Despite technological changes that have made businesses less dependent on central cities for office sites, downtown Chicago remains a viable location, a new survey of office tenants shows.
The survey, reported in the current issue of Chicago Office published by the Building Owners and Managers Association/Chicago, found “a less than enthusiastic response” from companies when asked about the absolute necessity of being located downtown, a question which garnered a rating of 6.6 out of 10.
But office tenants on the whole said they were quite positive about their own buildings and neighborhoods, and also reported that their clients and customers were favorably inclined toward the downtown.
The survey, taken in mid-1993, asked questions of 156 office tenants which occupy more than 5,000 square feet in the central business district. Those tenants had spent an average of almost 10 years at their current location, had an average of 35.9 employees and leased 379 square feet per person-a figure much higher than the national average of 290 square feet per employee.
The survey was conducted by Louis Masotti, professor emeritus of Management and Urban Development at the Kellogg Graduate School of Management, Northwestern University, and by David Davenport, president of Chicago RE Source Inc., an independent real estate research firm.
In examining the role of non-traditional office methods in downtown leasing decisions, the researchers found that concepts such as hoteling and virtual officing have had little impact downtown.
Hoteling involves workers who have no permanent desks and must reserve space, while virtual officing takes into account those who may use portable computers, phones and fax machines to conduct business from non-office locations.
The concept of flexible work time, however, has made inroads among Chicago companies. Almost half of the firms surveyed said they had implemented some sort of flexible hours policy for employees.
While most tenants said they liked downtown and would be inclined to stay, regardless of whether their business downsized or expanded, almost half said they would consider leaving the city if property taxes increased substantially.
Companies in the sample said they felt they receive only about a 32 percent value for their tax dollars spent now and cited a number of city services, such as transportation and crime prevention, that need improvement.
“Chicago has one of the most vibrant and attractive central business districts in the nation, but significant changes may be in the offing,” the article concludes.
“Downtown must not be taken for granted and the city’s leaders must become better informed about, and more inclined to address, the conditions and attitudes which could make the future of downtown vulnerable to decline.”
Two leases for Century
Two major leases, one for a new tenant and one representing an expansion for an existing occupant, have boosted the fortunes of One Century Center in Schaumburg, a 213,000-square-foot office building which had about 110,000 square feet vacant at the end of the third quarter.
In the first transaction, Advantis, a joint venture computer networking technology firm formed by IBM and Sears Roebuck & Co. subsidiaries, leased 51,000 square feet of office space. Advantis, formed last December, was assisted in negotiations by Mark Smith of CB Commercial Real Estate Group and Peter Capps of CBC Madison Advisory Group.
Also at One Century Center, 1750 E. Golf Rd., Design Benefit Plans Inc. has increased its office space to 35,000 feet. The insurance company, a division of Rockford-based Pioneer Financial Services, more than quadrupled its previous 8,000 feet in the deal. Steven Fifield represented the tenant.
Developed in 1985, One Century Center is owned by Hartford-based Travelers Insurance Co., which was represented in the leasing deals by CB Commercial’s Ben Wilson.
Pedaling space
After an analysis of its distribution needs throughout the United States, Schwinn Bicycle & Fitness Co. has selected three sites from which to base its operations.
Frain Camins & Swartchild-Oncor International, which assisted Schwinn in its market searches, said the bicycle maker has signed leases for distribution facilities in California and New Jersey, as well as renewing its lease in West Chicago for 212,000 square feet at 1155 Harvester Drive. The west suburban facility remains Schwinn’s largest.
FC&S chairman Ronald Frain, who along with senior associate Bill Frain represented Schwinn in all its transactions, said the other facilities are a 100,000-square-foot warehouse in Cranbury, N.J., and a 65,000-square-foot center in Rancho Cucamonga, Calif.
Cargo operation on move
Freight handler Nippon Express USA Inc. has signed a lease for a cargo facility to be built for the company at Hamilton Partners’ Hamilton Lakes Commerce Center in Itasca. The 135,000-square-foot project will be constructed on 8.3 acres at Illinois Highway 53 and Thorndale Avenue.
Britt Casey, vice president, and Hiloh Izumo, Japanese specialist, both with Grubb & Ellis, represented Nippon in its build-to-suit negotiations, along with Nittsu Housing Realtor, a subsidiary of Nippon Express.
Casey and Izumo said that the new facility will serve as the ocean cargo division headquarters for Nippon Express, which will move from its current location in Wood Dale when the project is completed early next year.
Other leases and sales
– LaGrou Distribution Systems Inc., a Chicago-based public warehouser specializing in food products, has purchased Nestle Distribution Co.’s 371,000-square-foot warehouse in Downstate Rochelle. Nestle, which is consolidating operations from Rochelle and Itasca into a new facility in Dekalb, was asking $5.2 million for the property, according to CB Commercial Real Estate Group, which represented Nestle.
– The federal General Services Administration Departments of Probation, Navy and Minority Business Development have leased 71,000 square feet of office space at 55 E. Monroe St. and will move into the recently refurbished building in the first quarter of 1994, according to Tishman Speyer Properties, leasing agent.
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Steve Kerch’s columns appear in Real Estate on Sunday and in Your Money on Thursday.
