metropolitan chicago

Size: px

Start display at page:

Download "metropolitan chicago"

Shona Lester
5 years ago
Views:

1 metroolitan chicago suburb an office FIRST uarter

Colliers B&K FIRST uarter 2009 Success Stories Table of Contents Suburban

River Road Schiller Park, IL 36,815-SF Lease Lisle-Naerville 7 Oak Brook 8

Submarket Ma 10 About Colliers Bennett & Kahnweiler Inc.

155 N. Pfingsten St. Deerfield, IL 20,446-SF Renewal Professional Pharmacy, Inc.

2 Colliers B&K FIRST uarter 2009 Success Stories Table of Contents Suburban Office Market Overview 3 O Hare 4 Northwest 5 North 6 GSA 5100 N. River Road Schiller Park, IL 36,815-SF Lease Lisle-Naerville 7 Oak Brook 8 First Quarter 2009 Suburban Office Market Statistics 9 Suburban Office Submarket Ma 10 About Colliers Bennett & Kahnweiler Inc. 11 Network Services Two Woodfield Lake Schaumburg, IL 32,539-SF Lease BNP Media 155 N. Pfingsten St. Deerfield, IL 20,446-SF Renewal Professional Pharmacy, Inc. North Grove Cor Center I Morton Grove, IL 19,612-SF Lease Amata Office Suites, LLC CityGate Centre Naerville, IL 26,630-SF Lease 2

3 Suburban Office Market Overview Leasing volume continued to slow in the first uarter of 2009, causing the suburban Chicago office market vacancy rate to increase to 21.8 ercent from 20.9 at year-end While the North market continues to have the lowest overall vacancy rate of all the markets with 18.0 ercent, the O Hare and Northwest markets had the highest vacancy, as both ended the uarter with 24.9 ercent. The overall sublease vacancy rate also increased slightly to 2.8 ercent in the first uarter, from 2.7 ercent at year-end Lease and Sale Activity Notable lease transactions for first uarter 2009 include Central States Pension Fund s 172,000-suare-foot renewal at Riverway III in Rosemont and DeVry s 150,000-suarefoot lease at Highland Landmark V in Downers Grove. No significant investment sales were comleted in the first uarter of We are continuing to see fewer consummated sale transactions in 2009 as many buildings are being removed from the market due to frozen credit markets and uncertainty of the economy. Overall net absortion decreased in the first uarter of 2009 to negative 872,167 suare feet, down from negative 719,562 suare feet at year-end All submarkets reorted negative absortion in the first uarter. No new construction was comleted in the first uarter of There are limited roerties under construction with comletion due in These include 555 Cororate Center, a 160,000-suare-foot roject in Lincolnshire; and Rosemont Cororate Center, a 120,000-suare-foot build-to-suit roject in Rosemont. The average asking rent for all classes in suburban Chicago measured $21.06 er suare foot at the end of first uarter 2009, u from $20.87 er suare foot at yearend The average Class A asking rent ended the year at $28.09 er suare foot, u from $27.80 er suare foot at year-end There has been a slight increase in asking rates due to 2009 estimated tax and oerating costs. However, owners have been lowering their net asking rates and recent comleted transactions have occurred at a decreased rental rate. Suare Feet Absorbed Not surrisingly, leasing activity continued to slow in the first uarter as each submarket exerienced negative absortion. vacancy and absortion 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , ,000-1,000,000-1,500,000-2,000,000-2,500, * Through First Quarter 2009 office Market Snashot Chicago Suburban Overview 4Q Q % 21.8% -719,562 sf -872,167 sf Asking $20.87 sf $21.06 sf % 20% 15% 10% 5% 0% 3

