Archive for the ‘Uncategorized’ Category


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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.

Taxed To Death

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Given the enormous budget deficit in Chicago, it comes as no surprise that the Mayor and members of the City Council are turning over every stone imaginable to unearth creative ways to raise revenue over the upcoming years. No industry appears to be exempt from their scrutiny, including commercial real estate. If some of the ideas being tossed around actually come to fruition, the results could be calamitous.

In a recent Crain’s Chicago Business article from September 10, it mentions that among the many ideas being pushed by certain coalitions include restoring and increasing Chicago’s corporate head tax to $16 per month for large companies, instituting a 3.5 percent tax on office leases, a vacancy tax on commercial properties vacant for more than 18 months, and a local income tax on those earning above a certain threshold. Wow, where do we even begin with all of this?

On a macro level, if more and more taxes continue to be implemented, at some point corporations and business owners are going to say enough is enough. Yes, the office market has been on quite a roll the last few years. Firms are relocating to and expanding in downtown Chicago like never before.  Unemployment is low and a healthy supply of new buildings have been and continue to be constructed to accommodate the vast demand. So far, the property tax increases which have been implemented have done little to deter activity. However, if these continue and more are piled on, there almost certainly will be a breaking point.

Proposals such as restoring the head tax will do nothing but suppress future hiring, push firms to automate more rapidly (thereby eliminating jobs), and drive businesses back to the suburbs or out of Illinois altogether. Do not be surprised to see more corporate headquarters going with split locations as a way to circumvent this altogether.

A tax on commercial leases would effectively be another add on charge forced upon weary tenants who already are dealing with having to pay rents at record high levels. Will this force landlords to cut rents in order to maintain occupancy levels, thereby reducing revenue in the process and curtailing sales activity? Might this push more businesses towards co-working, since many of these short-term arrangements are considered flexible memberships as opposed to leases?

The concept of a vacancy tax seems most unfair on many levels, as there are so many factors which go into why a space might sit empty for an extended period of time. Sure, there are instances where an owner overvalues its property or refuses to contribute a market-level improvement allowance and this could fairly be deemed as the main cause of a space not leasing.  However, what if it’s a flawed space that has, for example, little-to-no views or one which is situated way too close to the El tracks?  How can an owner reasonably change that?  What if high crime levels in the immediate area are scaring tenants away? What if the market tanks or an economic downturn ensues? The city is really going to punish these landlords at a time when no one is renting space?  Are they supposed to give spaces away to avoid paying this tax, or just chalk it up as another cost of doing business in the City of Chicago?

If the City ends up instituting these taxes, it makes one wonder what other charges could be on the horizon.  If the much-debated LaSalle Street tax is implemented, would the trading floors at the CBOT Building quickly become a ghost town? Advances in technology make it no longer necessary for trading firms to be in Chicago proper. If the tax on high end services goes into effect, could this ultimately include real estate brokers?  Might there one day be an additional tax placed on commissions?  Who knows, this could be the beginning of the end of the brokerage industry.

It cannot be disputed that we have a major problem and everyone collectively has to share the pain to get Chicago out of this massive fiscal abyss. There is a staggering amount of inequality in this town that needs to be addressed for Chicago to have a viable future. However, if the approach continues to involve taxing every industry and person in sight, we will suddenly encounter more serious problems than what we are faced with today. Mayor Lightfoot has said her priorities for the upcoming budget are to seek “reasonable options that relieve the financial burden on those least able to afford it while not driving businesses out of Chicago.”  In theory, this sounds ideal. In practice, it is much tougher to implement.

An endless string of property taxes increases in conjunction with a city income tax and taxing employees, leases and vacant spaces will have a detrimental effect on downtown Chicago commercial real estate. Businesses will stop growing here, leasing activity will decline, and rents and property values will take a tumble. The domino effect will slow down construction, architects will have less work, foreclosures will be on the rise, and more and more brokers will find it tougher to survive in the industry. Might this be the beginning of the end?  Let’s hope common sense ultimately prevails.

