This Week's Chicago Deal Sheet

Mortenson Construction finished building three major new ground facilities totaling 180K SF for United Airlines at Chicago’s O’Hare International Airport. Company officials said they used innovative construction technology and lean practices to finish the $105M project in less than a year, allowing the airline to vacate its previous ground facilities before new runway construction begins at O’Hare.

The runway modernization will complement the planned $8.5B investment to upgrade terminals and amenities and add the first new gates at the airport in nearly 25 years. Chicago Mayor Rahm Emanuel has said the project will be one of his most important legacies.

Mortenson broke ground in the last week of December 2017, and the airline received its occupancy certifications for the new ground facilities in November 2018. United uses the buildings for equipment maintenance and storage and to house its facility maintenance personnel, busing operation, aircraft move team and other operations.

“It is a testament to our skill and dedication that we were able to complete these high-quality facilities in such an accelerated time frame,” Mortenson General Manager of Aviation MacAdam Glinn said.

The project consisted of a two-story, 140K SF ground maintenance equipment facility; a single-story, 40K SF facilities maintenance and stores building; another single-story, 40K SF airport operations services building; and 1.2M SF of concrete paving, including new taxi lanes, concrete aprons, and plane and employee parking.

Ghafari Associates served as architect and Ardmore Roderick as the lead project manager on the apron paving. Thornton Tomasetti was structural engineer and DB Sterlin the civil engineer for the buildings. Burns & McDonnell served as civil engineer for the aprons. JLL was owner’s representative.

Mortenson and its partners relied on a range of lean processes:

• Simultaneous drawings for structural steel: Thornton Tomasetti and Mortenson’s structural steel subcontractor created the structural steel drawing simultaneously using a shared software platform, cutting as much as eight weeks from the schedule versus the standard approach.
• Prefabrication: To ensure quality and save time, Mortenson worked with subcontractors to build the doors and hardware as well as all of the process piping off-site.
• Staggered permitting: By securing city permits in sequence and for sections of work rather than seeking permits for the entire project at once, Mortenson minimized any schedule impacts while waiting for permits and Federal Aviation Administration clearances.

EXECS

Sterling Bay hired Mark Barbato as director of its industrial division. He brings more than 20 years of industrial real estate experience to the firm, and will help expand its industrial portfolio. Prior to joining Sterling Bay, Barbato served as principal at Chicago-based Nicolson, Porter & List, where he represented both tenants and landlords in industrial transactions as well as directed the firm’s acquisition and development platform. He will identify existing infill sites in the greater Chicago area as well as in new markets where Sterling Bay will develop both build-to-suit and multi-tenant projects.  

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Kevin Donohoe joined ML Realty Partners as acquisition manager, and will focus on acquiring Chicagoland properties. He previously spent more than 13 years as a Chicagoland real estate broker and was most recently employed at Sterling Bay. He holds a bachelor’s degree from the Richard T. Farmer School of Business at Miami University in Oxford, Ohio.

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Jimena Sayavedra joined Newmark Knight Frank as an associate in the company’s Chicago office. Specializing in industrial brokerage, Sayavedra will represent local and national clients, partnering with NKF Senior Managing Director Elise Couston, to advise clients on acquisitions, dispositions, leases and investment properties. Prior to joining NKF, the 13-year industry veteran was an associate adviser with Paine Wetzel Associates.

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Draper and Kramer’s Kristen Alessi, property manager at 1130 South Michigan Ave., a luxury apartment tower in Chicago’s South Loop, was named Accredited Residential Manager of the Year by the Institute of Real Estate Management’s Chicago chapter. The award was presented to Alessi at IREM Chicago’s annual Premier Awards, held March 8 at Chicago’s Drake Hotel.

LEASES

No18, a members’ club for professionals, signed a lease with The Howard Hughes Corp. and Riverside Investment & Development for 58K SF in the firms’ new trophy-class office tower at 110 North Wacker Drive, set to open in the fourth quarter of 2020. The lease includes two penthouse floors, and the space will feature a double-height atrium flanked by outdoor terraces with unobstructed views of the Chicago River. The balance of the space will offer a blend of offices, meeting rooms, lounges, clubroom and conference venues, all with approximately 10- and 12-foot ceiling heights.

The current tenant roster at 110 North Wacker includes Bank of America, the first anchor tenant, which leased 530K SF, more than one-third of the building’s space, and Lincoln International. The leasing, design and construction team includes CBRE, Goettsch Partners and Clark Construction.

