Monthly Archives: January 2015

Fourth Quarter 2014 Chicago Downtown Office Market Report

Chicago Office Market Continues to Heat Up

The Chicago economy continues to show signs of improvement as the unemployment rate in the metropolitan area decreased from 8.7% to 6.3% year over year. This translated into a healthier downtown office market with the vacancy rate decreasing from 14.1% to 13.1% year over year. Attributing to this was net absorption for the year of 1,141,848 SF. Vacancy however did increase slightly from 13.0% last quarter due to the former Chicago Public Schools (CPS) office building being added to the downtown inventory.

Read Full Market Report Here

 

Chicago Commercial Real Estate – In the News

Tom’s Recommended Reading for the Week

  1. Commercial Mortgage-Backed Securities Make Comeback – A hunt for yield and a gradually improving property market are bolstering a key engine of U.S. commercial property lending, helping borrowers to refinance but also reigniting fears the market is getting overheated. In all, lenders made $94 billion in loans bundled together and sold off as bonds to investors in 2014, the most since 2007 for the product known as commercial mortgage-backed securities, according to trade publication Commercial Mortgage Alert… Wall Street Journal
  2. Cyber sleuths move HQ to Chicago – Take that, all you evil-minded hackers! A fast-growing global cybersecurity company is moving its headquarters here. Prescient Edge, which has the likes of ex-Green Berets and federal intelligence agents in its executive suite, is setting up shop at One Prudential Plaza, where it is leasing about 24,000 square feet of space, according to the city and the company. Prescient Edge now is based in McLean, Va., not too far from Washington… Crain’s Chicago
  3. Jewel Osco HQ sold to Hamilton Partners – Feeling more optimistic about the suburban office market, Hamilton Partners added Jewel-Osco’s headquarters to its shopping cart for almost $24 million. The Itasca-based developer and investor bought the 185,020-square-foot office building at 150 Pierce Road in west suburban Itasca on Dec. 30 for $23.7 million, or about $128 per square foot, according to DuPage County records. The seller was Bethesda, Md.-based pension fund adviser ASB Capital Management… Crain’s Chicago
  4. Mezzanine Financing on the Upswing as Industry Sees More Construction – Borrowers have a growing appetite for mezzanine loans that is fueled by redevelopment and refinancing activity, as well as the return of new construction. Terra Capital Partners, a New York-based fund manager, has seen its mezzanine lending volume double over the past year and the firm expects that volume to double again in 2015. Although Terra Capital Partners does not disclose its total lending volume, it provided mezzanine or bridge financing on about 40 different projects last year. Mezzanine capital typically goes higher on the “capital stack” of project financing, layering on top of a first mortgage to provide a borrower with higher leverage… NREI
  5. Prices for Office Assets in CBDs Are on a Tear – Stronger job growth over the past year is beginning to have an impact on office building valuations, as Moody’s/RCA Commercial Property Price Indices (CPPI) registered an 8.6 percent increase in prices for office assets in Central Building Districts (CBD) in the three months ending in November 2014. The sector was the best performing of all core commercial property types at a time when commercial prices as a whole continued to go up. CBD office buildings have now recovered 145.6 percent of their losses peak-to-trough. All commercial properties taken together have recovered 105.8 percent of their losses… NREI
 

Bradford Allen Represents Blue Star Properties and Baderbrau Brewing at 2515 S. Wabash

CHICAGO, IL – Bradford Allen is pleased to announce that Senior Managing Director Ben Azulay and Director Justin Kessler have completed the 25,810 square foot building sale of 2515 S. Wabash in Chicago. The sale is valued at $1,250,000.

 Azulay and Kessler represented both the property buyer, Blue Star Properties and the lessee, Baderbrau Brewing. The property is located immediately off of I-55 in close proximity to McCormick Place and downtown. The South Loop property is situated a few blocks south of the soon-to-open Cermak station on the Green Line and features a bow truss ceiling, two drive-in doors as well as an old water tower visible in either direction on I-55.

 Baderbrau Brewing has leased the entire property on a long-term lease and plan to open the brewery along with a 4,000 square foot taproom later this year. Homebrewer Rob Sama revived Baderbrau in 2012, bringing back the original Chicago Pilsener popular in the 1990s, and has since created seasonal varietals such as Red Velvet, Oktoberfest, Lawnmower Lager and Naked Selfie, a Black India Pale Lager.

“We surveyed several neighborhoods outlining downtown, as it was important for Baderbrau to have a Chicago address,” Kessler said. “2515 S. Wabash was ultimately selected due to the building’s size and layout being ideal for Baderbrau’s vision, as well as the proximity to McCormick Place and the redevelopment of Motor Row.  However, with the building only for sale we had to bring in a developer to purchase the building and felt straight away that Blue Star was the right group for this project – it turned out to be a win/win for everyone.”

“The Bradford Allen team was fantastic to work with. Ben and Justin understood our requirements and worked tirelessly to find us a property that fit the bill for a brewery in terms of size, location as well as type of building,” said Sama. “Not only did they find us a great property, but they also found a buyer for the property, which was necessary to get the deal done.”

The brewery is projected to open late Summer 2015.

About Bradford Allen Realty Services

Bradford Allen Realty Services, a Chicago-based commercial real estate firm, offers a full range of services and expertise to entrepreneurial and corporate business entities as well as not-for-profit organizations. The firm provides real estate strategy, advice, marketing, and transaction execution for occupiers, investors and owners of real estate.

 

 

Chicago Commercial Real Estate – In the News

Tom’s Recommended Reading for the Week

  1. Office Market Sees Tepid Recovery – U.S. companies are adding employees at the fastest rate in years. But those workers aren’t filling up office buildings like they used to. While the labor force finally has pushed past its prerecession peak, readings on office-space usage have barely budged. The vacancy rate stood at 16.7% in the fourth quarter, down only a hair from the 16.9% registered a year earlier and compared with the postrecession peak of 17.6% reached in 2010, according to data from real-estate research firm Reis Inc… Wall Street Journal
  2. Offices to Become More Like Home in 2015 – In the past several years, office users across the nation began transforming their spaces from old-style cubicle designs into more collaborative arrangements. In addition, many sought to shrink their footprints by using space in a more efficient manner. And as office users look to the year ahead, experts say that other changes are underway… Globe St.
  3. Rising tide lifts DuPage office market – The effects of the improving economy are being felt in the suburban Chicago office market, where conditions are tightening and shifting the landscape for companies that do business hereA microcosm of this dynamic can be found in DuPage County’s sprawling East-West Office Corridor, which runs along a 20-mile stretch of Interstate-88 from Westchester to western Naperville… Daily Herald
  4. Suburban Chicago office vacancy rate drops to six-year low – Suburban office landlords entered 2015 with a burst of leasing momentum rarely seen since the recession. Office vacancy in suburban Chicago fell to 22.6 percent in fourth-quarter 2014, down from 23.4 percent in the previous quarter and from 24.3 percent a year earlier, according to Chicago-based Jones Lang LaSalle. The vacancy rate is at its lowest level in more than six years… Crain’s Chicago
  5. VisaNow moving HQ to Chicago’s Loop amid quick growth – With a $16 million cash infusion and plans to more than double its workforce within 18 months, visa processing firm VisaNow is moving its Chicago headquarters. VisaNow signed a lease for about 30,000 square feet at 230 W. Monroe St., with an option to add another 20,000 square feet in the Loop tower, CEO Bob Meltzer said. VisaNow helps companies secure visas for their workers… Crain’s Chicago