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The Walking Man

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One of the best parts of my job as a commercial real estate broker is not being tied to my desk for 10 hours per day. Typically, I have several meetings every day all over downtown Chicago and I always try to walk to and from these no matter the distance.

By doing this, it helps me keep tabs on the pulse of the city and gives me a chance to clear my head while I mentally prepare for my next showing. Plus, it is really the only form of exercise I get these days.

While roaming the streets with my patented fast-paced steps, I am always fascinated by the vast number of people asking for money; it seems like someone can be found panhandling on just about every Loop corner. Some of these individuals have been parked at the same location for years, while others strategically move from one location to the next. While there are exceptions, most of these people are simply down on their luck and are fairly harmless. Admittedly, I have never taken the time to get to know any one of these people by name, but over time I have started to recognize them as part of the unique fabric that makes up downtown Chicago.

For example, anyone who works in the vicinity of Clark and Madison knows of the “World’s Finest Chocolate Lady” who bellows in an annoyingly boisterous tone for 8 hours a day. Patrons of Ogilvie Transportation Center are likely familiar with the woman who sits on the Madison Street bridge everyday with resumes in hand in case a compassionate person has a job to offer, while politely asking for loose change to help her get through the day. The cast of characters is endless.

Part of me wants to stop and help every one of these people, but I cannot help being skeptical. I will never forget going to a Bulls game at the old Chicago Stadium and seeing a man in a wheelchair begging for money to help with his disability. After the game, I saw a car pull up next to him in an alley and watched him stand up from his chair, fold it up into the trunk and then walk into the car bragging to his friend about how much money he had just made. There was another instance where I gave some loose change to a beggar, only to have it thrown back in my face because it wasn’t enough. I was even scammed once by a sob story that I bought–hook, line and sinker–only to find out later that the guy was a complete fraud. Because of these incidents, I cannot bring myself to donate money to street people anymore.

However, a recent story in the news about one of these aforementioned characters known to many as the “Walking Man” really raised my ire. I have observed him wandering the streets of the Loop, Michigan Avenue, Streeterville, Gold Coast and Old Town for over 20 years. He has a very distinctive look: long, wavy, silver hair (it was black when I first noticed him), a bushy mustache and always clad in a white v-neck t-shirt and a sport coat. He has a mysterious look to him: part distinguished and part disheveled. He generally keeps to himself and never bothers anyone, always seeming to be wandering around with no particular place to go. Often, I have wondered what the story is with the Walking Man. Who is he and how did he get to where he is now?

Fast forward to this week when I was stunned to see a news story in which this man was brutally attacked on Lower Wacker Drive and by all accounts, is lucky to still be alive. The attack was so vicious that he has severe damage to his legs and may never regain eyesight.

As more details came out, though, we learned more about this mystery man. His name is Joseph Kromelis. He is a transient who goes from one homeless shelter to the next and has no family left, other than a nephew and an estranged sister who lives in Alaska. Certainly, he has no money to pay his medical bills and subsequent rehabilitation that awaits.

Everyday, I see stories in the Chicago news that make me shake my head and wonder what the heck is going on in this town. However, the outpouring of support and financial assistance to Joseph warms my heart and shows that in spite of the multitude of issues, we are still, for the most part, a city of genuinely good and compassionate individuals.

The Walking Man’s nephew has set up a Go Fund Me page for his uncle and I have donated some money. While I do not know Joseph personally, he is such a familiar face that I feel like we are old acquaintances. I figure this is as good of a time as any to break my policy.

If you would like to contribute to Joseph, please click here

Transforming The Loop

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For those of us who have emotionally, professionally or financially invested in downtown Chicago, the last two years have been difficult to stomach.

From the moment you arrived to well after you departed, the Loop that I fondly remember was bursting with energy. There was an unmistakable buzz that very few locales around the world could replicate. The immense and diverse crowds of office workers, residents, restaurant goers, shoppers, students and tourists all intermingled to make downtown Chicago a truly distinctive place.

Today is a vastly different landscape: sparsely populated streets, dark storefronts, half-filled office buildings and rampant crime. This is not the Loop we have grown to adore. In order for Chicago to be the successful, world-class city that it strives to be, it all must start with a healthy and thriving downtown. Without that, we are just another town. Something must change fast.

The immediate answer to turn the tide is a concerted effort on the part of the City of Chicago and all the key stakeholders to collectively map the next path forward for the Loop. It is not an exaggeration to say that this is the most critical time in the history of our city since the Chicago Fire. Everyone who works, lives, owns property or has clients here should want to get involved in this effort to reimagine downtown Chicago and the role it will play for years to come.

How do we accomplish this admittedly gargantuan task? Here are a few ideas:

1) Let’s begin with the Thompson Center. It is wonderful that Michael Reschke has stepped in with a perfectly fine vision to keep this notorious structure alive. However, there is nothing going on here which will change the trajectory of the Loop. Meanwhile, the five sites mentioned for the proposed Chicago casino have drawn significant community opposition and all present challenges. Frankly, each is uninspiring and non-transformational. Therefore, I must ask once again, why is the Thompson Center site not being mentioned as the home of the casino? Is this not an obvious solution? A combination casino-entertainment complex and hotel at this location would be a slam dunk in terms of restoring Central Loop activity and spurring new and meaningful development nearby.

