A federal judge has tossed out much of the lawsuit filed against Bank of America Corp. by Spire developer Garrett Kelleher, who was seeking to avoid repaying two loans by alleging he was wrongfully overcharged interest.

The ruling, which revolves around the issue of the bank calculating interest on a 360-day year rather than 365 days, marks a significant setback for Mr. Kelleher and his Dublin, Ireland-based Shelbourne Development Group Inc., which had proposed building a twisting condominium tower that was to be the tallest building in North America on a site along the Chicago River and Lake Shore Drive.

B of A sued Shelbourne in August 2009, seeking to collect $4.9 million on two loans for some preliminary expenses related to the Spire, which never got beyond foundation work. Mr. Kelleher personally guaranteed the loans, according to the suit filed by Charlotte, N.C.-based B of A.

Shelbourne and Mr. Kelleher countersued last October, alleging the bank committed fraud and violated state law by basing its interest calculations on a 360-day year rather than 365 days, resulting in higher interest charges. The suit seeks unspecified damages and says B of A should be barred from declaring default and accelerating the loan.

Related story: Spire developer accuses B of A of overcharging interest

The lavish Spire sales office at NBC Tower closed recently, after the landlord sued to evict over unpaid rent. And while the Spire site at 400 N. Lake Shore Drive is now a circular hole in the ground, media reports say Mr. Kelleher continues to seek new financing for the project.

In an Aug. 18 ruling, U.S. District Court Judge Amy J. St. Eve dismissed the fraud claims against B of A and threw out Shelbourne's contention that the 360-day interest calculation violates state law, saying a national banking law supersedes.

She also doused the notion that B of A acted in bad faith, stating that the 360-day term — common in commercial real estate loans — was spelled out in the loan agreement.

Six days after her ruling, Judge St. Eve referred the case to a magistrate judge for a settlement conference. The first hearing before that judge is scheduled for Sept. 28.

A spokeswoman for Shelbourne didn't return an e-mail, and a spokesman for B of A declines to comment.

Shelbourne's lawyer in the matter, Glenn Udell of Chicago-based law firm Brown Udell Pomerantz & Delrahim Ltd., said he plans to ask the judge to reconsider the ruling.

If that's not successful, he expects Shelbourne to appeal. He notes that another federal judge recently sent a similar case back to state court. In that case, the judge agreed with the lawyers — including Mr. Udell — that the plaintiff wasn't alleging the bank charged more interest than allowed by state law, but rather that the bank charged more interest than was represented in the promissory note.

In the Shelbourne case, Mr. Udell also claimed a partial victory for his client because Judge St. Eve didn't strike the developer's defense that it couldn't perform on the loan due to the “unforeseeable and unprecedented economic downturn and recession.”

B of A's loan said Shelbourne was required to have a construction loan commitment by November 2008. When that deadline was missed, the bank says it was entitled to accelerate all amounts due and demand full payment.

Shelbourne countered by invoking “commercial impracticability,” arguing that B of A executives made repeated public statements that the credit crunch and collapse of the commercial real estate market were unprecedented and couldn't be predicted.

Judge St. Eve agreed, saying B of A had not shown “to a certainty” that it would prevail over Kelleher's claim that financing could not reasonably be obtained.

Source: Crain's Chicago

New York-based TMP Worldwide Advertising & Communications, an independent recruitment advertising agency, has leased 15,685 square feet, the full 31^st floor at 444 North Michigan. The building, represented by Lenora Adds of Cushman & Wakefield, has signed 38,476 square feet of deals since the second quarter of this year.

Previously a subtenant, TMP has expanded to accommodate its growing staff with the addition of 20 new employees.

In other recent transactions, Monster Worldwide Inc. re-upped for 8,385 square feet. Anthony Karmin of Transwestern represented the tenant, parent company of jobs resource website Monster.com.

Joining the tenant roster, VerveLife, a digital entertainment company represented by Konstantine T. Sepsis and Daniel J. Nikitas of MB Real Estate, signed a 4,683-square-foot office lease at 444 North Michigan.

Accounting firm Leavitt Siegal signed a 2,253-square-foot lease negotiated by Josh Lapins of ForeFront Properties. Brian Poe and Michael Wolfson of Marc Realty arranged a 2,245-square-foot transaction for shopper engagement and solutions firm Lunchbox, while Ross Cosyns of Prudential Rubloff Properties represented energy efficiency and sustainability consulting firm Integrated Resource Solutions in a 2,163-square-foot lease.