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Intelligent Medical Objects recently established its headquarters in suburban Rosemont, but like many tech firms, decided it also needed to keep a downtown presence. Savills completed a 13K SF lease on behalf of the medical technology company in the historic Inland Steel Building at 30 West Monroe St., and the company will move from its current WeWork space at 100 South State St. in Chicago to the new location this summer. Savills’ Jon Azulay and Robert Sevim advised IMO in the transaction. Adam Southard, Rich Dale and Loredana Perri of the firm’s project management practice will oversee the office build-out and relocation. Mark Buth and Kelsey Morgan of MBRE represented the owner, Capital Properties.

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Urbanspace, a leading food hall operator, signed a lease to bring a 12K SF food hall with more than 20 vendors to the ground floor of 15 West Washington St., once the home of Woolworth’s flagship Chicago store. The company expects to open in late fall and plans to also open a 14K SF food hall at Willis Tower in 2020. Phil Golding and Amira Yunis of CBRE represented Urbanspace.

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RMS Properties hired Cawley Chicago as its new exclusive brokerage team representing Schaumburg National Plaza and Schaumburg Atrium Center. These two complexes consist of seven buildings and total more than 585K SF of office space. Tony Russo, principal at Cawley Chicago, along with Ryan Freed and Kent Smith, will begin marketing and leasing space immediately.

SALES

Holliday Fenoglio Fowler helped complete the sale of Lakeshore Medical Center, a 135K SF medical office building at 4700 North Marine Drive in Chicago. The company marketed the Class-A property on behalf of the seller, a partnership between CarVal Investors and Zeller Realty Group, and procured the buyer, an institutional investor. Chicago-based MBRE Healthcare will manage the five-story building, which is attached to the 236-bed Weiss Memorial Hospital. Tenants at the property include Walgreens, Fresenius Medical Care and University Dermatology and Vein Clinic. The HFF team included Ben Appel, Evan Kovac, Andrew Milne, Matt DiCesare, Jeffrey Bramson and Bryan Rosenberg. Tim Joyce provided debt advisory services.

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The Boulder Group, a net leased investment broker, completed the sale of a single-tenant net leased CVS property at 7929 North Ave. in suburban River Forest for $6.7M. The 11K SF building is close to multiple residential communities, local businesses and schools including Concordia University, Dominican University and Triton College. Randy Blankstein and Jimmy Goodman of Wilmette, Illinois-based Boulder represented the seller, a Midwest-based private partnership. The buyer was a private investor in a 1031 tax exchange.

CONSTRUCTION AND DEVELOPMENT

The Cook County Land Bank Authority raised the ire of historic preservationists by selecting developer Leon Walker of DL3 Realty to demolish the Washington Park National Bank Building, at the corner of 63rd Street and Cottage Grove Avenue in Woodlawn, and create a mixed-use complex. The move dashes the hopes of preservationists that the 1920s-era building would undergo a renovation. CCLBA acquired the property in 2017 after it accumulated $3.7M in unpaid taxes. Two other developers that bid for the project proposed to keep the building intact.

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A joint venture between Chicago-based Distribution Realty Group and a private real estate fund advised by Crow Holdings Capital announced its plans to develop a 338K SF speculative industrial building at 9500 Bradford Road in Plainfield, Indiana, known as Plainfield Distribution Center. The Class-A building will feature 32-foot clear ceiling heights, up to 74 dock doors and 67 on-site trailer stalls. The venture has hired Brian Buschuk and Steve Schwegman of JLL to market the property for lease, and Arco Murray will construct the building.

FINANCING

Square Mile Capital Management boosted its Chicago-area presence with a $260M structured investment in the One Chicago Square development project. The New York-based firm will capitalize local developer JDL Development and Wanxiang America Real Estate in connection with their 76-story, 1.5M SF mixed-use tower in the city’s River North submarket. The $850M project will occupy a full city block on land purchased from the Archdiocese of Chicago, and feature 735 residential rental units, 77 condos, 193K SF of retail, much of it pre-leased to Whole Foods and Lifetime Athletic, and more than 1,000 parking spaces. The project’s senior construction lender is Bank OZK.

THIS AND THAT

Bridge Development Partners was recognized as the Developer of the Year by the Greater Chicago Food Depository's 31st Annual Chicago Commercial Real Estate Awards on March 14. It was honored for three projects in the Chicago region’s industrial market: Bridge Point 290 Phase I, Bridge Point Franklin Park Building I and Bridge Point North Business Park Building III.

Bridge Point 290 Phase I is part of a larger development of three buildings that will total 900K SF in suburban Cicero. The long-vacant property was previously a manufacturing plant the municipality considered an eyesore. The developer delivered the first building last April and plans to complete the other two in June.

Bridge Point Franklin Park encompasses more than 740K SF in three buildings on the former site of an 80-year-old petroleum tank farm.

Bridge Point North Business Park Phase II is in Waukegan — totaling 927K SF, including the 544K SF Building III.