2) The city desperately needs to develop an initiative to encourage smaller shop owners from neighborhoods all over the city, as well as startups, to lease the many vacant storefronts in downtown Chicago. In order to assist with the likely rent gap between what the tenant can realistically afford and what the landlord expects to get, the city needs to either subsidize landlords or offer substantial tax breaks to encourage more variety, or both. As businesses grow over time, so will the rental rates. Downtown rents have generally priced out the “little guy” over the years. Has there ever been a better time to reverse this trend? Creative, entrepreneurial retailers will add a new and unique character to the Loop.

3) Inevitably, several Loop office towers are not going to survive post-Covid life and will need to be reimagined. Many of these are faced with significant deferred maintenance and high vacancy, and have accordingly outlived their usefulness as office buildings. The cost of renovating will be hefty, and the rents obtained when the work is complete will not be enough of a return to justify the expenditure. These properties should be ripe for residential conversions. Those that survive and remain as office buildings will need to adapt and modernize. The need for affordable office space will always be present and not every tenant desires a plethora of amenities. Some are perfectly fine with reasonable prices and convenient locations. Perhaps a subsidy and/or tax break approach is needed here, too, to help keep these older buildings viable.

4) If the Loop is truly going to transform into a genuine mixed-use neighborhood, another park is needed in the central district or on the western edge. It needs to be something unique in order to draw visitors, perhaps akin to a mini-Bryant Park in Manhattan. Some ideas include a mini-golf course, outdoor art gallery or a  live music venue.  Certainly space constraints will be a factor, but it might be time to revisit an idea that Steve Fifield had several years ago which involved “capping” the Kennedy Expressway and creating a 15-acre park running between Lake and Adams Streets. Now that would be transformational!

5) Along the same lines, more communal areas are needed where people can gather and linger.  Maybe park-like medians need to be built in the middle of LaSalle Street with benches where people can grab a sandwich or coffee from a nearby storefront window or food truck and gather and relax.

6) Chicago absolutely must get this crime problem under control, both on the streets and on buses and trains. All one needs to do is walk around or take an L ride to see that things have changed. At one time, the Loop felt like the safest part of the city. That is no longer the case. If people do not feel safe coming downtown, they simply won’t. It is way too easy to work from home or somewhere else. If employees are victims of a crime, it is just a matter of time before businesses start to bail and look to go elsewhere, whether it be the suburbs or a different state altogether.

Reimagining the Loop and implementing an action plan is no easy task and will need to be a well-organized, joint effort between public and private entities. The first step is to form some sort of organization which will start developing concrete ideas, determine how to finance each one and finally put everything in motion. It could take years to get there, but in the long run, a better, more sustainable and inclusive Loop can emerge. Together, we can make this happen.

For the Love of All That is Holy, Please Stop Predicting the Future of the Office

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I’m really tired of reading the same articles over and over again. Every week, there’s a new “think piece” about the so-called future of the office. Every word-count-hungry Hemingway with a blog seems to be milking the city’s anxieties for all they’re worth – which, as it turns out, is about the price of a Crain’s subscription. In the pursuit of answering the unanswerable questions of what the future holds for commercial real estate professionals and their clients, hundreds of outlets have tried and failed to provide meaningful insight that extends beyond some variation of “people want their dogs with them, and they don’t want to sit two feet from Cathy in HR with the sinus infection.” Rather than combing through any more of this doom-scroll bait, we can save you some time by summarizing the reality of the CRE state of affairs: 

No one has any clue what’s going to happen or when. We’ll adapt anyway.

The concept of adapting a workplace structure to adhere to employee needs is not new. During the 1918 Spanish Flu pandemic, office managers set out masks and sanitizing stations and implemented open-air concepts wherever possible. New buildings were heavily modernized and redesigned to increase ventilation and encourage social distancing. Despite an even more severe economic downturn than 2020 and even more drastic unemployment rates, the economy recovered and sparked widespread innovation and job creation. The truth is that we already know how CRE professionals can improve leasing activity – it just takes time, money, and creativity, which is in short supply for building owners who fear change. Time and again, we find that early adopters who invest in the future of their own products end up far better off than those who prefer to “wait it out” in hopes that someone will be desperate enough to take the deal.

As for timing, we should know by now to ignore predictions of “the Big Return,” which has been repeatedly pushed back due to the inception and spread of different COVID variants. Each company will determine for itself what the best course of action is. Working from home may benefit many people, but it’s counterproductive to assume that this will become “the new normal.” Yes, many businesses have realized that most of their employees can perform their jobs outside of the office. It’s not a question of how work can continue with people working from home, nor is it a question of what will entice those people back into the office. The question that employers should be asking is: “how can I innovate my company in such a way that utilizes my office as more than just a surveilled holding pen for my employees’ bodies?” 

