Soft landings, equity shootouts and sloppy markets are the hot topics in commercial real estate. Joint ventures, industry downsizing and earthquakes and hurricanes are out.
The real estate industry`s annual what`s-hot-and-what`s-not list, published by Skylines, the national magazine of the Building Owners and Managers Association, provides a titillating summary of the best cocktail conversations in the business.
The soft landing being talked about is the one economists mention, in which the nation faces slow growth but no recession. Equity shootouts are auctionlike sales of some of the most coveted investment properties where prices can soar. And sloppy markets is the new term replacing overbuilt in the real estate vocabulary.
Amenities that are hot in new office projects include concierge services, handling everything from auto rentals to grocery deliveries, and kitchen facilities built into tenant suites. Office paging systems and fax machines are out.
In office design, art and sculpture are blazing, as are arched entries, penthouse suites with rooftop gardens, mahogany and black-and-white decor. Stucco, plastic plants, pastels and small lobbies are passe.
The hottest issues in the industry: environmental concerns, taxes, education, labor shortages and Japanese investment in U.S. real estate, a hot topic despite the lower profile being maintained by Japanese players.
Outside of real estate, Skyline reports that Kellogg`s corn flakes are in, Lucky Charms are out; the Rust Belt is in, the Northeast is out; the Simpsons are hot, Doonesbury is not; boots in, loafers out; Dick Tracy is hip, Batman is flip.
Only partially related to real estate: Cuff links are in, buttons out;
the 9-to-5 routine is nowhere, while working late is where it`s at; and Leona Helmsley is definitely out, replaced by Ivana Trump-until next year.
– Safety Kleen Corp. has purchased 79 acres at Randall Road and Royale Boulevard in northwest suburban Elgin and plans to build a 250,000-square-foot corporate headquarters on the site, according to Frain Camins & Swartchild, the brokerage firm that put together the land deal.
Frain Camins also assisted in the selection of the team that will design and build the offices for Safety Kleen. Lohan Associates was selected as the architect, and The Greeby Cos. has been appointed as the owner`s
representative for development.
The project is expected to be completed in the fall of 1992. The company is headquartered currently at 777 Big Timber Rd. in Elgin.
Safety Kleen provides a variety of services to businesses that generate hazardous and nonhazardous waste fluids. The company primarily focuses on auto repair shops, fleet operators, dry cleaners and manufacturing plants. The company had revenues of more than $478 million in 1989.
Tom Gledhill, Kane Keirnan and James H. Swartchild of Frain Camins were the brokers in the transaction.
– To expand its manufacturing operations in west suburban Bellwood, Sanford Corp. will lease 210,000 square feet of warehouse and distribution space at 2711 Washington Blvd., across the street from its present location.
Sanford, a maker of writing instruments and school supplies, will move its corporate headquarters to the new site. Henry Pearsall, chairman and CEO, said the moves increase Sanford`s total operating space by 50 percent.
”Sanford needs more manufacturing space,” Pearsall said. ”We`re going to reconfigure machinery and convert some of our current offices into more manufacturing. And the interior of the new shipping, warehousing and office space is being completely remodeled.”
Pearsall said work on the expansion will begin in April and is expected to be completed by July.
– In one of the largest leases on the North Shore in the last year, Baxter International Inc. has taken a short-term lease on 50,500-square-feet of office space at One Northbrook Place, on Lake Cook Road west of the Edens Expressway.
Frain Camins & Swartchild, which handled both sides of the deal, said Baxter would use the space as a temporary career continuation center to provide outplacement counseling to employees during the health care firm`s ongoing corporate restructuring.
Baxter announced in January that it might begin cutbacks in staffing by the end of March but would not specify how many of its 64,000 employees worldwide might be affected. The company employs 2,000 at its headquarters in Deerfield.
The lease brings One Northbrook Place, at least for a time, near full occupancy. The 175,000-square-foot, five-story building, completed in 1983, had nearly a 40 percent vacany rate last year.
