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 February 11.
- The president of Merchandise Mart Properties announced he will step down this week, six months after signing a 572,000-square-foot lease with Google that will change the face of Chicago’s largest commercial building, The Merchandise Mart. Mark Falanga will begin a transition away from MMPI, a unit of Vornado Realty Trust, which owns the 4.2-million-square-foot Merchandise Mart in River North. High-tech users, including the 1871 incubator, have made the Mart “one of the hippest buildings in the city and Chicago’s technology epicenter, in addition to being a world class merchandise mart and design center,” according to Falanga.
- The delinquency rate for Chicago-area commercial real estate loans dropped to 5.7 percent in Q4 2012. Last quarter was the first time the rate dipped below 6 percent since Q3 2009. The drop is due to banks purging their portfolios of delinquent real estate loans and higher occupancy and rental rates for Chicago-area commercial properties.
- The Ritz-Carlton Chicago is for sale. The 435-room hotel just off Michigan Ave. could sell for about $180 million, or $414,000 per room, which would rank among the most expensive hotel transactions in Chicago. Revenue per available room, a metric that accounts for both occupancy and room rate, rose to $209.48 at downtown Chicago’s luxury hotels last year, an 11.6 percent increase over 2011.
- Two data centers are in the works on Chicago’s South Side, developments that would cost at least $550 million to build. Data storage provider Equinix is in advance talks to invest about $350 million in a new data center at 111 E. Cermak Rd., and Sterling Bay Cos. will build a facility at 717-727 S. Des Plaines St. at a price tag of at least $200 million. Demand for data centers is fueled by increasing internet usage, online business transactions and electronic record-keeping, which requires more off-site storage facilities equipped with servers, chillers and backup power sources. Demand for local data centers has increased because Chicago has the third-largest fiber optic capacity of any metro area in the country.
- According to Doug Frye, president and CEO of Colliers International, the state of the commercial real estate industry is gaining strength. However, CRE professionals will still face several challenges as the national economy continues on its slow recovery.
What CRE or Chicago news headlines from the past week captured your interest? Leave us a comment and let us know.