Employees have always craved flexibility and comfortable amenities. The COVID pandemic didn’t make them more demanding – it only gave them more leverage to refuse to accept current standards for the typical workplace. The mid-1900s had employees focused on self-determination, encouraged to work independently except for the rare team meeting. Later, the “open plan” workspace fell into favor, still consisting of rows and rows of desks, but adding warm elements and cork ceilings to limit noise pollution and increase productivity. As women began entering the workplace, modular furniture and semi-flexible workstations met the increased need for privacy and “modesty.” That desire for privacy increased until cubicle farms were the norm, standing several feet high and surrounding employees on nearly all sides. Finally, the early aughts saw a complete rejection of privacy, encouraging creative layouts and breakout spaces rather than confining employees to their 5 or 10 square feet of space. The only difference between these gradual shifts in standards and post-Covid workplace standards is that the proliferation of technology makes it difficult to compete with employees’ homes. If workers can still make money and keep their jobs without leaving the house, why wouldn’t they?

Employees who want to work from home most or all of the time are not going to change their minds. Employees who want to come back to the office probably have already done so, or are planning to do so in the near future. No amount of koi ponds or rooftop dog parks are going to convince people to give up rolling out of bed at 9am, dusting the Dorito crumbs off their sweatpants, and answering emails from their $400 gaming chair. Instead of concerning themselves with enticement and amenities, employers should take a utilitarian approach to regenerating interest in the concept of an in-office workday. Collaboration spaces and private offices alike should be designed to challenge and inspire employees, not just appear aesthetically pleasing. If employees aren’t utilizing the company ping-pong table, get rid of it and consider what kind of installations would actually benefit the company. 

Perhaps it’s as simple as leasing an office with a medical tenant on another floor so that employees have quick access to primary care, or offering subsidies for employees who take advantage of the gym just around the corner. Maybe it’s the responsibility of the company owner to identify new ways to monetize their services that require the physical presence of team members, such as hosting focus groups or product testing and demonstrations. Maybe it requires revisiting company communication strategies to identify whether there is a genuine need to eliminate Zoom calls in favor of face-to-face meetings. Perhaps it’s time to revisit the concept of the 9-5 schedule, and instead implement a 24-hour access system that allows employees to choose the hours they’d like to come in, in case they’re more productive as night owls than early birds. Maybe it’s a matter of leasing smaller, more department-oriented spaces in multiple convenient locations around the city, so commutes are shortened significantly and the company footprint remains more or less the same. Or maybe, with the exception of special circumstances, companies could pay higher salaries to in-person employees. Regardless of the solution, we need to stop waiting on “the Big Return.” It’s already happening right now – and it’s more like “The Slow, Reluctant Trickle.” 

All of this is to say that it is counterproductive and borderline useless to constantly monitor the latest news about how and when the city will recover from Covid. Chicago is as Chicago does; through resilience, innovation, creativity, and the willingness to invest in ourselves, the CRE industry will recover at its own pace in due time. Instead of hyper-fixating on some vague, hazy conception of the future dreamed up by those with a significant stake in manipulating the public image of the market, focus instead on the present needs and goals of your business. And for the love of God, stop publishing your predictions. 

The Office (R)evolution

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In your wildest imagination, could you have even foreseen a scenario in which the streets of Downtown Chicago would be zapped of its trademark energy, office buildings would generally sit dormant, and the concept of office space altogether would be openly debated as to its necessity? For most commercial real estate professionals, this is a scene straight out of The Day After Tomorrow. COVID-19 hit and this nightmare became reality. Nearly two years later, questions regarding how the office will be impacted on a long-term basis are really no closer to being answered.

Sure, a standard office has metamorphosed over time, but it has always been viewed as a constant and generally a necessity for most businesses. We have witnessed significant changes to offices sizes and their locations within the suite (interior versus along the window line) and a favor toward more open space. Corporate stuffiness has yielded to ping-pong tables and beer kegs. Dropped ceilings have been replaced with exposed ceilings. But however different the office became over time, it was always still there.

Yet at the onset of the pandemic when firms were forced to go remote, many firms survived and some even thrived. Then several firms gave up their offices altogether, hence the record amount of sublease space hitting the market. Can you imagine if this pandemic had hit in 1980 instead of 2020? The business might have never recovered. Talk of completely junking it all in favor of working from home would have been nothing short of blasphemous in the days before computers and internet.

Fortunately for those of us trying to put kids through school and making sure the mortgage is paid every month, it became apparent as time went on that remote work is not a long-term solution. On occasion and in certain situations, it is completely fine. Truthfully, there really isn’t a need for everyone to be in the office every single day. How offices are utilized is changing again, probably more radically than in the past, but that is okay. We can work with this.