Additionally, Brailsford & Dunlavey relocated its Chicago office to 2,025 square feet at 444 North Michigan. Steven R. Goldstein of Chicagobroker.com represented the Washington-based facility planning and program management firm in the deal.

Source: REJournals

From Real Estate Bisnow

The staff at First Industrial has been resilient the last few years, and CEO Bruce Duncan says the Chicago-based industrial REIT has reduced its senior debt by more than $200M since the beginning of 2009, with now just $225M through 2012, down from $728M.

Bruce joined the company in last year to help delever the company's balance sheet, which he and the team are working on by selling off assets and raising equity. The REIT still owns 800 properties nationwide, and owns and manages 6.5M SF in the Chicago area. With the portfolio about 82% leased, getting occupancy up is the next big goal for First Industrial. Bruce says the industrial sector hasn't seen the distress that some other property types have, so the REIT won't be acquiring until they see the perfect opportunity.

Bruce has a broad background, working for companies as diverse as Starwood Hotels, Equity Residential, and JMB. He finds industrial an interesting product type because the transactions are “bite-sized”—it's easier to find lenders as well as users or investors willing to spend $1M to $10M on a warehouse property than $50M plus on a downtown office or a regional mall. Bruce says that while First Industrial still has a ways to go on delevering, the qualified people at the company are getting the job done. After having seen a lot of cutbacks, they're determined to get back on top, he adds.

Memories of Memory Rock

Several real estate companies banded together to support Alzheimer's research last week at Memory Rock at Joe's on Weed. The event, which featured the musical stylings of Golub's Dr. Bombay and a silent auction, raised $23k. We snapped Newmark Knight Frank's Richie Klein, The Alzheimer's Association's Erna Colborn, Golub's Good Guy Lee Golub, Alzheimer's Association's Nancy Rainwater, and Halyard Group's Joanne and Larry Blankenstein enjoying a few drinks. Golub will be busy this week with its Hancock Observatory serving as the first US site for the World Federation of Great Towers Conference. Sorry, Lord of the Rings fans, even though it's literally an association of towers and skyscrapers, neither of your two towers make the cut.

ABCO Electric's Guy Greco, Grubb & Ellis' Steve Monroe and MB Real Estate's Mark Buth joined in the festivities. Steve organized the event for its third year and was happy with the turnout, which included 300 people. Mark is the leasing manager for 220/225 N. Michigan, where the Alzheimer's Association is a tenant. As for MB, it added four new associates while we were on vacation last week.

Stitching for the 21st Century

More than 600 guests were in attendance at the 6th annual Stitch Fashion Show benefiting the Illinois Interior Design Coalition. Furniture, carpet, textile, and related manufacturers partnered with local design firms including teams from VOA, Partners By Design, Perkins Eastman, HOK, IADT and Harrington Design Alumni to create garments out of interior design materials. Each team selected a decade as a theme for their design—above is the 2010-themed design of Izzy, Knoll Textiles, and SmithGroup.

Navistar representatives, along with roughly a dozen Illinois officials, announced plans this morning to move the engine manufacturing company’s headquarters to Lisle, retaining thousands of jobs in DuPage County.

“I’ve got one thing to say. Illinois is Navistar country,” said Gov Pat Quinn. “We believe in Navistar.”

Navistar President Dan Ustian added that the project would create about 500 engineering jobs right away.

The company said it will invest $110 million in the 1.2 million-square-foot Lisle headquarters, which will include product development.

Navistar’s headquarters are currently in Warrenville, though the company also employs more than 1,000 workers in Fort Wayne, Ind.

The technology center once envisioned for the Lisle campus will move, possibly to the Melrose Park facility as part of a possible $80 million investment. Another $15 million will be invested in a new parts facility.

Combined, Navistar will be investing $205 million in Illinois. The state gave Navistar an investment package of up to nearly $65 million, including tax credits.

Source: Chicago Tribune

The following report has been provided by Jones Lang LaSalle.

The North American Industrial real estate sector has delivered positive news for the second quarter 2010, according to a new, national report by Jones Lang LaSalle. National average vacancy rates have tumbled 20 basis points for the first time in almost two years from 10.6 percent in the first quarter to 10.4 percent in the second quarter. Leasing activity across many markets is up but the sector is still vulnerable to mixed economic indicators which could make sustained recovery slow or sporadic at best.

