A party atmosphere is prevailing at Cityfront Center, what with all the hoopla surrounding the opening of upper Illinois Street last week and the formal opening of the NBC Tower this week.
But Craig Bayless, managing director of Tishman Speyer Properties, the developer of the NBC building, on Columbus Drive just north of the Chicago River, already has his mind on more work.
”We`d like to develop another office building at Riverside Plaza, at 500 W. Monroe St.,” Bayless said. ”We`re in the preliminary design stage there and have just started looking for an anchor tenant.
”We`re in a similar mode at Cityfront Center, where we`d like to build the NBC twin, not a twin exactly but another office building north of NBC. But there are at least two dozen new buildings that want to be built, and they are all competing for about a half dozen anchor tenant prospects.”
Those anchor prospects are firms shopping for at least 250,000 square feet, which Bayless considers to be the threshhold to consider a prospect a possible anchor tenant. Few developers today can obtain financing for an office project without an anchor tenant secured beforehand.
The competition is also likely to become geographically heated, with Cityfront Center on the east and the American Medical Association properties on the north vying for office projects with the emerging areas west and south of the Loop.
”The big tenant will look at all kinds of different places,” Bayless said.
But he is hoping they will look hardest at Cityfront Center, the mixed-use project underway north of the Chicago River and east of Michigan Avenue, where Tishman hopes to develop some of the six sites west of Columbus Drive owned by Equitable Real Estate Investment Management Inc. (The Chicago Dock & Canal Trust controls development of the eastern portion.)
”Cityfront Center, when the Mandel Building comes down and Pioneer Court gets finished and the river esplanade is done, will be a fantastic urban space,” Bayless said. ”It is one of the few places where the river level has been reclaimed.”
– Prices being paid for prime downtown Chicago office buildings have risen more than 50 percent in the last two years, according to a study by the investment research department of Jones Long Wootton USA.
According to the study, office buildings that sold before 1986 were fetching prices of $125 to $175 a square foot. But now Loop offices are commanding prices as high as $300 a square foot.
”In general, the downtown Chicago office market has entered into a state of equilibrium in which real rental growth should result in the near term, providing enhanced investor returns” on both existing properties and well-located new developments, the study said.
Along with the rise in prices paid for existing offices, land prices have soared in the Loop as well.
The study found land prices along LaSalle Street today reaching $1,500 a square foot versus a top price of about $1,000 two years ago.
Fueling the rise in prices, the study concluded, are foreign investors who have discovered the allure of Chicago`s diversified economy and the relative bargains to be had here as opposed to the East and West Coasts, with which foreign investors are most familiar.
An earlier study by Kenneth Leventhal & Co. found the Japanese to be the key foreign participants in the Chicago market.
”We`re undervalued, and that fact isn`t escaping the savvy Japanese investors, especially the newer players, who include individuals and small companies that are making smaller investments,” said Dale Anne Reiss, managing partner of Leventhal`s Chicago office.
”The Japanese are going into new markets, diversifying their investments to get higher returns on greater-risk office, hotel and new construction projects,” Reiss said.
Of the 16.5 billion spent by the Japanese on U.S. real estate last year, 11 percent was spent here in Chicago, she said.
– The 201 N. Wells St. Towers office building, which houses the Chicago Teachers` Union headquarters, will be auctioned by Sheldon Good & Co. at 2 p.m. Thursday in the Continental Bank Shareholders` Room, 231 S. LaSalle St. Steven L. Good, president of Chicago-based Good & Co., said that the 30-story structure at the northeast corner of Lake and Wells Streets may be the first major Loop office building to be auctioned.
Good said the building will be sold absolute, meaning the seller nust accept the highest bid subject to a $1.1 million minimum and the approval of the U.S. Bankruptcy Court.
The building is owned by an Illinois land trust.
The beneficiary of the trust, the 201 N. Wells Corp., is in Chapter 11 bankruptcy proceedings, necessitating the bankruptcy court`s approval of the sale.