4 Suare Feet Absorbed With slow leasing velocity, net absortion in the O Hare market reached negative 115,226 suare feet in the first uarter. vacancy and absortion 400, , , , , , , , , * Through First Quarter 2009 office Market Snashot 4Q Q 2009 O Hare 24.1% 24.9% -85,292 sf -115,226 sf Asking $21.58 sf $21.41 sf % 25% 20% 15% 10% 5% 0% O Hare The overall O Hare vacancy rate increased in the first uarter of 2009 to 24.9 ercent, u from 24.1 ercent at year-end This is the highest level we have seen since Sublease vacancy has shown a slight decrease, falling to 1.9 ercent at the end of first uarter from 2.0 ercent at the end of There are four existing roerties in the O Hare market that can accommodate large (100,000 suare feet and above) users, two of which are Class A. Additional large blocks are likely to come available this year ending decisions from U.S. Cellular and TrueValue. Lease and Sale Activity Significant first uarter 2009 lease transactions in the O Hare market include Central States Pension Fund s 172,000-suare-foot renewal at Riverway III and US Foodservice s 25,000-suare-foot exansion and consolidation at Riverway I, both in Rosemont. There were no first uarter investment sales in the O Hare market. First uarter 2009 net absortion totaled negative 115,226 suare feet, down from fourth uarter 2008 s total of negative 85,292 suare feet. Class B roerties showed the most significant change, ending the first uarter with negative 50,254 suare feet of net absortion, down from 3,696 suare feet of ositive absortion in the fourth uarter of There was no new construction comleted in O Hare market during the first uarter of However, The Har Grou and Ryan Comanies broke ground on 9501 W. Boilermaker Boulevard, a 105,000 suare foot roerty in Rosemont. Cisco Systems will occuy 80,000 suare feet of build-to-suit sace once the roerty is comlete. Proosed rojects include Pointe O Hare II and O Hare Cororate Camus, both in Rosemont. If comleted, these rojects could add 1.4 million suare feet to the O Hare market s inventory. Rosemont aroved a 550,000-suare-foot outlet mall to be built at the southeast corner of the Tri-State Tollway and Balmoral Avenue. Chicago-based Silver Rock Develoment Grou and Florida develoer AWE Talisman are exected to close on the 14-acre roerty in the second uarter of 2010 and oen the mall in time for the 2011 holiday season. Class A average asking rent for the O Hare market increased to $30.31 er suare foot, u from $30.19 at year-end The average asking rate for all classes decreased to $21.41 er suare foot, down from $21.58 at year-end To First Quarter Transactions Tenant Size (SF) Address Tye Central States Pension Fund 172,000 Riverway III, Rosemont Renewal US Foodservice 25,000 Riverway I, Rosemont New/Exansion Xchanging 22,000 O Hare Plaza II, Chicago Lease CH2M-Hill 13, W Higgins Road, Chicago Renewal 4

5 Northwest The overall Northwest market vacancy rate increased in the first uarter of 2009 to 24.9 ercent, u from 23.8 ercent at the end of There are eleven roerties in the Northwest market that can accommodate large (100,000 suare feet and above) users, seven of them being Class A. Lease and Sale Activity To Northwest lease transactions in the first uarter include Catalina Marketing s 32,138- suare-foot renewal at Woodfield Preserve in Schaumburg. There were no significant investment sales comleted in the Northwest market during the first uarter of However, 955 American Lane, a 107,000-suare-foot roerty in Schaumburg, was recently ut on the market. The Northwest market ended the first uarter of 2009 with negative 293,067 suare feet of net absortion, down from fourth uarter 2008 s negative 54,517 suare feet. Class B roerties showed the largest change, ending the first uarter with negative 126,724 suare feet of net absortion, down from ositive 51,913 suare feet in the fourth uarter of There was no new construction comleted in Northwest market during the first uarter of 2009, and no notable rojects are currently underway. The Northwest suburban Class A average asking rate measured $26.37 er suare foot, u from year-end 2008 s rate of $ The average asking rate for all classes was $20.23, u from $19.85 at year-end While asking rates are showing an increase mainly due to increased tax and oerating costs, recent comleted deals are reflecting a decrease in actual rates. To First Quarter Transactions Tenant Size (SF) Address Tye Catalina Marketing 32,138 Woodfield Preserve Office Center, Schaumburg Renewal Keyence 17, N Arlington Heights Rd, Itasca Lease Suare Feet Absorbed Both lease and sale activity was slow in the Northwest market as the vacancy rate is raidly aroaching 25 ercent. vacancy and absortion 800, , , , , , , * Through First Quarter 2009 office Market Snashot 4Q Q 2009 Northwest 23.8% 24.9% -54,517 sf -293,067 sf Asking $19.85 sf $20.23 sf % 25% 20% 15% 10% 5% 0% 5