Crazy 8’s

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As we approach the Labor Day weekend and unofficial end of summer, here are 8 random thoughts that recently have crossed my mind as we conclude month number 8 of 2019:

1) A big thumbs down to the City of Chicago and State of Illinois regarding their handling so far of the proposed Chicago casino.  Did they really expect a casino operator to be willing to accept such an overbearing and obnoxious tax and fee structure?  Wake up!  This would be a positive development for the city.  Please do not drive away yet another potential draw which would generate revenue and expand tourism.  Meanwhile, the budget deficit continues to get bigger and bigger with no end in sight.

2) While it might be a moot point now, if generating tax revenue is truly the ultimate goal of a Chicago casino, I do not see how it can be located anywhere but downtown.  I am all for trying to boost struggling neighborhoods and love the concept of a casino being a catalyst for future growth and development, but in reality, people are not going to stray too far from the city center for this sort of attraction. Given all the issues with the Thompson Center, this seems like a no brainer site on the surface.  However, can a casino really be located right across from City Hall?  That is questionable.  Maybe if the casino access was from Lake Street and the entertainment and hotel component faced Randolph, it could be feasible. Perhaps a better idea is to exercise eminent domain and buy up one of the remaining dilapidated blocks in the Loop –   Clark between Van Buren and Ida B. Wells Drive comes to mind – and develop a complex over there.

3) Speaking of taxes, any Landlord reps out there who have lost a deal recently due to concerns about the upcoming property tax reassessment?  I sure have.  It seems like not a day goes by without someone expressing concern, and rightfully so. At some point, Springfield needs to step in and realize that it will become counterproductive for businesses and people, in general, to remain in Chicago if the tax rates continue going up, up and up. We need some certainty and common sense applied to the situation.

4) Some of the recent leases signed in the Central Loop with larger-sized tech firms (Kin Insurance, Showpad, Snapsheet, ActiveCampaign, SpotHero and ReviewTrackers, to name a few) are very exciting and a telling sign that the office leasing market is still buzzing along at a healthy pace.  If these types of users continue to embrace the Loop, things should be in fine shape for a long time to come, recession or not. This is good since there is going to be quite a bit of space to fill in upcoming years as tenants such as Bank of America and BMO Harris scamper off to new towers in the West Loop.

5) I am fascinated to see how one of those so-called holes is going to be filled at 135 South LaSalle.  It is such a wonderful building, so rich in history and an architectural genius.  However, I have a hard time seeing another anchor tenant coming in and taking over the gigantic space being vacated by Bank of America.  This reminds me of a lot of what happened at 11 South LaSalle in the late 1990s when LaSalle Partners relocated to the former Amoco Building.  This ultimately led to the building being transformed into a Residence Inn. Could 135 South LaSalle be next in line for a partial hotel or residential conversion?  It would make sense.

6) A standing ovation to all parties involved in bringing the Old Post Office back to life starting at the very top with the ownership of 601W Companies, leasing expertise by Telos Group, property management by JLL, architectural services by Gensler and Bear Construction as lead contractor. What a truly amazing job of filling this building up so quickly with such a high-level caliber of tenants.  This has to go down as one of the greatest redevelopments in the history of Chicago real estate.  Mad respect to all.

7) Here is a good question to bring up the next time you are at a gathering of real estate professionals: has there ever been a more important lease signed in Chicago than Google at 1000 West Fulton Market?  Would Fulton Market exist today in its present form if Google would have decided to stay and expand in River North?  Discuss.

8) Sincere condolences to the families and friends of two Chicago real estate veterans who recently left us too soon, Ann Anovitz and Gerald Frank.  Ann was a true pioneer of the industry who opened up so many doors for numerous people.  Gerald was a long-time broker who epitomized hard work and ethical behavior.  Both were total class acts in every sense, wonderful people and credits to the industry. They will be missed.

I will now end on a positive note with 4 words to get everyone through the fall and winter seasons:  Super Bowl, Super Bears!

The Willard Jones Building Quiz

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Ready to test your knowledge of downtown Chicago real estate? Well, it’s your lucky day! We hereby present the first ever Willard Jones Building Quiz, past and present. Answers to follow below.