The 250,536-square-foot building, a masonry and concrete structure with two floors of penthouse offices, is leased to various tenants, including several law firms. Built 59 years ago, it has undergone several renovations during the last 10 years.
– Construction is underway on Brookside Plaza, a 95,000-square-foot retail center at the northeast corner of Waukegan Road and Int. Hwy. 94, in north suburban Northbrook.
Chicagoland Commercial Real Estate Corp., leasing agent for the 20-store center, said the project is scheduled to open in August.
Brookside Plaza is being developed by Bannockburn/Stonegate Ventures.
The center is one of the first in the Chicago area to be anchored by Silk Greenhouse, an importer and retailer of silk flowers, trees and plants.
Silk Greenhouse, based in Tampa, has retained Coldwell Banker Commercial Real Estate Services to locate 12 stores in the Chicago area by 1990.
Silk Greenhouse also is anchoring the Shops at Copley Center, a 68,600-square-foot retail center under development by Fifield Development Corp. on Golf Road east of Roselle Road in northwest suburban Schaumburg. The center is part of Fifield`s 128-acre mixed-use Copley Center office park.
In addition to the Northbrook and Schaumburg sites, Coldwell Banker said openings are slated in late summer for Silk Greenhouse stores in Naperville, Niles and Burbank.
The Northbrook lease is for 25,000 and the Schaumburg lease for 18,200 square feet, about the range Silk Greenhouse is seeking elsewhere.
– Superior Toy & Manufacturing Co. of Chicago has purchased the former Borg Warner Corp. driveline division industrial facility in Rockford.
The 350,600-square-foot building is on 61 acres at 2020 Harrison Ave.
The sale is another boost for Illinois` second largest city, which has seen a strong rebound in its manufacturing sector after suffering through the devastating recession of the early 1980s.
The purchase of the Borg Warner facility puts Rockford`s largest unused industrial building back in operation.
Bennett & Kahnweiler, which represented Borg Warner along with Whitehead Inc., of Rockford, said Superior Toy will expand its operations with the purchase of the plant. Asking price for the property was $2.1 million.
– Other leases and sales: A 132,000-square-foot office complex in De Kalb, formerly the national headquarters for Wurlitzer Co., has been sold to Briarwood Development Co. by Equitable Life Assurance Co. Coldwell Banker Commercial Real Estate Services, which represented Equitable in the sale, said Briarwood plans to convert the five-building facility into a retirement village. Asking price for the property was $1 million. . . . Essex Electro Engineers, a manufacturer of electric products, has purchased a 103,300-square-foot warehouse and manufacturing facility at 2015 Mitchell Blvd. in the Centex Industrial Park in Schaumburg. Bennett & Kahnweiler represented the seller of building, Nationwide Life Insurance, and Paine/Wetzel represented Essex. . . . Also, Bennett & Kahnweiler was the sole broker in the sale of a 62,000-square-foot warehouse at 5670 McDermott St. in west suburban Berkely to North American Paper Co. B & K also was involved in the sale of a 40,500-square-foot warehouse and manufacturing facility at 1375 Lunt St. in Elk Grove Village to Topy International. . . . Galway Warehouse & Distribution Corp. purchased a 48,500-square-foot industrial building at 12601 S. Springfield Ave., Alsip. Owen Wagner & Co. represented the buyer and seller of the facility, Oxequip Health Industries, which is moving its operation out of state. Asking price for the property was $1.25 million. . . . Westinghouse Electric Corp. leased 30,800 square feet at Roselle Center, in Roselle. Other recent leases in the center, developed and managed by Bradford Realty Services Inc., include 19,800 square feet to VT Plastics and 14,100 square feet to Miller Fluid Power Inc. Roselle Center, at Medihan Road and Stevenson Court, is a warehouse/distribution center with 139,000 square feet still available for lease.