6 Suare Feet Absorbed Bridge Develoment s LEED-certified building in Lincolnshire makes the North market the only suburban market with significant construction underway vacancy and absortion 800, , , , , , , , * Through First Quarter 2009 office Market Snashot 4Q Q2009 North 17.4% 18.0% -615,732 sf -172,147 sf Asking $21.18 sf $21.79 sf % 20% 15% 10% 5% 0% North The North market continues to have the lowest overall vacancy rate of all the suburban markets, ending the first uarter of 2009 with 18.0 ercent. However, this is an increase over the 17.4 ercent vacancy at year-end For the first time in several years, the North market has the highest sublease vacancy of all the markets, ending the first uarter of 2009 with 3.9 ercent. There are seven blocks of sace available for large-sized tenants (100,000 suare feet and above), all of which are Class A. Lease and Sale Activity To North market lease transactions in the first uarter of 2009 include Astellas Pharma US, Inc. s 400,000-suare-foot build-to-suit lease at the former Culligan site (I-294 and Willow Road) in Glenview. The transaction is contingent uon the financing of a $100 million loan. There were no significant investments sales comleted in the North market during the first uarter of The North market ended the uarter with 172,147 suare feet of negative absortion, u from 615,522 suare feet of negative absortion in the fourth uarter of No new construction was comleted in the first uarter of 2009 in the North market. Current rojects under construction include Bridge Develoment s Class A, LEED certified, 160,000-suare-foot roject at 555 Atakisic Road in Lincolnshire, which is exected to deliver in January There are several sites available for future build-to-suit rojects in the North market, including an 800,000-suare-foot oortunity at International Cororate Park in Vernon Hills, The Har Grou s, 150,000-suare-foot roject in Wheeling, and Duke Realty Cororation s 400,000-suare-foot roject in Gurnee. The North market s average Class A asking rent increased in the first uarter of 2009 to $28.92 er suare foot, u from$28.04 at year-end The average asking rate for all classes totaled $21.79 er suare foot, u from year-end 2008 when the overall rate was $21.18 er suare foot. To First Quarter Transactions Tenant Size (SF) Address Tye Astellas Pharma US, Inc. 400,000 I-294 & Willow Rd, Glenview New Mead Johnson Nutrition Co. 33, Patriot Blvd, Glenview New College of American Pathologists 18,419 Cororate 510 Center, Deerfield New 6

7 Lisle-Naerville The overall vacancy in the Lisle-Naerville market increased in the first uarter of 2009, rising to 22.9 ercent versus 21.9 ercent at the end of Sublease vacancy showed a decrease, ending the first uarter of 2009 with 1.7 ercent vacancy comared to 2.0 ercentat the end of Five buildings in the Lisle-Naerville market can accommodate large (100,000 suare feet and above) users, two of which are Class A roerties. Lease and Sale Activity To Lisle-Naerville lease transactions include McCain Foods 94,375-suare-foot lease extension at Cororate Lakes IV in Lisle. There were no significant investments sales comleted in the Lisle-Naerville market during the first uarter of However, the Lucent ortfolio, a 1.2 million-suare-foot, nine-roerty camus came on the market in the first uarter of 2009, as did Arboretum Lakes, a 808,000-suare-foot, five-roerty ortfolio. Both are located in Lisle. The Lisle-Naerville market ended the first uarter of 2009 with 141,492 suare feet of negative absortion, down from ositive 83,031 suare feet in the fourth uarter of All classes showed negative absortion in the first uarter. Ryan Comanies lans to break ground early in the second uarter of 2009 on a build-tosuit develoment at 123 Shuman Boulevard in Naerville. Delta Dental will be the lead tenant in the building and will occuy 64,000 suare feet. Ous North Cororation has broken ground on a iece of land on the Cororetum develoment in Lisle. It is being develoed for high-end residential condominiums, but also has a site for 130,000-suare-foot office building. The average Class A asking rent in the Lisle-Naerville market measured $26.88 er suare foot at the end of first uarter 2009, u from $26.64 er suare foot at the end of The average asking rate for all classes decreased to $20.94 er suare foot from $21.03 at the end of To First Quarter Transactions Tenant Size (SF) Address Tye McCain Foods 94,000 Cororate Lakes IV, Lisle Extension Delta Dental 64, Shuman Boulevard, Naerville Lease Suare Feet Absorbed While leasing and investment sale activity is stagnant, Lisle-Naerville witnessed the availability of two sizable office ortfolios totaling 2 million suare feet. vacancy and absortion 800, , , , , , , ,000-1,000, * Through First Quarter 2009 office Market Snashot 1Q Q 2009 Lisle-Naerville 21.9% 22.9% 83,031 sf -141,492 sf Asking $21.03 sf $20.94 sf % 30% 25% 20% 15% 10% 5% 0% 7

