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 November 4.
Demand on the Rise for Off-Loop Office Space
According to a Q3 analysis recently released by the Studley Chicago office, demand for West Loop and Near North office space continues to rise. Tenants from both the suburbs and other parts of downtown, including Michigan Avenue and Central Loop submarkets, are choosing to move to other off-loop areas. We reported one example of this trend last week in regards to Associated Bank consolidating five offices into a unified headquarters on the top floors of 525 W. Monroe.
Statistical evidence of this trend, as described by Studley, shows that Class A availability in the Near North decreased 0.9% to 14.4% and that availability in the West Loop has also declined 0.8% to 16.2%. While the West Loop, East Loop and Near North submarkets have seen class A space decline by 2.5-million-square-feet, the amount of similar space in other parts of the loop has increased by 700,000-square-feet.
CDOT Commissioner Resigns
Gabe Klein, Transportation Commissioner at the Chicago Department of Transportation, resigned his post earlier this week. After spearheading campaigns to make Chicago more bike-friendly and to bring speeding cameras to city streets, Klein has decided to return to the private sector and plans to move back to Washington DC.
Florida Firm Purchases Chicagoland Offices
Beacon Investment Properties LLC, a Florida-based commercial real estate operator and fund manager, has sealed a deal to purchase 20 N. Clark St for $63 million. Beacon has also expanded its Chicago-area portfolio by acquiring a four-story building in Naperville for $24 million. Ariel Bentata, co-founder and managing member of Beacon, stated that Chicago is “still affordable on a price-per-square-foot basis compared with the rents you can achieve. There’s much more upside in Chicago than in some of the other gateway cities.”
Renovations Ahead for Citigroup Center
KBS Realty Advisors LLC recently confirmed that it has acquired Citigroup Center, a 1.5 million-square-foot office and retail building located at 500 W. Madison St., for $425 million. Over the next six years, KBS plans to spend $66.4 million in unspecified renovations and improvements. As we reported back in October 2013, the $425 million price tag is the highest amount paid for a Chicago office tower since July 2010, when KBS paid $503 per square foot for the 1.3 million-square-foot building at 300 N. LaSalle St. That deal, which cost KBS $655 million, remains a Chicago record for amount paid per square foot.
Thor Takes Over Barneys
Thor Equities LLC has acquired the Barneys building located at 1-15 E. Oak St. in the Gold Coast. The 94,700-square-foot building came with a $155 million price tag ($1,626 per square foot). A branch of Citigroup bank rents space in this building along with Barneys New York, which occupies 90,000 square feet under a lease that runs through 2024. According to CoStar Group, the sale is one of the most expensive retail property sales in downtown Chicago this year.
What CRE or Chicago news headlines from the past week captured your interest? Leave us a comment and let us know.