1) Which Loop property had manually operated passenger elevators until 2000?
A) 39 South LaSalle
B) 123 West Madison
C) 40 North Wells
D) 228 South Wabash

2) GE Capital’s Chicago headquarters was once based out of this building:
A) 919 North Michigan
B) 230 West Huron
C) 105 West Madison
D) 29 South LaSalle

3) Which property was originally part of the Illinois Bell office campus?
A) 309 West Washington
B) 100 West Monroe
C) 226 South Wabash
D) 180 West Washington

4) The beloved Dill Pickle deli was located at________:
A) 180 West Washington
B) 36 West Randolph
C) 218 South Wabash
D) 166 West Washington

5) Hannah’s Bretzel’s first ever location is here:
A) 180 West Washington
B) 209 West Jackson
C) 205 West Randolph
D) 309 West Washington

6) The Isolated Pier construction technique was first implemented at ________:
A) 2229 South Michigan
B) 819 South Wabash
C) 40 North Wells
D) 36 West Randolph

7) Which of the following office properties was the first to construct balconies on its exterior façade in the early 1900s?
A) 17 North Wabash
B) 205 West Randolph
C) 230 West Huron
D) 218 South Wabash

8) The AC McClurg Publishing Company was the original anchor tenant of:
A) 2325 South Michigan
B) 223 West Erie
C) 850 South Wabash
D) 218 South Wabash

9) This building was the home of Playboy Enterprises from 1965 – 1989:
A) 160 East Grand
B) 919 North Michigan
C) 200 East Ohio
D) 324 North Michigan

10) Which 3 buildings share a common basement?
A) 19-29-39 South LaSalle
B) 218-226-228 South Wabash
C) 819-828-850 South Wabash
D) 2036 South Michigan-2000 South Wabash-2001 South State

11) The A Bauer Distilling Company had a presence in which of the following properties?
A) 230 West Huron
B) 117 North Jefferson
C) 900 West Jackson
D) 555 West Jackson

12) The City Colleges of Chicago was offered a free space in perpetuity in this building, only to decide during construction that they did not need it after all:
A) 226 South Wabash
B) 205 West Randolph
C) 55 East Randolph
D) 850 South Wabash

13) Which building was once the home of the Reagle Beagle bar?
A) 40 North Wells
B) 230 West Huron
C) 218 South Wabash
D) 160 East Grand

14) Advertisements for Gold Medal Flour, believed to be from the early 1900s, can be found on the third floor walls of which building?
A) 324 North Michigan
B) 160 East Grand
C) 2229 South Michigan
D) 117 North Jefferson

15) Which building was named after the Haymarket Farmers Market?
A) 555 West Jackson
B) 117 North Jefferson
C) 36 West Randolph
D) 205 West Randolph

16) The original use of this building was a coffin manufacturing factory:
A) 2300 South Michigan
B) 819 South Wabash
C) 900 West Jackson
D) 228 South Wabash

17) Before being converted into an office property, which building was previously a movie theater?
A) 2229 South Michigan
B) 117 North Jefferson
C) 850 South Wabash
D) 223 West Erie

18) A Studebaker car showroom was previously located here:
A) 2300 South Michigan
B) 2229 South Michigan
C) 2245 South Michigan
D) 2036 South Michigan

19) A Buick car showroom was previously located here?
A) 2300 South Michigan
B) 2229 South Michigan
C) 2245 South Michigan
D) 2036 South Michigan

20) The Cowpath is part of which Loop office building?
A) 123 West Madison
B) 105 West Madison
C) 100 West Monroe
D) 39 South LaSalle

21) New York Life Insurance had its Chicago headquarters here:
A) 39 South LaSalle
B) 105 West Madison
C) 309 West Washington
D) 180 West Washington

22) Where was the Chicago Bar Association originally located?
A) 29 South LaSalle
B) 205 West Randolph
C) 123 West Madison
D) 36 West Randolph

23) Which of the following is the oldest standing Loop building?
A) 40 North Wells
B) 39 South LaSalle
C) 36 West Randolph
D) 228 South Wabash

24) Which property was originally two separate buildings that were merged together into one?
A) 218 South Wabash
B) 205 West Randolph
C) 160 East Grand
D) 17 North Wabash

25) Which building is known as the McKinlock Building?
A) 218 South Wabash
B) 230 West Huron
C) 166 West Washington
D) 209 West Jackson

