Gatherings of the Urban Land Institute, which includes many of the nation`s top developers as well as members from related public and private real estate businesses, are usually hard-working, nuts-and-bolts affairs.
But the group`s recent fall meeting in Washington, D.C. went beyond just sober. With the country`s commercial real estate industry mired in what more than one analyst is calling a depression, the mood was deeply somber.
More than 2,600 members turned out for the meeting, not as many as last fall in Chicago but not as bad as organizers might have thought. But they all ran into a wall of pessimism right from the opening economic address.
”I`ve been known as an optimist. But I`ve become a worried optimist,”
said Edward Yardeni, chief economist for C.J. Lawrence Inc. in New York City. ”There are lots of things to worry about.”
Among the worries: lower interest rates, generally a friend of real estate, are doing little to stimulate the economy; deflationary pressures, especially on commercial real estate prices, are a drag on the economy; and the demographics of an aging Baby Boom don`t point toward accelerating growth. ”Office construction will get down to zero,” Yardeni said. ”The amount of commercial mortgages outstanding is actually shrinking. About the only thing offsetting that is a construction surge in public and private schools.” ULI knows the troubles in the real estate economy all too well. Before its meeting, it announced a one-third reduction in its Washington headquarters staff. And it postponed a planned spring meeting in London, which had been designed to take advantage of interest in European unity.
”We`re in a period of cyclical change and also structural change,”
James Klingbeil, a San Francisco developer and ULI president, told members.
”We`ve had to make an adjustment in our organization just like many of you have in your organizations.”
The London meeting was to have been limited to 750 ULI members, but only about 450 had signed up by November. So ULI`s board of trustees opted to change directions and seek a U.S. site for its spring meeting instead.
”With the current condition of te U.S. real estate market, it sends the wrong message (to go to London.) And during these difficult times we did not feel it would be prudent to let a year go by without having the chance to network, the chance to look at the changes and how we ought to adapt,”
Klingbeil said.
Is it perhaps time to call in a priest to deliver the last rites to the real estate development business? Not quite. But ULI did invite a rabbi to help put things in perspective.
Rabbi Harold S. Kushner, author of ”When Bad Things Happen to Good People,” told the group that even though his words were not about the development economy, they did deal with ”questions that we all face, not only in business but in our personal lives as well.”
”As far as I know, this is ULI`s first program on religion,” said Bowen ”Buzz” McCoy, a Los Angeles real estate consultant. ”I guess at this time in the (real estate) cycle, it`s only appropriate that we turn to the wisdom of the ages for solace.”
– Prentiss Properties Ltd. has broken ground for Sears Mortgage Corp.`s 101,000-square-foot corporate headquarters at the developer`s Continental Executive Parke, near Milwaukee Avenue and Illinois Highway 60 in north suburban Vernon Hills.
Des Plaines-based McShane Builders Inc., the design/build contractor for the project set on 7.2 acres, said the two-story structure is expected to be ready for occupany in October, 1992. Serena/Sturm Architects Ltd. is the architect.
Sears Mortgage Corp., a full service mortgage company that is a subsidiary of Sears Roebuck & Co.`s Coldwell Banker Real Estate Group, will move about 455 employees from its current facility in Riverwoods when the project is completed.
Walter C. Klein, Sears Mortgage chairman, said the move was necessitated by the growth of the company, which ranks as the fourth largest retail mortgage originator in the country with $6.1 billion in fundings in the first nine months of the year.
– Contractor Bulley & Andrews has been hired to construct a 150,000-square-foot, two-phase addition to the Plymouth Place Retirement Community, 315 N. LaGrange Rd. in west suburban La Grange Park. The $13.5 million project includes some renovation of the existing facility.
The 19-month project is the first expansion of the 50-year-old Plymouth facility. It will include construction of a 99-bed, 73,000-square-foot wellness center to treat residents, a 35-unit, 77,000-square-foot independent living apartment addition and the rehabilitation of the 26,000-square-foot sheltered care area of the existing building.
Work is expected to get underway next March. The new construction is expected to be completed in April of 1993, at which time the renovation work will proceed. Larsen-Wulff Associates Inc. is the architect.
– Construction is underway on a 30,000-square-foot speculative industrial building at Amli Realty Co.`s Crystal Lake Business Center, a 152-acre development north of U.S. Highway 14 and west of Illinois Highway 31.
Doud Engineering Systems of McHenry purchased the 3.3-acre tract earlier this year from Amli to develop the multitenant facility. Leasing agent John Harding, of Harding Real Estate in Woodstock, said the project is expected to be ready for occupancy in early 1992.
– Metcalf and Eddy Inc., an environmental engineering firm that is part of the A.W.T. Co. of Wakefield, Mass., has leased 57,000 square feet for its office headquarters at Trammell Crow Co.`s One Pierce Place in west suburban Itasca.
The firm, which tests air, water and soil, will relocate about 200 employees from offices in Chicago and Arlington Heights early next year, said Frain Camins & Swartchild brokers Brian Borkan and John Conerty, who represented the tenant.
Metcalf and Eddy will occupy the top three floors of the 16-story, 525,000-square-foot office tower. The lease brings the seven-year-old building close to 80 percent occupancy. The project is part of Trammell Crow`s Chancellory development at Interstate Highway 290 and Thorndale Avenue.
– Other leases and sales:
Wilcox & Follett, a schoolbook publishing subsidiary of Follett Corp., has leased 140,000 square feet at the Beacon Companies` Midway Business Center, 5555 S. Archer Ave. in Chicago and will move its corporate
headquarters there early next year. Julien J. Studley Inc., which represented the tenant, said the company has outgrown its space at 1000 W. Washington St. and the property is now for sale. . . . Chicago Title and Trust Co. has added 40,000 square feet to its lease at 400 S. Jefferson St. and now occupies 93,400 feet there. Equis Corp., which represented the tenant, said the added space will be used for records storage from the firm`s headquarters at 111 W. Washington. . . . Quality Analytical Labs, an environmental testing facility, has leased 21,500 square feet at 1938 University Ave. in Lisle and will relocate from Downers Grove. Cushman & Wakefield, which represented the tenant, said the new location will allow for laboratory expansion as well as corporate offices. . . . Flagship Express Inc., a cargo airline, has leased 17,000 square feet at Bannockburn Executive Plaza, 2275 Half Day Rd. in the north suburb. Goldie B. Wolfe & Co., which represented the tenant, said Flagship would move its corporate headquarters from Ypsilanti, Mich. to the Dolan Associates` building. . . . DeMert and Dougherty, a consumer products maker, has leased 16,000 square feet of office space at Podolsky and Associates` Westbrook Corporate Center, Wolf and Cermak Roads in the west suburb. The company will move in December from Oak Brook.
