Chicago’s office market has traditionally been dominated by trophy towers and high-rise construction. While there is plenty of demand for trophy space fueling the current development activity (4.3 million square feet), those buildings are not meant for every tenant. Some companies are more attracted to loft spaces, creative offices or repositioned assets. To help in the tenant analysis, JLL Research has created the Downtown Chicago Building Matrix – Cost vs. Class with examples in each quadrant:
Traditional – 500 W. Monroe
Expert: JLL Senior Vice President Gary Kostecki, one of the building’s leasing agents.
Perfect for: Corporate headquarters users (like new tenant Motorola Solutions) as well as technology and financial companies. These tenants are attracted to the quality of the lobby renovation and amenities. The building also offers more indoor parking spaces than any other downtown building and close proximity to public transit.
Perks: A recently renovated lobby and exterior signage. Features include a new entrance, ample natural light, new seating and security, as well as a modernized rotunda, elevator lobby and cabs. The building also features a conference center, fitness center, bike storage, restaurant and convenience store.
Prediction: The building will remain stable for many years to come, as it is 95 percent leased with great credit tenants and no near-term lease expirations. The larger market may soften with the delivery of three new buildings.
Trophy – 150 N. Riverside
Perfect for: Corporate headquarters users (like William Blair or Hyatt Hotels) as well as private equity, professional service and financial companies. These tenants are attracted to the best-in-class views of the Chicago River, nearly two acres of outdoor space, state-of-the-art amenities and proximity to public transportation.
Perks: A public park with nearly two acres of public space and an unmatched amenity package including high quality dining, a fitness center and conference facilities.
Prediction: The building will be one of the trophy Class A assets in Chicago for many decades given its location along the Chicago River and incredible amenity base.
Office Lofts – 363 W. Erie
Expert: JLL Senior Vice President Mark Georgas, one of the building’s leasing agents.
Perfect for: 363 isn’t your average loft office building. With an unusually large 17,000 square-foot floor plate, it’s perfect for more established tenants seeking an upgraded, more professional loft office environment and interested in a high quality product. The building and office spaces are nearly brand new, having been completely renovated over the past couple of years.
Perks: Curb appeal with a large, prominent and well-appointed lobby, a unique feature in loft office product that lends itself well to client-facing businesses. Retail tenant Asado Coffee, just off the lobby, serves as an easily accessible coffee bar and meeting place. For the more adventurous, try a class at AIR Aerial Fitness, another retail tenant.
Prediction: As River North’s loft office market continues to tighten and more multifamily product is developed in the area, 363 will remain a high-end loft office building of choice. We expect healthy rent growth across all River North office buildings.
Creative A – 1K Fulton
Expert: JLL Executive Vice President Chris Cassata, one of the building’s former leasing agents.
Perfect for: I represented former owner and developer Sterling Bay in its first lease at the building with Google, which set the tone in terms of tenants. The building is well suited for mature technology, advertising and marketing firms, which love the Fulton Market location and modern aesthetic of a former cold storage building.
Perks: It’s a high price point, but you get what you pay for. A big floor plate, a two-minute walk to the new Morgan train station, amenities from a fitness center to a roof deck and a front row seat to the hottest neighborhood story in the city. Development to date has only scratched the surface of Fulton Market’s possibilities in terms of office, restaurants, retail, housing and more.
Prediction: As the building is full with new, long-term leases, not a lot will change at 1K Fulton in the near future. What will change is the neighborhood, as Fulton Market continues to develop and evolve to meet growing demand.