A byproduct of all this is the Downtown Chicago has taken a pretty significant hit. With the exception of the seemingly indestructible Fulton Market, it is a challenge to find a building which has not experienced some pain. Occupancy is down across the board, operating costs and taxes are rising to levels never before seen, and many tenants understandably remain noncommittal with respect to their long-term plans. While these challenges abound, there are still some sizable leases getting signed (Exhibit A – Kirkland & Ellis 662,000 SF at Salesforce Tower) and properties selling at record high prices (like 110 North Wacker and just about everything in Fulton Market). Why is this, you ask? Because it will take a heck of a lot more than a pandemic to destroy the foundational base of Downtown Chicago. Too much money has been invested up to this point and too many people believe in the sustainability of our city. However, like the office itself, Downtown too will need to evolve in order to thrive for the next generation.

The recovery and evolution are interrelated, and it will take years for this to play out. The first step to recovery is getting workers back to the office on at least a semi-regular basis. Realistically, we have no chance of seeing a significant return until Spring 2022 at the earliest. Between the holidays, Omicron, and the cold and snowy winter weather, there are all sorts of valid excuses to delay the “Great Return.” If a manager or business owner has already been getting resistance from workers who wish to continue working remotely, good luck trying to persuade a return on a January morning when the temperature is 2 degrees with 6 inches of snow on the ground. Sorry, but a complimentary catered breakfast will not be enough, not matter how good the bagels might be.

Of course, this projected Spring return is contingent upon you-know-what getting under control. Every time it looks like we are over the proverbial hump, another variant gets in the way. What letter in the Greek alphabet comes after Omicron? Eventually, we will reach a point where around 75% of the workforce is using their office at least some of the week. This will be a significant milestone, as workers will start experiencing tangible evidence of the benefits of the personal interaction and collaboration which cannot be replicated over Zoom.

Once we learn to live with the virus as a regular part of life, we will then settle into the hybrid work routine. Some may choose to work 3 days in the office and 2 days at home. Others will come in just for meetings, perhaps when special projects are ongoing or during busy times each year (such as tax season for accountants, or summer for event coordinators). Slowly but surely, the attendance numbers will creep up over time. As soon as a co-worker who has been working predominantly from home witnesses another who has been going in 4 or 5 times per week get a promotion, this fear of missing out might encourage others to come in more regularly.

If getting people back to the office is the first step of the recovery, the second involves firms figuring out how to use their offices once back inside. Will there be a preference for more private offices and less open area? Will there be less personal space and more communal areas? Will these changes create a need for less square footage or possibly more to accommodate spacing out? Once there are some concrete answers to these questions — and it could legitimately take another two years or so to get to this point – only then we will see this so-called “new normal” kick in. At this point, we will see a greater level of comfort for entering into longer term leases.

Of course, the office evolution is multifaceted. Along with the aforementioned, the next key question is exactly where tenants will want to office: downtown versus suburbs, direct space versus coworking, new construction versus second generation space. If the choice continues to be downtown, are we looking at traditional markets such as the Central or East Loop? Or is it all Fulton Market from this point forward? If so, what happens to the older buildings? We will explore this topic in depth in our next blog.

Be sure to subscribe to our newsletter to stay up-to-date on the latest progress and pitfalls of the Chicago commercial real estate market. Subscribe to our weekly podcast, the CowCast, and follow us on Facebook, Twitter, and Instagram. For more information on Willard Jones and our offerings, contact Jonathan Zimmerman at 312.263.8787.


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As we all try to cope with our new world and everything it entails, I sincerely hope that you and your families are staying healthy and sane during this unparalleled time. Our hearts go out to everyone who has tragically lost a family member, friend or colleague. As trying as this experience is, it has been heartening to see people come together and make personal sacrifices for the common good. More so, our everlasting respect, gratitude and admiration go out to the many healthcare workers, first responders, delivery drivers, grocery store workers and the other essential employees who are heroically keeping our country together.

As for how this relates to downtown Chicago commercial real estate, never in a million years could I have imagined a scenario like this taking place. In my college economic classes, we never learned about a scenario where the economy suddenly came to a screeching halt. I know firsthand that there are a lot of businesses suffering permanent damage from this ordeal who may never recover. Those which do will likely never be the same.

As we hopefully creep closer to a return to whatever our new normal will entail and pray for the rapid development of a vaccine, I suppose it is time to start thinking ahead to what office life and downtown real estate will be like. I have been getting tons of questions about where the market is going and the truth is, I have no idea how this will play out. There really is no history to use as a guide. My suspicion is that things will remain quite unsettled and difficult until a vaccine is developed. If and when that occurs, I can see a recovery beginning at that point.

So many thoughts and questions have crossed my mind over the past month. Here are a few to ponder:

• How will showings work both near and short term? Will doors have to be left open in advance so no one has to touch anything? Can only 1 or 2 people tour at a time while others wait in the lobby? Will elevator access be limited? Will it be okay to pass out floorplans and marketing folders to prospects or do these now need to be emailed in advance? Should we just do guided video tours on Skype indefinitely?

• One trivial positive of this experience is that it could lead to the end of the handshake. Will something else replace it? I am not into the elbow bump and fist bumps still require hand contact. Will we bow? Flash the peace sign? Wave? Point? Nothing at all? One thing we all can agree on is no kissing on the cheek:

• I completely understand the need for facemasks, but what will the etiquette be? Do these get removed once you enter the building and establish proper distancing? When walking from one building to the next on tours, will it be possible to talk with clients or too difficult to hear one another? Will I continuously bump into people and things when my glasses inevitably fog up?

