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!