Chicago

601W Cos. Buys Old Post Office

GlobeSt.com | ARTICLE BY Brian Rogal
March 18, 2016

CHICAGO—The significance of this sale is unclear. City officials seem determined to use the eminent domain process to assume control and have already issued an RFP.

CHICAGO—Another developer may get a shot at tackling one of the biggest question marks in the city’s downtown. Bill Davies’ International Property Developers North America announced yesterday a conditional sale of the Old Post Office, the iconic 2.7 million square foot property that straddles the Eisenhower Expressway, to New York-based investment group 601W Cos. It is still not clear whether the deal will survive, as city officials seem to have other ideas.

Earlier this week, after losing patience with Davies’ unsuccessful attempts to cobble together a workable plan since acquiring the site in 2009, the city’s Department of Planning and Development issued a RFP for the property with proposals due June 10. Officials want to take over the site through the eminent domain process, identify a company willing to buy it for fair market value and then transform it into an office or mixed-use project. Davies’ sale was announced the day after the RFP was issued.

“I think the obvious thing is that the city will, I’m sure, respect the contract,” Richard Sykes, a consultant with Savills UK who represented IPDNA, told GlobeSt.com. He pointed out that 601W Cos. has built up a formidable reputation as a firm that can take over and revive aging properties. It bought the Starrett-Lehigh building in New York, for example, a 2.3 million square foot Art Deco landmark, “and turned it around in a short space of time.”  

The company also owns Chicago’s One Prudential Plaza and has transformed the 60-year-old tower into a sleek modern office space with a host of new amenities. And in 2014, it purchased the 2.15 million square foot Southfield Town Center, perhaps the most recognizable office complex in suburban Detroit, for $177.5 million, even though it was only 67% occupied at the time. In all, 601W Cos. has acquired and repositioned more than 40 million square feet of trophy office assets within the US. It also owns other Chicago properties including the giant Aon Center and 111 W. Jackson.

IPDNA went through a long process before settling on 601W Cos. In late 2014, IPDNA brought in Savills to seek a joint venture partner or purchaser. In the subsequent 18 months Savills gave presentations in China, Japan, South Korea, Malaysia, the Middle East and Europe as well as throughout the US and Canada.

Serious negotiations with 601W Cos. began in May 2015 and the parties signed a contract of sale this week. The companies did not disclose the sale price or whether Davies’ firm will still play a role in the redevelopment.

City officials “only knew about it on Tuesday,” Sykes said. “It would have been nice to do it a week before,” but it took a few more days to finalize the deal. The looming threat of the RFP “had no impact whatsoever” on the negotiations. 

Asked whether he expects the city to now withdraw the RFP, Sykes said, “it’s not for me to comment on. But 601W has every intention of moving forward.”

The city’s response perhaps sets the stage for a battle in court. “The city is going forward with the RFP as planned,” Peter Strazzabosco, deputy commissioner of the planning department, told GlobeSt.com. The city will hold a pre-submittal conference on April 14, and “potential developers are strongly encouraged to respond.”

Along with Sykes, Lisa Davidson and Tiffany Winne of Savills Studley represented IPDNA; 601W Cos. was represented by Jaime Fink and Jeff Bramson of HFF.

 

Portillio Backed Firm Pays $139 Million for Single Tenant Buildings

A new Chicago venture whose investors include hot dog baron Dick Portillo paid $139 million for 48 single-tenant retail buildings, including seven in the Chicago area.

BlueRoad Ventures said it bought the portfolio last month from Brauvin Net Lease, a privately held real estate investment trust managed by Chicago-based Brauvin Real Estate.

It was the first acquisition for BlueRoad, an asset management and investment firm launched in the fall, said Managing Partner Tim Farrell.

“The diversity of the tenant mix and locations offers long-term value for our investors,” Farrell said. “We’re aggressively growing our portfolio and looking for opportunities throughout the country.”

BlueRoad is seeking retail and office properties with long-term leases in place and large vacancies to fill, Farrell said. The company, whose investors are wealthy individuals and family offices, also has private-equity and financial and accounting services arms, Farrell said.

Farrell is a longtime real estate investor and developer whose former firm was called Farrell Office Properties. His projects included converting the Garland Building at 111 N. Wabash Ave. to office condominiums. Although that project and similar ones struggled during the recession, Farrell said 97 percent of the Garland space has now been sold, and “our investors did extremely well on the deal.”

BlueRoad’s chairman is Portillo, who will invest in some deals, as he did in the acquisition from Brauvin, Farrell said.

Portillo has been active in real estate investments since selling the Portillo’s Hot Dogs chain to Boston-based Berkshire Partners for nearly $1 billion in 2014.

In late 2014, a Portillo venture paid $74.4 million for 18 Chicago-area buildings leased to his former chain, and also acquired two other Portillo’s buildings in Arizona.

