is from renting out Orchestra Hall and the various event spaces at Symphony Center. Renting event space comprises at least half of my daily work: from marketing the space, to contracting and invoicing rental clients as well as producing the concert or event.

The relationship with our patrons is a tremendously rewarding one as well. As the CSO has been a pillar of Chicago since 1891, our concertgoers take genuine pride in the orchestra and its historical building. We get to preserve that history for generations to come and help the organization thrive.

Everything we do is for the support and advancement of our single biggest asset: the Orchestra. As an arts organization, the CSO is lucky to own its own facility. In the Operations & Facilities departments, I have the privilege of helping make that facility run at the very highest level. And my RPA/FMA education through BOMA/Chicago is proving invaluable to that experience every day.

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CRE News: What We’re Reading the Week of March 24

By BOMA/Chicago

Each week, The Elevator Speech summarizes news related to some of the key industry trends, buildings, deals and dealmakers that shaped headlines. Below are articles that caught our attention the week of March 24.

High Profits Despite Low Occupancy
Lincoln Property Co. and investment manager PIMCO plan to place 230 W. Monroe St. on the market. Despite the building’s 67% occupancy rate, the 29-story office tower is expected to earn about $200 per square foot, or nearly $125 million. Lincoln Property and PIMCO purchased 230 W. Monroe in August 2012 for $91.3 million when the building was 90% leased.

JLL Wins Big at GCFD CRE Dinner
The 26th Annual Chicago Commercial Real Estate Awards Dinner, hosted by the Greater Chicago Food Depository (GCFD), was held on Thursday, March 20. JLL won three awards at the dinner, including Office Broker of the Year, Project Manager of the Year and Project Management Company of the Year. Broadcaster Corey McPherrin of WFLD-TV/Channel 32 hosted the event at the Hilton Chicago, where more than $1 million was raised for the GCFD. Click here to see the full list of winners.

Other Tech Businesses to Replace Google
Chicago-based Sittercity Inc. and a local startup, Modest Inc., will collectively lease about 24,000 square feet at 20 W. Kinzie St. These two leases will keep the building’s vacancy rate at 5%. Google currently resides in this building, but the firm will be moving to 1000 W. Fulton St. within the next year.

Florida Investor Buys Monroe Property
Beacon Investment Properties LLC, a Florida-based investor, has purchased the 535,911 square foot office tower at 200 W. Monroe for $100 million, or $187 per square foot. The sellers, Farbman Group and Lubert-Adler Partners L.P., paid $75 million for the building in July 2012. The sale does not include 113,354 square feet owned by the Jewish Federation of Metropolitan Chicago.

Walgreens Moving to Thompson Center
Walgreen Co. has announced plans to close its 8,000 square foot store at 240 W. Randolph St., where John Buck plans to build a 36-story office tower. Walgreens will be relocating this store a few blocks away to the James R. Thompson Center. The 11,000-square-foot store will open along the Randolph Street side of the Thompson Center, filling some of the space by the now closed Dress Barn. Walgreens signed a lease with the Marc Realty LLC and Boston-based Winthrop Realty Trust venture that controls the Atrium Mall retail space 100 W. Randolph St.

What CRE or Chicago news headlines from the past week captured your interest? Leave us a comment and let us know.

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Tax Increases are Coming & Chicago’s Economic Viability Hangs in the Balance

By Ron Tabaczynski, BOMA/Chicago Director of Government Affairs

Chicago is facing a predicament whose resolution will surely impact office building owners. State law mandates that Chicago make a $590 million contribution to its police and fire pension funds in 2015. If the city funds that contribution entirely from real estate property taxes, a recent analysis done by Crain’s Chicago Business suggests that this could result in Chicago having the highest commercial property tax rate in the nation, not to mention additional spending cuts to city services.

For years, Chicago building owners and managers have borne a disproportionate share of the city’s real estate tax burden, a burden which does not compare favorably with other major markets. According to BOMA/Chicago’s 2012 Economic Impact Study, Chicago buildings had the third highest property tax rates in the country for 2011, exceeded only by New York City and Washington, DC. Moreover, real estate property taxes in Chicago accounted for nearly 76 percent of a large building’s total operating expenses, the highest percentage among the nine comparable markets.

Since 2007, BOMA/Chicago’s Tax Committee has monitored annual assessments and property tax rates of more than 190 of our building members as part of our Annual Property Tax Index. Most recent available data for 2012 (payable in 2013) shows that commercial buildings were hit with significant increases in assessed value and overall tax rates. While trying to gain traction in a challenging market, BOMA/Chicago buildings in the index paid more than $89 million more in property taxes than the previous year. The average BOMA/Chicago building saw an increase in its tax bill of nearly half a million dollars last year. Some saw much more.

While it is widely believed that property taxes fund meaningful city services and infrastructure, the reality is the entire property tax levy goes toward funding pensions and debt. If an additional $590 million in property taxes were imposed for 2014, none of that would be used to provide city services. Given the increasing costs of providing city services, it seems likely that additional taxes and fees would be created or increased to provide those services.

All combined, this creates a perfect tax storm that could cause a harmful trickledown effect directly harming our long-term economic viability. From a commercial perspective, high property tax rates directly impact our city’s ability to attract and retain businesses – the lifeblood of our local economy – as additional cost is passed through to tenants.

We’re already starting to see an exodus of businesses due to Illinois’ high taxes and unfriendly business climate. Local companies like Jimmy Johns, Office Max/Office Depot, CME Group and Sears have all threatened to leave Illinois given the state’s tax environment. Some of these companies have stayed only after accepting financial incentives from the city and state. Others are relocating to cities with friendlier business environments. With property taxes likely to increase again, our concern is other businesses will follow suit – taking jobs and revenue with them.

While we are still in the early months of 2014, there’s no getting around the fact that tax increases are coming. We implore the city and the state to find a fair solution to pension funding in 2015 without compromising Chicago’s long-term economic competitiveness.

What are your thoughts about the 2015 pension funding? Let’s start a discussion today. Leave your comments below.

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