“While we can report some overall positive news for the sector, we are still very much at the mercy of this precarious economy,” explained Craig Meyer, managing director and leader of Jones Lang LaSalle’s Logistics and Industrial Services group. “Declining consumer confidence, the fading impact of the federal stimulus support and worldwide economic volatility are forcing many industrial landlords, tenants and investors to look back over their shoulders in fear of a double dip recession.”

While labor market pressures and slow job growth are dragging on the economy and keeping pressure on consumer spending, there have been positive indicators to offset some of the down side.  Increasing corporate profits have renewed long-term optimism which has in turn spurred a significant amount of second quarter industrial leasing activity. This was fueled by large occupiers executing significant renewal, consolidation or relocation transactions helping to temper overall vacancy figures.  However sustained deal volumes will be essential for a stronger turnaround in current trends.

“With the rise in Corporate America’s second quarter profits and a need to restock inventories that were running at 50-year lows, a number of large occupiers have strategically captured high quality logistics space at cyclically low rates,” said Meyer.  “Opportunities remain in virtually every market at aggressive terms and even with the very modest levels of leasing and little or no speculative construction, choices are quickly becoming limited in some markets especially in the Class A large block sector.”

“In fact there is only 11.3 million square feet of new construction in the pipeline and 83 percent of that is pre-leased. With such low levels of new construction planned in the foreseeable future, we expect to see an increase in build-to-suit activity,” he concluded.

Around the U.S.

The report which tracks 38 key industrial markets in the U.S. found that average net absorption is at 11.1 million square feet for the quarter, but remains negative at 7.4 million square feet so far this year, compared to last year’s total of 126.6 million square feet percent.  Markets that also act as supply chains are performing well such as New Jersey where vacancy declined 60 basis points joining the Inland Empire with 4 million square feet of positive net absorption year to date, along with Dallas posting 2.4 million square feet of positive gains; both markets are trending toward organic growth.

“While pent up demand was responsible for some of the leasing activity, renewals still comprise a healthy share of market demand across the country,” said Meyer.  “Many businesses are still sensitive to cost control and possible economic volatility so we are still seeing the ‘blend and extend’ market continue.”

The overall availability of sublease space has decreased across the country, a positive sign that demand is on the rise again.  The highest volumes of marketed sublease space reside in Northern and Southern California, especially in Sacramento and the Inland Empire as well as mid-tier markets in the Southeast such as Memphis and Nashville.

The report also shows that nearly 66 percent of all the industrial markets tracked by Jones Lang LaSalle experienced positive net absorption with a further 20 percent showing declining absorption.  Major industrial markets such as Chicago and Los Angeles account for a combined 8.3 million square feet of negative net absorption so far this year.  However, both are showing recent signs of stabilizing, with submarkets around their ports and airports benefitting from recent growth in container traffic and cargo tonnage.

Demand for high-end, prime logistics space is topping the general market and has given a boost to Midwest markets like Memphis, Columbus, Dallas/Fort Worth in addition to the Inland Empire in Southern California, as well as key distributions markets in the Northeast such as Central New Jersey, Philadelphia and Harrisburg.

Overall average asking rents are still declining across the country, but the rate of decline is slowing and in second quarter fell by 1.1 percent.  The lowest industrial rents are in Columbus and Memphis and the highest in San Diego, San Francisco’s Bay Area and South Florida.  Competition for tenants is fierce in almost every market and the growing level of concession packages, including periods of free rent and tenant improvement packages continue to be a critical component when completing deals.

A Mixed Outlook

While the economy is giving mixed messages and keeping real estate players cautious, demand for industrial real estate is slowly improving. Leasing in the form of expirations, early renewals and ‘blend and extend’ transactions has been providing the market with deal activity. If expansion requirements continue from large institutional users, the industrial market may keep its head above water and progress towards full recovery.

Click here for the Q2 Report.

Source: REJournals

By at least one measure, things are looking up for the downtown office market.

The amount of space available for sublease has dropped 20% since the end of last year, to 3.38 million square feet at the end of the second quarter. That's the lowest amount since the end of 2008, according to data from Chicago-based MB Real Estate.

Sublease space is a good indicator of market conditions because it shows how much excess space companies are looking to unload. So sublease space tends to rise, as it did from mid-2007 through last year, when demand for office space is weak. Sublease space generally declines when demand is strong.

Less sublease space also is a positive for landlords because it reduces competition, and sublease space is generally cheaper than so-called direct deals with landlords.