In other real estate investments, Portillo paid more than $24 million last year for an Oswego shopping center and sold a Hinsdale home for more than $3.8 million after he and his daughter-in-law bought it for almost $2 million and rehabbed it.

Tenants in the Chicago-area properties acquired by BlueRoad are Burger King franchises at 2000 W. 47th St. in Chicago and 11740 S. State Route 59 in Plainfield; private elementary and middle school operator Chesterbrook Academy, in buildings at 1571 and 1587 Oswego Road in Naperville; Steak ’n Shake at 2121 Willow Road in Glenview; a Fresenius Medical Care dialysis facility at 2601 S. Harlem Ave. in Berwyn, and National Tire & Battery at 1360 Ring Road in Calumet City.

Other tenants in the more than 1 million-square-foot portfolio include CVS, Advance Auto Parts and Tractor Supply, according to BlueRoad. The buildings are in 18 states.

The average remaining lease term is more than 10 years, Farrell said.

“We have the capital and the flexibility to pursue a range of deals in the office and retail asset classes,” Farrell said. “We will absolutely look at one-off deals. That’s going to be our bread and butter.”

Brauvin, meanwhile, plans to acquire about $200 million in net-leased retail properties for its 17th fund, President James Brault said.


To Compete, Lake County Needs To Be More Affordable

GlobeSt.com | Article by Brian Rogal

March 4, 2016

CHICAGO—Brad Migdal, a site selection expert with Transwestern, tells GlobeSt.com that the recent moves by Allstate and Beam Suntory should motivate Lake County to make it cheaper for millennial workers to live there.

The Merchandise Mart has now become one of the most significant tech hubs in the US.

CHICAGO—The plans announced this week by AllstateCorp. and Deerfield, IL-based Beam Suntory to make moves from the suburbs into the Merchandise Mart are not really surprises, given the parade of companies that have made similar migrations in the past several years. And Brad Migdal, executive managing director of the site selection/business incentives practice at Transwestern, tells GlobeSt.com that Lake County could lose even more workers in the near future if it doesn’t do something to make living there more affordable. 

“Lake County’s biggest problem is its property taxes; it’s like paying two mortgages,” he says, and if the younger tech workers that most companies want to recruit can’t afford Lake County, those companies will continue to move to where the workers do want to live. And these days that means the city. 

“These moves are great for Chicago, but bad for Illinois,” he adds, because the state is no longer attracting companies from out of state, as it did when Boeing moved from Seattle, but instead just shuffling existing ones around. “We have these beautiful corporate campuses in the suburbs, and they are going to turn into dinosaurs.” 

“We have had some great successes in the suburbs with the pharmaceutical sector,” but “every year a new bunch of millennials move to Chicago. They move to where they want to live, rather than to where the jobs are.” And the most important consideration for most companies these days when selecting a new site is how it will help with talent recruitment. “Every project I do now, whether it is office or industrial, the companies are chasing labor.”  

And although Allstate says only about 400 of its workers, primarily those involved in quantitative research and analytics, will make the move from its Northbrook headquarters to 45,000 square feet on the Mart’s eighth floor, Migdal wonders if that is just the beginning. After all, if the move helps Allstate recruit tech workers, company officials may decide to move advertising, marketing and other departments downtown. “What then happens to that property?”

“The suburban real estate market is at a crossroads,” he says. “We just need to make it more affordable for millennials. Chicago is winning that battle.”

Link to Original Article

GlobeSt.com [official website]

The Cool New Digs of SRAM - Trending the Open Office Concept

One Day at SRAM by Perkins + Will

SRAM, a bicycle components manufacturer recently took space at 1K Fulton in Chicago's West Loop Neighborhood, which has an interesting development story.  The building was an old cold storage facility that took about a year to thaw and redeveloped into a brand new office building, home to companies like Google and SRAM.

The growing trend of these creative spaces are showing that the blurred space between our work/life balance is being recognized and companies want their employees to be happier while working longer and of course, harder.  

These spaces come at a price as many lounge/creative/open areas add to the rentable SF and bottom line, but that's not what it's all about.  Companies like SRAM see this as an investment and great justification to increase collaboration, flexibility and inspiration.  This type of creative layout is not for every industry, but it is interesting to see more companies trending towards an open concept.  Factor in the cost of employee retention and there may be an argument to justify that expensive espresso machine.

Tour the new digs of Chicago's SRAM

Original Article: Curbed Chicago | By: AJ Latrace

 

 

9 of Chicago's hottest tech offices: Company Culture and New Office Trends

Source: Built in Chicago - Andreas Rekdal

Source: Built in Chicago - Andreas Rekdal

Source: Built in Chicago
From basketball courts to Nintendo rooms, here are 9 of Chicago's hottest tech offices
Author: Andreas Rekdal

With a shift in the office environment, we're seeing a lot of companies shifting from the traditional private offices to more open collaborative environments.  Cultural changes in the work place have been the predominant force behind these changes.  

Although this open environment is not for every company, the link below shows some really cool offices and how it can be done.