• Will hand sanitizer and disinfecting wipes become a standard item in every lobby? Will security guards take your temperature before letting you inside? Will everyone who looks at space get a free bottle of hand sanitizer and a face mask with the building logo plastered on it?

• Will people be hesitant to enter an elevator with more than 2 people? Will people start using the stairs more frequently?

• How will office layouts be impacted? Will tenants need to downsize for economic reasons or end up needing more square footage to accomplish social distancing? Will workstations have to be reconfigured and will it be economically feasible to completely change these configurations in the middle of a lease? Is open space a thing of the past? Is benching dead? Will private offices make a comeback? Will wider corridors be necessary?

• Will firms need to divide their staff into “Team A” and “Team B” where A works in the office one week while B works at home, then vice-versa?

• What will the psychological effect on an office be when an employee tests positive for COVID-19 and everyone has to start working from home again? Hypothetically, what if a broker schedules a multi-building tour and the prospect tests positive for COVID-19? Will all of the building agents be out of commission for the next 2 weeks in quarantine?

• Will a building be tagged as undesirable if a case is diagnosed? Will buildings with medical clinics that do testing become stigmatized?

• How badly will this situation impact the office market and economy in general? Will this be a short-term hit followed by a strong comeback or will this cause permanent damage? What if so many firms have successfully mastered the art of working from home that they decide to make it a permanent part of their business? What if many of the laid off and furloughed workers are never rehired?

• Will suburban or neighborhood satellite offices become more popular to cut down on commutes?

• Will people be afraid to take public transit? If so, will this lead to more vehicular traffic and longer commutes? Will employees need to begin staggering hours as a result?

• How will coworking be impacted? Will the rate of default be so prevalent that it ultimately metamorphosizes into an amenity which buildings have to offer to land or retain tenants? Will the operators go away and simply become third party management agents for the facility?

• With the likely downturn in the market, how will real estate companies fare? Will there be an exodus of brokers leaving the industry? Will there be a consolidation of firms? Will the small shops be able to survive?

• Will the unsung heroes who have been keeping our buildings safe and clean finally be recognized for the fine and essential work they do?

• What new technology will result from COVID-19? Elevator buttons that do not have to be touched? Automatic door openers and closers? Advances in HVAC technology?

• Will furniture be constructed differently using materials that are more germ resistant? Will disposable desk pads become more common?

• Will tenants demand more cleaning and other services several times per day which cause operating expenses to increase? Will more staff be needed? Will the operating expense increases offset any rent reductions caused by the down market?

• Will buildings need to add onsite nurses like in schools? Will having an immediate care health clinic become as desirable of an amenity as a Starbucks in the building?

• Speaking of amenities, will anyone be utilizing fitness centers, take a building yoga class or sit in a collaborative lobby area, at least for a while?

There is a lot to digest. I will not even attempt to speculate how it ultimately will play out, but I do look forward to commencing whatever our new routine will be so I can find out. Until then, keep the faith and stay well.

The Central Loop Elixir

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I have been working in the Central Loop for nearly a quarter of a century and in my humble opinion, rumors of the Central Loop’s demise are exaggerated. Undoubtedly, challenges lie ahead as several larger-sized tenants are set to vacate in the upcoming years. It is true that some of the older buildings have grown a bit stale and certainly are less efficient as compared to the newer counterparts in the West Loop.

The buzz which used to percolate on the corner of LaSalle and Madison in decades past no longer exists. I recall a time back in 1998 when I was marketing a corner retail space at 11 South LaSalle and a bidding war erupted between 3 different tenants. We ended up obtaining a rent of $20.00 per square foot over our asking price. Alas, that was a different era.

Fortunately for the City of Chicago, there is an easy solution at hand to revitalizing this essential part of our fair city. It is a solution so obvious and sensible that it will probably never happen. Ready? The State of Illinois and City of Chicago need to come together and do everything in their collective power to locate the Chicago casino at the site of the Thompson Center.

What does this accomplish, you ask? So, so much. Consider the following points:

1) It takes an albatross of a building off the State’s hands and into the control of a private developer/operator, hopefully one who is experienced with building such an entertainment complex. Paying attention Sands, MGM, Wynn and Caesar’s?

2) If designed well, the preservationists can be appeased by maintaining the architecturally significant atrium while integrating the casino, restaurants, retail and performance venue on the lower floors. The upper floors would be a natural fit for a hotel.

3) You cannot ask for a more assessible location, with the Clark/Lake station literally inside the building and Union Station and Ogilvie Transportation Center a short walk away. The site is also right in the heart of the Chicago Theater District and mere blocks from the River North entertainment district.

4) Build the casino here and watch the tax revenue come rolling in. This money can go towards education, fighting crime, paying down the pension and infrastructure improvements, among other things.