1) B – The elevator operators were relieved of their duties at 123 West Madison a mere 19 years ago.
2) C – General Electric Capital served as the anchor tenant at 105 West Madison until 2000.
3) A – The Illinois Bell campus included 309 West Washington, 301 West Washington, 208 West Washington and 212 West Washington.
4) D – The Dill Pickle lasted until it was ousted in favor of a Subway restaurant in 1999.
5) A – Florian Pfahler’s highly successful chain originated at 180 West Washington in 2003.
6) C – This innovative style of construction used at 40 North Wells paved the way for future skyscrapers.
7) A – These balconies are still functional today after being restored during a building renovation in 2006.
8) D – McClurg was one of the larger Chicago publishing houses in the early 1900s.
9) B – Better known as The Palmolive Building, Hugh Heffner called 919 North Michigan home for 24 years before relocating to 680 North Lake Shore Drive.
10) B – While each are three separate buildings, 218, 226 and 228 South Wabash all share a common basement.
11) A – Bauer owned several buildings near the intersection of Franklin and Huron in the early 1900s.
12) C – The third floor at 55 East Randolph has never been occupied since it was established in 2003 (hopefully this is about to change).
13) D – The Reagle Beagle at 160 East Grand was a take off of the famous bar that appeared on the television show Three’s Company in the 1980s.
14) A – Still in excellent condition, these ads were painted on the side walls of both neighboring properties and uncovered during a building renovation 10 years ago.
15) B – 117 North Jefferson is located a little over a block away from the original market location.
16) B – To the best of our knowledge, the coffins were all empty when shipped out of 819 South Wabash.
17) C – The Burnham Park Cinema was one of the main attractions in the South Loop, back when the neighborhood was known as Burnham Park.
18) D – 2036 South Michigan was one of many car showrooms in this historic district.
19) C – The Buick emblem still appears on the façade of 2245 South Michigan today.
20) C – 100 West Monroe was forced to build around the “cowpath” when constructed in 1927.
21) A – New York Life was the largest tenant at 39 South LaSalle for most of its tenure as an office building.
22) A – The Chicago Bar Association was based out of 29 South LaSalle until 1990.
23) C – The Delaware Building at 36 West Randolph was built shortly after the Chicago Fire.
24) B – Originally known as 122 North Wells when built in 1915, a 23-story addition was constructed next door and connected to the building in 1928, when it became known as 205 West Randolph.
25) D – A one-time owner of 209 West Jackson, George McKinlock, decided to name the building after himself in 1909.

The Chairman

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It is rare when one can say they have been mentored by a legend.  A legend of not just their profession, but also of life in general. Well, I am one of the lucky few, as I had the extreme good fortune of being taken under the wing of the great Howard Weinstein.  Howard passed away last week after a brief illness at the age of 77, leaving behind a legacy few in the real estate field can match.

A lifelong Chicagoan who was raised in the Albany Park neighborhood, Howard entered the real estate industry immediately after graduating from his beloved University of Illinois and was hired by the original Chicago real estate icon, Arthur Rubloff.  It did not take Howard long to rise up the corporate ranks as he was eventually running the show, opening offices up all across the country.  Rubloff & Company was THE place to work in real estate back in the 1970’s and 80’s.  So many individuals had the privilege of getting their start at this prestigious firm and Howard played a central role in their development.

In the early 1990’s, Rubloff & Company split into three parts, with the commercial side merging with Koll (and ultimately becoming the modern day CBRE).  Howard and his long-time partner Tom Horwich purchased the residential division in 1996 and grew Rubloff Residential Properties into a Chicago powerhouse.

When I entered the commercial real estate business in 1996, my first assignment was to serve as the leasing agent of two Loop office buildings owned by Tom’s family, 100 West Monroe and 30 North Michigan.  After 2 fortunate years of experiencing some success, the firm I was working for at that time became mired in some difficulty and I needed to make a change.  Tom took pity on me and suggested I come work for Rubloff, as their non-compete clause just expired and they were able to practice commercial real estate again.  The catch was that I had to persuade Howard that this was a good idea.

Prior to the meeting, I asked as many people in the industry as I could about Howard Weinstein and the same message kept being conveyed: if you have the chance to work for this guy, do it!  The second I walked into his office, it was obvious he had a certain air about him where you could just tell he was someone important.  We talked for a few minutes and I somehow convinced him that a 25-year-old schmuck was worthy of using the Rubloff name.  He hired me the next day.

