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Chicago Office: Mediocre; The Deal Sheet

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Chicago Office: Mediocre; The Deal Sheet
After many grueling hours of marketing research, Reis analyst Brad Doremus developed the perfect tagline for the office market in Chicago. “Chicago Office: Not very pretty, but not as ugly as everyone else.” (No, Brad doesn't teach self-esteem classes on the side. Hard to believe, right?)
 
Chicago Office: Mediocre; The Deal Sheet
Maybe it doesn’t exactly flow off the tongue, but effective rents in the Chicago office market were  flat during Q3 2010, stemming six consecutive quarters of rent decreases for the metro while all US metros in aggregate recorded the ninth consecutive quarter of effective rent declines. The Chicago office market held up much better than the nation as a whole during the throes of the recent economic turmoil. Effective rent in Chicago declined a respectable 2.2% between Q4 2008 and Q3 2009 relative to the  7.1% fall exhibited nationwide. However, recent quarters (aside from Q3 2010) have shown a reverse in this trend as Chicago effective rent fell 2.3% vs. a 1.6% decline for the country. Chicago investors hope the most recent quarter’s out-performance is a sign of things to come. They may be vindicated in the longer term; although Chicago’s effective rent growth is expected to lag the US in total over the next year, growth should top the national average beginning in 2012.
 
Management News

CB Richard Ellis' Natalie Koziol is the new senior real estate manger for Health Care Services Corp. at 300 E. Randolph. The 1.8M SF building added 860k SF last year when HCSC built an additional 25 stories on top of the existing building. CB Richard Ellis’ property management group’s portfolio in the Chicago area is now more than 45M SF.

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Bridge Development Partners' 555 Aptakisic Dr in Lincolnshire has been awarded LEED Gold status. Colliers International’s Steven Kling and Peter Kelly are leasing agents for the property. Architectural services were provided by Archideas and the general contractor was Premier Design+Build Group. The 162k SF spec office building has a storm water system design that minimizes erosion, optimized energy performance and indoor air quality 30% higher than ASHRAE standards.

Executive Moves

Three new employees have joined HOK in Chicago. Robert Bistry,David Genc and Andre Baros are now VP, senior associate and associate, respectively, at the firm. Robert will provide leadership and project oversight for the firm’s Architecture Practice. Before HOK, he was founder and senior principal at Built Form in Chicago.David joins HOK from DeStefano Partners. His recent work includes the Technology Building at the College of DuPage in Glen Ellyn and the Chandler Residential Tower at Lakeshore East in Chicago.Andre has a strong focus in sustainable design. He was previously with Wheeler Kearns Architects where he implemented the office’s transition to the Revit building information modeling platform by training and providing ongoing support for the entire staff.

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Lou Berchicci has joined Jones Lang LaSalle’s  industrial project & development services group where he will be responsible for managing large-scale build-to-suit projects for the firm’s industrial clients. The 20-year industry vet was previously with Providence Logistics.

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Loren Guzik was promoted to senior director from director at Cushman & Wakefield. He specializes in tenant representation within C&W’s office brokerage division. Clients include law firms, professional services firms, insurance agencies, construction firms, healthcare companies and financial services firms.

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Robert Fitzsimmons
 has joined K&L Gates as a partner in the firm’s real estate investment, development, and finance practice. He joins K&L Gates from Mayer Brown. Robert has extensive experience advising investment entities, banks, and not-for-profit organizations in their  real estate asset transaction s involving cross-border and offshore structures, private equity fund s, equity ventures, public and private real estate investment trust s, and debt issuances. 

Construction News 

Principle Construction Corp has completed a  53k SF renovation project for Probat Burns, located at 601 Corporate Woods Pkwy in Vernon Hills. The new facility, which includes a  customer training area  and showroom, also marks an expansion for the firm. The new space will allow Probat Burns to increase its manufacturing/assembly line of coffee and cocoa roasting equipment. The renovation included approximately 7,500 SF of existing office space including new flooring, new paint, wall relocation, bathroom remodel and the construction of an additional 1,500 SF of new engineering office space. Timothy Morgan Associates provided architectural services.

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McShane Construction Co completed a 20k SF office assignment on behalf of Ogletree, Deakins, Nash, Smoak & Stewart at 155 North Wacker Dr, Suite 4300. The legal services suite includes 36 private offices, 12 soft offices, three conference rooms, an extensive law library and a kitchen/breakroom. ASD Architects provided the architectural services.

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Chicago Lakeside Development, a venture of McCaffery Interests and United States Steel Corp, opened its 2k SF marketing center in the only remaining structure between 79th and 91st along the lakeshore. The 1917 structure has been updated to show the development's vision. When completed over a span of 30 years, the development will include 13,575 new homes, 17.5B SF of retail and other commercial space, a new high school, and a 1,500-slip marina. Construction is expected in a minimum of six distinct phases. The center, which was developed with LEED-CI green building criteria, was designed by Antunovich Associates.