8 Suare Feet Absorbed The Oak Brook market exerienced an decline in both absortion and vacancy rate in the first uarter. vacancy and absortion 1,000, , , , , , , , ,000 * Through First Quarter 2009 office Market Snashot 4Q Q 2009 Oakbrook 19.4% 20.0% -47,052 sf -150,235 sf Asking $20.74 sf $20.91 sf % 20% 15% 10% 5% 0% Oak Brook The Oak Brook market ended the first uarter of 2009 with a vacancy rate of 20.0 ercent, u from year-end 2008 s overall rate of 19.4 ercent. Four buildings in the Oak Brook market can accommodate large (100,000 suare feet and above) users, two of which are class A. Lease and Sale Activity To first uarter 2009 Oak Brook leases include DeVry s 150,000-suare-foot lease at Highland Landmark V in Downers Grove. It is the first lease executed for this seculative building develoed by Ous, which was comleted in the second uarter of There were no significant investments sales comleted in the Oak Brook market during the first uarter of The Oak Brook market ended the first uarter of 2009 with negative 150,235 suare feet of net absortion, down from fourth uarter 2008 s negative 47,052 suare feet. Class A roerties made of the majority of the negative absortion, ending the first uarter with negative 143,117 suare feet. No new construction was comleted for the Oak Brook market in the first uarter of 2009, and there are no develoments currently lanned. The current Class A average asking rent in the Oak Brook market measured $27.95 er suare foot at the end of first uarter 2009, down from $28.11 er suare foot at yearend The average asking rate for all classes totaled $20.91 er suare foot, u from $20.74 er suare foot reorted at year-end To First Quarter Transactions Tenant Size (SF) Address Tye DeVry 150,000 Highland Landmark V, Downers Grove Lease DeVry 65, Commerce Dr, Oak Brook Lease 8

9 chicago suburban office FIRST uarter 2009 suburban office Submarket Ma 9

10 FIRST QUARTER 2009 Market Statistics Class Bldgs Total Inventory SF Direct Sublease Current Qtr Prior Qtr Net Current Qtr - SF Net YTD - SF Comletions Current Qtr - SF Under - SF Asking Full Service Rent $ PSF O HARE A 33 7,745, % 2.4% 24.9% 23.9% (72,963) (72,963) - 120,000 $30.31 B 57 5,330, % 1.4% 26.0% 25.1% (50,254) (50,254) - - $19.25 C , % 0.0% 10.3% 12.5% 7,991 7, $14.67 Total ,452, % 1.9% 24.9% 24.1% (115,226) (115,226) - 120,000 $21.41 NORTHWEST A 71 13,868, % 5.7% 26.4% 25.2% (174,644) (174,644) - $26.37 B ,280, % 1.9% 25.0% 23.9% (126,724) (126,724) - $18.45 C 33 1,738, % 0.2% 12.5% 13.0% 8,301 8, $15.88 Total ,886, % 3.8% 24.9% 23.8% (293,067) (293,067) - - $20.23 NORTH A ,533, % 5.8% 20.4% 19.4% (167,410) (167,410) 160,000 $28.92 B 170 9,502, % 0.8% 14.0% 14.3% 30,059 30,059 - $19.65 C 37 1,688, % 1.6% 16.7% 14.7% (34,796) (34,796) - - $16.80 Total ,724, % 3.9% 18.0% 17.4% (172,147) (172,147) - 160,000 $21.79 LISLE/NAPERVILLE A 37 5,679, % 3.3% 23.5% 23.1% (25,279) (25,279) - $26.88 B 130 6,725, % 0.9% 26.7% 25.4% (89,555) (89,555) $19.53 C 27 2,036, % 0.1% 8.4% 7.1% (26,658) (26,658) - - $16.42 Total ,441, % 1.7% 22.9% 21.9% (141,492) (141,492) - - $20.94 OAK BROOK A 67 13,308, % 1.9% 20.2% 19.1% (143,117) (143,117) $27.95 B 150 8,902, % 0.8% 19.7% 19.7% (4,189) (4,189) - $18.56 C 23 1,130, % 0.4% 20.7% 20.5% (2,929) (2,929) - - $16.21 Total ,340, % 1.4% 20.0% 19.4% (150,235) (150,235) - - $20.91 SUBURBAN TOTAL A ,134, % 4.2% 22.8% 21.7% (583,413) (583,413) - 280,000 $28.09 B ,741, % 1.2% 21.8% 21.2% (240,663) (240,663) - - $19.09 C 131 6,969, % 0.5% 13.5% 12.9% (48,091) (48,091) - - $16.00 Total 1, ,845, % 2.8% 21.8% 20.9% (872,167) (872,167) - 280,000 $21.06 QUARTERLY COMPARISON AND TOTALS Q1-09 1, ,845, % 2.8% 21.8% 20.9% (872,167) (872,167) - 280,000 $21.06 Q4-08 1, ,845, % 2.7% 20.9% 20.0% (719,562) (739,938) 293, ,000 $20.87 Q3-08 1, ,551, % 2.1% 20.0% 20.0% 136,306 (20,376) 194, ,810 $21.00 Q2-08 1, ,357, % 2.2% 20.0% 19.5% 65,276 (156,682) 634, ,803 $21.15 Q1-08 1, ,659, % 2.6% 19.5% 19.0% 517,980 (221,958) 582, ,153 $21.10 The information contained in this reort was rovided by sources deemed to be reliable, however, no guarantee is made as to the accuracy or reliability. As new, corrected or udated information is obtained, it is incororated into both current and historical data, which may invalidate comarison to reviously issued reorts 10