– Fifield Realty Corp. has broken ground for Phase 1 of Westwood of Lisle, a twin-tower midrise office development on Warrenville Road between Naperville Road and Illinois Highway 53 in the west suburb.
The first phase will consist of a 152,000-square-foot, six-story office building. When completed, the two buildings will be connected by an underground parking garage and a landscaped plaza with fountain. Completion is scheduled for March 1991.
”There is a strong demand for Class A office space in the Lisle/
Naperville area because of its excellent access to expressways and the high visibility from the East-West Tollway,” said Robert Smietana, Fifield`s executive vice president.
Leasing activity in the East-West corridor was strong in the opening two months of 1990, according to figures from Julien J. Studley Inc. The real estate firm said a total of 303,600 square feet was leased during January and February.
But almost 800,000 square feet remains vacant in the 1.9 million square feet of new space in the market. And with Fifield`s announcement, more than 900,000 square feet of additional space is expected to come on line in 1991, according to Studley`s figures.
– Plastic Recycling Alliance, a joint venture of du Pont de Nemours & Co. and Waste Management Corp., has leased 100,000 square feet at the former Libby McNeil & Libby plant at 1700 W. 119th St. for a nonbiodegradable plastics reprocessing center.
Lawrence Hanley, senior associate with Bennett & Kahnweiler, the leasing agent for the 600,000-square-foot facility, said the lease foreshadows a large role for recyclers in the industrial market.
”The recyling business, especially something like this operation, is going to be a major industry in the future,” Hanley said. ”The issue affects a lot of grandchildren out there.”
Hanley said 200,000 square feet remains to be leased in the industrial facility, a former Libby canning plant that was redeveloped by Crown Oaks Development Inc. in 1986.
Hanley also said the facility was sold recently to American-European Realty Co., a private investment firm. JoAnn Mills and USCO Public Warehousing already occupy space in the building.
– Pfaelzer Bros., a division of Con Agra, which markets meat and poultry by mail, has leased 31,000 square feet at Trammell Crow Co.`s Crossroads Business Park in Bolingbrook. The company will use the space as its national distribution center when it moves in July.
The lease brings the first two buildings in the park to full occupancy. The 258,500-square-foot Crossroads (No.) 1 was leased by Interstate Distribution Services, a division of Sanyo. Ezon Products, an automobile parts distributor, leased 123,000 square feet and will share Crossroads (number) 2 with Pfaelzer.
Trammell Crow recently completed construction on the third building in the park, a 260,000-square-foot warehouse/distribution facility. Plans for two additional buildings have been approved by the village, including a building of some 250,000 square feet and one of 76,000 square feet.
The 242-acre Crossroads Business Park is at Gateway Drive and Frontage Road. When completed, the project is expected to have more than 4 million square feet of office/warehouse space.
– Other leases and sales:
The law firm of Shefsky & Froelich Ltd. has leased 46,400 square feet at 444 N. Michigan Ave. L.J. Sheridan & Co., the leasing agent for the 36-story building, said the transaction represents a 60 percent expansion for the firm, which was represented by U.S. Equities Realty Inc. . . . Sunstone Imports Inc. has leased 25,400 square feet at 2020 Dempster Plaza in Evanston. Cushman & Wakefield, which represented the tenant, said the company will relocate its corporate headquarters from 801 Davis St. in the north suburb. . . . A privately held foreign investment firm has purchased the 11-story office building at 417 S. Dearborn St. Benj. E. Sherman and Sons, which handled the deal, said the asking price for the 35,200-square-foot building was $2.5 million. . . . University of Chicago Hospitals has leased the 18,000-square-foot office building at 8201 S. Cass Ave. in Darien. The Alter Group, developers of the project, said the hospital will house its billing and accounting operations in the space. . . . Factory Card Outlet of America Ltd., a discount retailer of greeting cards and party goods, has leased 26,000 square feet of warehouse/distribution space at 10516 United Pkwy. in Schiller Park. Podolsky & Associates Ltd. represented the ownership of the building, part of the 1 million-square-foot O`Hare Industrial Plaza.