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J.C. Anderson completed construction on an 18k SF penthouse office renovation for LSV Asset Management at 155 N. Wacker. The penthouse features 10’ clear heights which allowed for the use of ceilings with custom lighting. The newly constructed walls have high-end tiles, stone and glass. J.C. Anderson's Thomas Raveret led the construction team including project manager Joe Maguire and project superintendent Steve PerryHydzik Schade Associates provided the architectural services.

Sales News

Boxer Property has purchased the 107k SF Fox Valley Executive Center  in Aurora from Miami, special servicer LNR Property  for an undisclosed amount. The office property, located at 75 Executive Dr, includes 5.6 acres of land. NAI Hiffman's Art Burrows represented LNR. TPG Financial's Tom Gallagher repped Boxer Property. NAI Hiffman has been handling the leasing and management of the property since 2009 when LNR negotiated a deed-in-lieu with the borrower.

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Barrymore LLC purchased a 105k SF industrial building at 2600 Washington Blvd in Bellwood from DeNovo Rockford/Bellwood. Grubb & Ellis' Ryan KehoePeter Block and Anne Arnold represented the seller.

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CB Richard Ellis’ Keith PuritzBrett KronerRyan Bain and Zach Graham represented Glentronics in the sale of 640 Heathrow Dr in Lincolnshire. Dynomax purchased the 40k SF industrial building for an undisclosed price. Asking price was $2.7M. Darwin Realty's Patrick Shannon represented the purchaser.

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Permatron Corp purchased a  35k SF industrial building at 2020 Touhy Ave in Elk Grove from the Hessler Family. Grubb & Ellis'Brian Carroll and Sam Durkin represented the buyer.

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Millennium Properties' Daniel Hyman and Susan Silver sold 5940 Touhy Ave in Niles. The three-story 34k SF office building was bought by Imperial Realty for an undisclosed amount from a consortium of banks situated in the Midwest. Susan and Daniel represented the buyer and sellers respectively, while Garfield & Merel's Greg McCormick served as counsel for sellers.

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Millennium Properties sold a partially completed townhome development in Willowbrook on behalf of Private Bank. The sale consisted of seven partially completed units and one model unit. Each unit is approximately 2,500 SF and consists of three bedrooms and two and a half bathrooms. The homes sold for a total of $1.2M to Ben Pecoraro. Private Bank was represented by Millennium Properties' Greg Block. The buyer was represented by Quick Time Realty's Bozena Ryt.

Leasing News


Parkway Properties  has signed a 10-year lease with the General Services Administration for 184k SF at 233 North Michigan in Chicago effective Dec. 1. The 10-year extension includes contractual rent concessions totaling $5.3M over the period December 2010 through  February 2012, of which  $4.5M occurs during 2011. The extension includes a tenant improvement allowance of approximately $7.8M, and any unused portion after construction is completed can be applied as a rent concession on a straight-line basis over the remaining term.

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APA 73 leased 70k SF of industrial space at 1106 Ellis St. in Bensenville from Mobile Equipment Warehousing Co. Grubb & Ellis' Brian Carroll and Matthew Mulvihill facilitated the transaction on behalf of both parties.

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Doumak leased 50k SF of industrial space at 1815 Landmeier Rd in Elk Grove Village from ProLogis Trust. Grubb & Ellis' Sam Durkin represented the tenant.



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WEG Electric leased 50k SF of industrial space at 2325 North Ave, in Melrose Park from TIAA-CREF. Grubb & Ellis' Brian Carroll represented the tenant. Brian and Grubb & Ellis' Ryan Kehoe and Matt Mulvihill represented the lessor.

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CB Richard Ellis' Cal WessmanScott Brandwein and Jon Milonas represented North American Company for Life and Health Insurance in the renewal of its 42k SF corporate HQ location at Congress Center, 525 W. Van Buren. Grubb & Ellis' Mark Parrish and Sara Spicklemire repped the landlord.

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Atlas SN Transportation leased 26k SF of industrial space at 1901 Pratt Blvd in Elk Grove from Hollander Holdings. Grubb & Ellis' Brian Carroll and Sam Durkin facilitated the transaction on behalf of both parties.

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NAI Hiffman’s Michael Flynn and  Trip McDonough completed an 8k SF long-term lease at One Conway Park, 100 N. Field Drive in Lake Forest on behalf of Chicago-based national furniture rental company Brook Furniture Rental. Duke's Ryan O’Leary repped his own company.

Finance News

Cambridge Realty Capital Cos closed on a $15.3M loan to provide new construction and permanent financing for Ottawa Pavilion, a 129-bed skilled-care nursing home in Ottawa. The fully amortized loan was processed using HUD’s Section 232 funding program. The interest rate was not disclosed.