CHICAGO OFFICE MARKET
Steven Fifield
 According
to Steve Fifield, president of Chicago-based Fifield Companies, we are
continuing to see a considerable amount of office development taking place
in Chicago’s West Loop — primarily in the area just west of
Ogilvie Transportation Center and Union Station. Since 1999, six new office
buildings (some completed and some still under construction) have been
added to Clinton Street — adding more than 3.3 million square feet
to the area. These six new buildings will draw more than 12,000 employees
to the area, thereby creating additional demands for restaurants and housing.
Additionally, more than $20 million will be added to the real estate tax
rolls in this area. “This will better enhance the West Loop’s
role as the gateway to the city,” Fifield says.
Two of the buildings on Clinton Street will satisfy major corporate headquarters
relocations for Quaker Oats Company and ABN AMRO. Fifield Companies completed
construction of 555 West Monroe in August 2002. The 17-story, 418,000-square-foot
office building is 100 percent leased by Quaker. Also, one block north
on Clinton Street is the new ABN AMRO headquarters — a 31-story building
totaling 1.3 million square feet — that is currently under construction
and will be completed this year.
There are two other new high-rise buildings under construction on Wacker
Drive that are adding additional space to the West Loop. One of the projects
is Pritzker’s new Hyatt headquarters at 71 S. Wacker: a 47-story
building totaling 1.3 million square feet and located at the northeast
corner of Wacker and Monroe. The building is 71 percent leased to three
tenants: Hyatt, 290,000 square feet; Goldman Sachs, 180,000 square feet;
and the law firm Mayer, Brown, Rowe and Maw, 450,000 square feet. Across
the street, at the southeast corner of Monroe and Wacker at 111 S. Wacker,
is the new John Buck Company development, which is a 50-story building
totaling 975,000 square feet. The building is 55 percent leased to Deloitte
Consulting, which has leased 425,000 square feet. Both buildings will
be completed in 2005.
“Several factors are responsible for the surge in new office development
in the West Loop, including the proximity to the two train stations, easy
access to the expressways, affordable parking, the tremendous amount of
amenities, and attractive economics,” Fifield says. These factors
are the key reasons why the West Loop has realized the strongest absorption
of any submarket over the last four years in the Chicago central business
district.
Existing newer Class A rental rates are averaging $22 to $26 per square
foot net. The current vacancy rate for Class A, B and C buildings in the
central business district (CBD) is 14.43 percent. Class A vacancy in the
CBD is 12.58 percent, while Class A vacancy in the West Loop, which includes
buildings under construction, is 12.13 percent. “There has not been
one tenant that has been absorbing space in Chicago,” Fifield says.
“The majority of new large tenant leases consists of relocations
and consolidations from other properties.”
With the latest new office developments completed or underway in the West
Loop, there are very few available sites left for office development in
this area, Fifield says. However, opportunities for additional restaurant,
residential and hotel developments do exist.
Steven Fifield is president of Fifield Companies in
Chicago.
©2003 France Publications, Inc. Duplication
or reproduction of this article not permitted without authorization
from France Publications, Inc. For information on reprints of
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Sherer at (630) 554-6054.
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