11 About Colliers Bennett & Kahnweiler Inc. colliers bennett & Kahnweiler inc. is an indeendently owned and oerated business and a member fi rm of colliers international roerty consultants, an affi liation of indeendent comanies with over 293 offi ces throughout more than 61 countries worldwide. locally, colliers bennett & Kahnweiler offers full service real estate services including office, retail, investment, and industrial brokerage; develoment; roject/construction management; and roerty/asset/facility management. in total, some 200 ersons are emloyed by the firm nearly half of which are brokerage rofessionals. headquarters Colliers Bennett & Kahnweiler Inc n. river road, suite rosemont, il / (main number) 847/ (fax) PrINCIPALS David Kahnweiler, SIOr chairman and ceo william Fausone, SIOr resident David Bercu, SIOr colliers usa Director Daniel Arends ronald Behm, SIOr colliers manager richard Berger Gerald Cernick robert Chodos, SIOr Kevin Clifton, SIOr Jeffrey Devine Steven Disse Jeffrey Kahan Jeffrey Kacheck, SIOr Steven Kling Gregory Pacelli, SIOr Francis Prock Jack rosenberg, SIOr Andrew Sexson Phili Stafford Matthew Stauber, SIOr COLLIerS INterNAtIONAL DePArtMeNt LeADerShIP Daniel Arends richard Berger robert Chodos, SIOr Directors of cororate offi ce grou David Bilfeld Director of multi family advisory grou Kevin Clifton, SIOr Director of suburban offi ce grou James Degnan, SIOr Director of industrial services grou Jeffrey Kahan Director of investment services grou Phili Stafford senior vice resident colliers b&k real estate management services llc Gregory Pacelli, SIOr Director of land grou Aimee Course Director of marketing and communications George Cutro vice resident, market research Mark Las Director of information Technology BrANCh OFFICeS Colliers Bennett & Kahnweiler Inc. 200 s. Wacker Drive, suite 700 chicago, il / (main number) 312/ (fax) Colliers Bennett & Kahnweiler Inc south ulster street suite 1000 Denver, co / (main number) 303/ (fax) With more than 11,000 emloyees worldwide, colliers international is comosed of the best local real estate comanies in key world markets. each member rovides immense local insight as to customs, trends and cultural standards; a sound exeriential base and an extraordinary staff of rofessionals committed to all colliers international clients. market coverage of colliers international sans the americas, euroe, africa, the middle east and asia/acifi c. 11

C OLLIERS INTERNATIONAL MULTI-FAMILY A DVISORY GROUP

C OLLIERS INTERNATIONAL MULTI-FAMILY A DVISORY GROUP P RESENTED BY: SENIOR V ICE PRESIDENT 312.612.5935 312.612.5985 fax dbilfeld@colliersbk.com ASSOCIATE 312.612.5936 312.612.5986 fax jberner@colliersbk.com MARKETING SPECIALIST 312.612.5938 312.612.5988