The influx of both locals and tourists to this attraction will have a chain reaction on the surrounding neighborhood. The Central Loop will become cool again. Property owners will be more motivated than ever before to invest in updating their properties. This will lead to a combination of office tenants returning to the newer and recently renovated properties, with several of the older ones gaining new life as hotels and apartments. More restaurants and bars will come into the mix, along with other retailers as well.

Of course, every idea has downfalls and this one is no different. Some may argue that a casino will already add to the congestion that Loop workers, residents and visitors deal with on a daily basis. While this may be true, isn’t the Loop built for this more than any other part of town? Plus, the highest trafficked times for the casino and connected entertainment venues will be nights and weekends, times when the workers are out of the office.

Others may opine that it is a bad look for a casino to be located across the street from City Hall and a block from the Daley Center and County Building. Personally, I cannot think of anything more Chicago than this. Access to the casino can be on the Lake Street side, with the theater on Randolph and hotel on LaSalle. That should help better organize the traffic and limit the comingling with city workers.

Then, there is the legitimate argument that the casino belongs in one of the economically depressed neighborhoods on the South or West sides badly in need of reinvestment. While there is some validity to this point, the truth is that it will be difficult to get tourists and residents of the metropolitan area who live in the suburbs or north side of the city to travel that far away. If the true objective of the casino is to generate tax revenue, it has to be located in the most accessible setting possible.

When one factors in the Thompson Center’s massive list of problems and mixes that with the clear necessity to give a kick start to one of the most essential parts of town, the puzzle pieces come together nicely. Other cities have been able to revitalize downtown areas via casinos, so why can’t Chicago do the same? Hopefully, the political leaders will reach the conclusion that the Thompson Center casino is a win-win for all involved that will pay long-term dividends for the city’s economy for decades to come.

2020 Predicitons

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Happy New Year! As we ring in 2020, it is time once again to look into the future and forecast what lies ahead for the new year. First, let’s revisit my 2019 predictions and see how these played out.  Surprisingly, not too badly.

1) After an extended period of growth, leasing activity will begin to slow across the board in downtown Chicago. There will not be a full-blown collapse by any stretch, but absorption will be down and concessions will increase as competition becomes fiercer to attract tenants. Rents will generally remain steady as owners still struggle to cope with the unprecedented property tax increases. The rent and tax part was true, but there was no slowdown in leasing activity at all.  The market is still healthy and at least so far, showing no signs of letting up.

2) A slowing market combined with a weakening economy will bring on the first group of distressed sales downtown in quite some time. This will be the first step in sales prices becoming a bit more reasonable as compared to the past few years. The sales market did slow substantially, but no distressed sales at all.

3) An owner of multiple downtown office buildings will put their portfolio up for sale and exit the Chicago market. AmTrust did put their 7-building portfolio on the market in May, but has yet to complete any sales.

4) Some cracks will begin to appear in the co-working phenomena. WeWork will tap the brakes on expansion in 2019, while two of their competitors merge together and another shuts down entirely. No significant mergers or shutdowns yet, but the cracks did appear big time in the WeWork phenomena.

5) None of the planned developments on the outskirts of downtown (Lincoln Yards, The 78, Burnham Lakefront, River District) will be successful in landing an anchor office tenant. One of the developers, citing economic concerns, will completely shelve their project for several more years.  No deals, but all projects are still attempting to move forward.

6) While these planned developments struggle, the Fulton Market locomotive keeps on chugging, as another major corporation will announce plans to relocate their operation to a new Sterling Bay-developed property in the district. Well, I guess this one wasn’t too hard to predict. Several significant tenants did sign up with Sterling Bay in 2019 including Flexport and WPP.

7) Certain segments of retail will continue to struggle, but the Mag Mile starts to rebound. Multiple new, non-traditional concepts will sign leases and set up shop on North Michigan Avenue, all at significantly lower rents than in the past.  This generally occurred, with the new supersized Starbucks leading the way.

8) Speaking of North Michigan Avenue, the former Hancock Building will land a new anchor tenant of the tech variety and gain naming rights to this iconic property as part of the deal. All quiet on the 875 North Michigan front last year.

9) While on the topic of naming rights, let’s try this one again. The Willis Tower will have a new name by this time next year.  Still the Willis, although you have to wonder if the United Tower is on the horizon given their massive lease renewal.

10) A well-known tenant in the tech industry who occupies a significant portion of their building will substantially scale back in 2019 and put their space up for sublease.  Gogo, step right up.


Overall, not horrible.  I could easily recycle a few of these for this year, but I will try to keep it original.  Let’s now see what lies ahead for 2020:

1) The leasing market will begin to slow a bit and activity will gradually flatten out. Key decisions will be put off as a result of the upcoming presidential election, which is always a convenient excuse, as well as the continued uncertainty surrounding rising property taxes.

2) Office building sales will be brisker in 2020 as compared to 2019, but only by a small margin. Several owners who would like to sell will be faced with the difficult decision of unloading at a loss or hanging onto a property with declining net operating income and toughing it out until the market becomes more stable.