Very early on he established two rules that always stuck with me:  (1) Don’t embarrass the Rubloff name and (2) Make me a lot of money.  I am not sure I was successful with either, but can say without hesitation that working at Rubloff and for Howard was the greatest. He gave me complete autonomy to do my thing and always was there whenever I needed anything.  I would’ve stayed there forever if I could have, but that darn recession led to the sale of the firm and yada yada yada, Willard Jones was born.

Early in my Rubloff career, a new owner of a building I had been representing asked me to take over a renewal negotiation that he had been working on with little success.  The tenant had a well-deserved reputation for being quite difficult and seemingly had one foot out the door.  As a Hail Mary of sorts, I was asked to take a crack at keeping him in the building but warned the odds were slim-to-none.  Somehow, I was able to convince the owner of the firm to meet for a few minutes.  He basically ignored me and nothing was being accomplished, so I decided to leave.  On my way out I handed him my card which he surprisingly glanced at and saw that it said Rubloff.  His demeaner abruptly changed and he asked if I knew Howard Weinstein.  I told him that he was my boss.  Suddenly, he started blurting out all these stories about projects he and Howard once worked on together.  Sensing that the tide had turned, I asked if he would like to talk with Howard on the phone.  Fortunately, Howard picked up and the two spoke for 20 minutes, laughing hysterically as they recounted old times.  As the conversation was ending and the topic of why I was there finally came up, Howard told him to, “stop f-ing around and sign the damn lease.” Sure enough, we completed the renewal, I made a new friend and the owner felt like I pulled off a miracle.  That was the power of Weinstein.

Then there were the Rubloff holiday parties.  This was Howard’s annual night to shine.  He would throw these over-the-top galas at some of the most classic Chicago locations imaginable: the Chicago History Museum, Adler Planetarium, Chicago Cultural Center, Newberry Library, Peggy Notebaert Nature Museum and Chicago Yacht Club to name a few.  He always used to tell me that the revenue from the commercial division I ran was used to cover the cost of the party and let me tell you, that was a ton of pressure as I know how important that night was to him.  He went out of his way to create a pleasant environment for his agents, which is why so many remained loyal to him and the reason why so many moved on once he sold the business.

No one could command a room like Howard Weinstein.  The second he walked in anywhere, he immediately was the center of attention.  It was partially because just about everyone in the real estate industry knew who he was, but for those who didn’t, he had a certain approachable swagger about him. However, he never acted like he was better than anyone else.  To the contrary, he was always curious to learn about your background and find ways he could relate whether you were the CEO of a Fortune 500 company or the janitor of a building.  This is one of so many reasons why people loved him.

Over time, no one had a bigger influence on my career than Howard.  I affectionately referred to him as “The Chairman” of Willard Jones Real Estate.  We typically got together every other month for lunch and regularly talked about real estate, the Bears and life in general.  He talked me off the ledge thousands of times, gave me an immeasurable amount of advice (never expecting anything in return) and taught me Yiddish in the process.

Our cherished phone conversations always started the same way. At Rubloff, it was something like this:

  Jonathan? Weinstein!  Did you make me any money today?
Me: No.

Once I started Willard Jones, it changed slightly:
Howard: Jonathan, this is the Chairman calling.  Where are my dividends?
Me:  As soon as I make my first profit, you are next up on the list
Howard:  What am I going to do with you?

The topic would then shift to sports.  He was a huge Chicago sports fan, especially the Cubs (one of the few things we disagreed about).  I will miss our Monday calls about the Bears (aka “your crap team”) where he would often tell me how he was a better quarterback than Jay Cutler.

Howard also loved his food and regularly consumed the classic Chicago menu: Italian beef, steak (medium rare), deep dish pizza, hot dogs (NEVER with ketchup) and Long Grove Confectionary candy for desert.  I always let him select our lunch spots and he usually leaned towards the classics (Manny’s and The Berghoff were two of his favorites).  The truth is, I never much cared where we went.  I just enjoyed his company and wanted to soak in as much knowledge as I could.

Howard Weinstein was the true definition of a mensch: an honorable, decent stand up person. Not having Howard in my life is going to be tough, as I now have to fall back on 20 years of guidance to solve my problems.  While he will be missed so much by so many people, I am enormously grateful for our time together.  RIP, Mr. Chairman. Thank you for making me a better person.