2017 has certainly been a year for the ages. In spite of all the controversies and uncertainty, the downtown Chicago commercial real estate market kept chugging along at a solid pace. While not quite as active as the past few years, vacancy remained relatively low and rental rates and sales prices continued to push upward. Let’s look back on the top 10 events that made this past year interesting.
10. Macy’s Shedding Space – After years of speculation, Macy’s finally announced plans to downsize their iconic State Street department store. Brookfield Asset Management is redeveloping floors 8 – 14 and while their plans have not officially been announced, it is expected that they will convert these 700,000 square feet into loft office space that would be accessed by a newly created office lobby.
9. The Old Post Office Returns to Relevance – As one drives down Congress Parkway, it is a wonderous sight to watch this hulking edifice gradually come back to life after nearly two decades of dormancy. The renovation is now in full swing and the building is actively courting tenants with their plans for a high-end amenity package, creative atmosphere, and all new finishes.
8. Changing Face of Retail – E-commerce is forcing retailers to offer their customers an enhanced shopping experience as an attempt to get them offline and into stores. Those who cannot adapt will not survive and this metamorphosis is being illustrated on the Mag Mile, which has unprecedented availability as several notable retailers have already–or are looking to–vacate. Crate & Barrel is one example, as it will soon be replaced by a gigantic Starbucks Roastery which is expected to be just as much of a museum as it is a store.
7. The Ever-Growing Boundaries of Downtown Chicago – Move over Goose Island and Fulton Market, it’s time for some new hot spots. Riverside Investment & Development and Tribune Media are teaming up to create the River District, a 37-acre site at 700-777 West Chicago Avenue–right where River North, River West and Goose Island all come together. This site will feature as many as 18 mixed-use buildings totaling 9 million square feet, as well as a river walk. Not to be outdone, Sterling Bay’s Lincoln Yards development will create a 70-acre mixed-use site along the North Branch of the Chicago River where Lincoln Park and Bucktown meet. In addition to office, retail and residential buildings, a soccer stadium/concert venue is planned.
6. Still No Slowdown in Fulton Market – Just when it seemed like there was nothing left to develop, Fulton Market kept churning out new deals and development plans. Notable leases in 2017 include WPP committing to over 250,000 square feet in a planned 24-story Sterling Bay Development at the former Coyne College site and Leopardo Construction leasing a full floor at the soon-to-be-completed 210 N Carpenter building. Among the plethora of development plans announced include IBT Group’s proposed 1.2 million square feet of office, hotel and retail tower at 1200 West Fulton, as well as Shapack Development’s 17-story office development at Lake and Halsted.
5. Media on the Move – With the Tribune Tower redevelopment project approaching, two of the most legendary media empires, the Chicago Tribune and WGN Radio are being forced to relocate. Tribune Media is off to the Prudential Building, while WGN is heading to 303 East Wacker. Not to be outdone, the recently-acquired Chicago Sun Times vacated their riverfront location at 350 North Orleans and headed west to Fulton Market, setting down roots at 30 North Racine.
4. Welcome to the Skyline – After a lengthy break from new development, 444 West Lake and 150 North Riverside opened and welcomed an all-star cast of tenants, creating a chain reaction of new vacancy in some highly desirable properties. Adding 151 North Franklin and 625 West Adams to the mix in 2018 may very well push the pendulum slightly to favor the tenant when it all shakes out.
3. The Biggest Gets Better – A $500 million dollar-rehabilitation of the Willis Tower is now underway and will feature a new, three-story glass retail structure on the lower floors, three additional underground floors, restaurants, a fitness center, tenant lounges, 30,000 square feet of outdoor space, and upgrades to the common areas and Skydeck.
2. Even More Development – Just when it appeared as if this current development cycle had concluded, Riverside Investment & Development and the Howard Hughes Company jointly announced plans to erect a 1.35 million square foot office tower at 110 North Wacker Drive–the current site of the low rise General Growth Properties building. Bank of America has been confirmed as the anchor tenant and will be occupying approximately 500,000 square feet when the building opens in 2020.
1. HQ2 Fever – The possibility of Amazon choosing Chicago as the home for their second headquarters has rightfully dominated the news for the last quarter. The fantasy of gaining up to 50,000 new jobs, along with ancillary development, economic growth, and the national attention it would bring to Chicago could go down as the most meaningful event to ever transpire in our city. Between the speculation over where the site would be located (Old Post Office? Fulton Market? Lincoln Yards? River District?), to trying to figure out what incentives the city and state have offered, it has been fun to wonder.
There you have it. What is in store for 2018? In my next blog, I’ll let you know what I predict to appear in this annual recap one year from now. Happy Holidays everyone!