3) The Thompson Center will sell in late 2020 to a prominent casino developer. Plans will be announced shortly thereafter to locate the long-discussed Chicago casino at this site, with the existing structure preserved and converted into a hotel as part of a massive renovation.

4) Speaking of hotels, while the downtown market seems to be oversaturated, at least one   Central Loop office building will announce plans to convert to this use.

5) The Pittsfield Building will rise once again.  All legal issues will finally be worked out and a developer will step into the picture with plans to do apartments in the upper half of the building and a boutique hotel on the lower floors.

6) Still hurting over the rapid decline of WeWork, co-working expansion will tail off substantially.  More and more landlords will attempt to do this on their own and bring in a co-working management company to oversee the operation.

7) Are we at the end of the current development cycle? Not so fast, as the long-vacant land site on the corner of Washington and Franklin will sign up an anchor tenant which will launch yet another new building that will be completed in 2024.

8) Another national headquarter search will be launched by a significant tech firm with far less fanfare than Amazon.  Chicago will be a strong contender, but ultimately end up in second place.

9) Two mid-tier commercial real estate firms will announce plans to merge, thereby creating another larger-sized agency which will compete directly with the Big 3.

10) As always, this will be the year that a grocery store signs a lease to open up a location in the Central or East Loop.

Best wishes to all for a very happy and healthy 2020!


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With yet another year just about in the rearview mirror, it is time to take a look back at the key events which made 2019 so fascinating.  I hereby present my annual list of top 10 events:

10) Where did all the sales go? While office vacancy sunk to its lowest level in the past 3 years, the sales market dried up substantially. Anticipated future tax increases (more on this below) have been cited as a key contributing factor.

9) The East Loop’s new tech hub. Brookfield Properties’ redevelopment of the upper half of Macy’s is already proving to be a huge hit, as leases are pending with tech giants VividSeats to rent 110,000 square feet and Numerator another 60,000 square feet.

8) River Views = High Demand.  Riverside Development has the magic touch when it comes to new buildings in the West Loop. The latest example is 110 North Wacker, where the future Bank of America Tower continues to attract a first-class tenant roster. Perkins Coie, Jones Day and No18 announced plans to join the mix when the building opens in late 2020.

7) The cool kids now hang out in the Southwest Loop. No doubt spurred on by the success at the Old Post Office redevelopment, the southwest corner of the Loop has suddenly become a sizzling market.  Amplifying this point is the new BMO Tower that just broke ground at 310 South Canal, which will be anchored by BMO Harris as well as the law firm Chapman & Cutler.

6) Sterling Bay can do no wrong.  Stop me if you heard this before. 311 West Monroe is the latest Sterling Bay triumph, as this reimagined property was able to go from 0 to 100 percent occupancy this year thanks to leases with West Monroe Partners, Convene and Mayer Brown.

5) The United Tower. United’s 816,000 square foot renewal at the Willis Tower not only helped stabilize this asset for many years to come but also disappointed several developers who were hoping to land United as a primary tenant to help launch a new project.

4) Dear Fritz, please show mercy.  The fear of rapidly rising property taxes in the City of Chicago dominated the conversation on both the investment and leasing sectors.  Not only did sales activity slow substantially, but office and retail tenants are rightfully concerned about how their additional rent charges might skyrocket in upcoming years.

3) WeImplode. What a year for WeWork. After staking claim to the title of largest occupier of space in downtown Chicago, a failed IPO led to a complete restructuring of the operation.  After backing out of several deals in progress and making their name nothing short of toxic to many landlords, their future is clearly in doubt.

2) Will it ever stop? With Google leading the way by leasing another 800,000 square feet, Fulton Market continued to solidify itself as the premier office market in Chicago.  Other tenants joining the mix this year include Flexport, WPP, Convene, Ernst & Young, Glassdoor and Herman Miller.

1) The greatest success story ever. – Has there been a better reincarnation in the history of Chicago commercial real estate than the Old Post Office?  At worst, it is the story of not just 2019, but the entire decade. Feast your eyes on this tenant roster: Uber, PepsiCo, TrueBlue, CBOE, Cisco Systems, Federal Home Loan Bank of Chicago, Kroeger , Abelson Taylor, Chicago Metropolitan Agency For Planning and Walgreen’s, with likely more in the pipeline.  While owners who lost tenants to this project may not agree, this is a tremendous symbol of the strength of the downtown Chicago office market as 2019 comes to a close.

Chicago real estate continues to be the gift that keeps on giving.  In my next blog, we pull out the crystal ball and predict what will happen in 2020. Happy Holidays, everyone!

Salt of the Earth

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As we approach Thanksgiving 2019, it is the most appropriate time of year to express a hearty appreciation for all of the talented individuals who truly are responsible for ensuring the smooth daily operation of the many office buildings throughout the Loop and beyond. To the building engineers, maintenance teams, custodians, security staff, tenant service coordinators and property managers – you all are truly the unsung heroes of commercial real estate.

When either taking over a new listing (as a leasing agent) or moving into a building (as a tenant), the very first task should be to make friends with the engineers. No one is more helpful and important when it comes to learning about the ins-and-outs of a property, whether it be from a mechanical standpoint and just getting the all-important gossip about particular tenants when it comes time to discuss a lease renewal. Engineers are truly the eyes and ears of the operation. Locked out of your suite? An engineer is there to save the day! Need help hanging a picture or fixing a broken chair? The engineer has that covered, no problem at all. It is easy to take for granted the fact that our offices are properly heated and cooled each day and everything is functioning properly, from the lights and outlets to the toilets. Without the engineering staff, none of this would be possible.

To the custodians and cleaning staff, thank you for making sure our trash cans are empty each morning, all of the crumbs from the mid-afternoon granola bar snack are vacuumed off the rug and the bathrooms are cleaned and well stocked with the necessary supplies. We appreciate the snow being shoveled and sidewalks coated with salt, the lobbies being kept tidy and all fingerprints being removed from the glass doors so the building presents well during a showing. We all know how important a first impression is and the cleaning staff plays a critical role in helping the cause.

To the lobby security guards and attendants, we are grateful to you for not just keeping our buildings safe, but also for the morning salutation when we stagger in the door still half asleep. It is like putting on a comfortable pair of old slippers to be greeted by name and asked about the family and how business is going. The mutual complaints about how pathetic the Chicago sports scene is right now is also part of the ritual. The small talk is just the right medicine for taking our minds off the stressful events of the day, for a few minutes anyway.

Last but certainly not least, to the property managers, thanks for being on call 24-hours per day, 7-days per week and coordinating all of the teams that make the buildings go. If there is a problem at 2:00 AM, the manager is on standby ready for action. Whenever anything goes wrong, the manager is there to accept the blame, even when he or she had absolutely nothing to do with the issue whatsoever. When things do go well, as they do the majority of the time, there is never any credit given. It is simply how things are supposed to be. This can be a thankless job at times, but in this space today, a large helping of well-deserved credit is hereby given.

On behalf of all tenants and brokers, thank you. There is no better way to pay tribute than by quoting two of the great philosophers of our time, Mick Jagger and Keith Richards:

Let’s drink to the hard-working people
Let’s drink to the lowly of birth
Raise your glass to the good and the evil
Let’s drink to the salt of the earth
Say a prayer for the common foot soldier
Spare a thought for his back breaking work
Say a prayer for his wife and his children
Who burn the fires and who still till the earth

Happy Thanksgiving, everyone!

Same Story, Different Day

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I have written in this blog space before how important it is for brokers to keep up on current events in the real estate industry. The truth is, it has never been easier to do so given the wide variety of resources available. Between Crain’s Chicago Business, Bisnow, GlobeSt, Connect CRE, Chicago Tribune, Chicago Sun-Times, Illinois Real Estate Journal, Real Deal, Curbed Chicago, Costar and QSR, it is difficult to miss much of anything these days. Since knowledge is power, this is generally a good thing.

As I peruse through these information sources on a daily basis, two things become evident. First, there has been and continues to be, a ton of activity in the marketplace. These past few years have been incredibly eventful and for this, we should all be grateful given the alternatives that might lie ahead in the future. Second, it seems like a lot of the news is essentially the same thing over and over again on a continuous loop. The names and addresses might change, but the general narrative remains constant. Honestly, it is starting to get just a bit tired.

As a public service to the writers and editors at the above-mentioned publications, here is a template that can be used for just about all articles for the immediate future:

• A new building is planned in Fulton Market on the corner of {insert address or intersection} to accommodate {insert company name} relocating its offices from {insert suburb}. {Insert company name} cited the ability to take advantage of Chicago’s vast and talented labor pool in a cutting-edge location as the primary reason for the move.

• {Insert Fortune 1000 company name} has signed a lease to relocate from {insert address of Class A or B building} to the Old Post Office. The building’s large floorplate and robust amenity package were mentioned as main selling points of the redeveloped property.

• WeWork is in turmoil and continuing to restructure internally, thereby concerning {insert building owner} about their long-term viability. Yet, {insert building owner} still inked a deal with the coworking behemoth for another 100,000 square foot lease at their {insert Class A building address} property.

• Co-working operator {insert name of any brand not named WeWork} is expanding its presence in Chicago at {insert address}.

• Real estate taxes on commercial properties are continuing to increase at record high levels in the City of Chicago and this is both depressing sales and investment activity and freaking out tenants who are contemplating signing new leases (Side note: this fact seems to be mentioned in EVERY Crain’s article about commercial real estate).

• A new controversy involving {insert topic} is surrounding Sterling Bay’s Lincoln Yards project and the public is outraged.

• Another tenant, {insert name}, just signed a lease at the Old Post Office. The building’s superior amenities yada, yada, yada…

Don’t get me wrong, these subjects are fascinating in their own right. However, perhaps we just need a few new topics thrown into the mix. History tells us that the narrative will likely change sooner rather than later. In due time, we will be reading about rising vacancy rates, more sublease space hitting the market, falling sales prices, rising unemployment and more Class C buildings being converted to hotels and apartments (granted this one will impact me more so than others). By then, we all will be yearning for the days of old.