Over the past decade, sublease space peaked in 2002 at 6.28 million square feet — a result of the dot-com bubble bursting — and then bottomed out in 2007 at 1.98 million square feet.

Sublease availability stayed relatively low this recession the 130.5-million-square-foot downtown office market, peaking at 4.2 million square feet in the fourth quarter last year.

Andrew Davidson, an executive vice-president who heads MB's tenant-representation group, says he's not convinced the fall in sublease space means the market is turning in landlords' favor.

Sublease space appeals to tenants in today's market because many want move-in conditions and cheaper rents, Mr. Davidson says. Also, sublease space has become increasingly attractive as many cash-strapped landlords are no longer willing to pay much for move-in renovations, which is generally an advantage of so-called direct leases with landlords.

“I think there's been a lot of people searching for good, as-is conditions,” Mr. Davidson says. “It's certainly a good sign that the sublease market went down, but until there is real job growth I'm not convinced that the market has made its permanent turn for the better.”

In MB's second-quarter report on the downtown office market, the firm says layoffs and employment declines in this recession have far outpaced office space reductions, suggesting the direct vacancy rate, which excludes sublease space, is poised to climb higher after edging up 0.1 percentage point in the second quarter to 16.1%.

“MB Real Estate's baseline office forecast expects substantial declines in occupancy over several upcoming quarters to correlate with job losses,” the report says.

The firm predicts the direct vacancy rate will exceed 17% by the end of 2012 and that demand for office space won't turn positive until 2013.

Also, because there's so much uncertainty about the economy, many companies are just sitting on excess space rather than seeking to sublease it, and are likely to restructure and downsize when their leases come up, Mr. Davidson says.

“I think there's a lot of excess space,” he says. “Some tenants aren't even willing to talk about any type of extension right now. They would rather sit with excess space for a year or two rather than extend five years.”

Local landlords had some reason to feel encouraged by economic reports last week. The U.S. Labor Department said Friday that the unemployment rate edged up to 9.6% in August from 9.5% in July. But private payrolls climbed by 67,000, more than economists had forecast.

“The double-dip talk was probably misplaced,” Maury Harris, chief economist at UBS Securities LLC in New York, told Bloomberg News. “From a historical perspective, things are still soft. The economy ought to be doing better.”

The Chicago Business Barometer, an index of U.S. business activity, last week showed an 11th straight month of growth, but six of the seven indicators that make up the report showed “slowed expansion.”

The index, compiled by the Institute for Supply Management-Chicago and formerly known as the Chicago Purchasing Managers Index, registered 56.7 in August, down from 62.3 in July and lower than economists' forecast of 57.6 from a Dow Jones Newswires survey.

According to the MB report, just one large block of sublease space was added to the downtown market in the second quarter: Citigroup Inc.'s 58,094 square feet at 227 W. Monroe St.

Just four other large blocks of Class A space are available for sublease downtown, while there are four such spaces in older, so-called Class B buildings.

The largest sublease spaces on the market are:

• Aon Center, 200 E. Randolph St., 296,247 square feet, expiring December 2011, and 95,103 square feet, expiring December 2013.

• 231 S. LaSalle St., 167,179 square feet, expiring June 2023.

• 600 W. Chicago Ave., 117,001 square feet, expiring November 2015.

Source: Crain's Chicago

From Real Estate Bisnow Merchadise Mart Properties issued a statement today denying rumors that Vornado Realty Trust was selling The Merchandise Mart. Reports Saturday indicated that Vornado was making plans to sell the property for $1B.

An MMPI spokeswoman says Chris Kennedy's quote that Vornado would sell the property if they could reinvest for a higher yield should apply to any publicly traded entity and does not mean that the Mart is for sale. In MMPI's case . . . there is no book prepared, no retained counsel, no investment banker, no broker, no process being pursued—all things that would indicate a property described as being "up for sale," according to the statement by MMPI.

Sales CB Richard Ellis' Keith Puritz and Brett Kroner repped Midwest Air Technologies in its purchase of 821 Bluff Rd. in Romeoville. The 507k SF new industrial building was sold by Land and Lakes Development for an undisclosed amount. Midwest Air Technologies will take occupancy of the building this fall. Colliers International's Lynn Reich and Jeffrey Kapcheck repped Land and Lakes Development. US Asia Group acted as a consultant for Midwest Air Technologies. *** Paine/Wetzel · ONCOR International has completed four sales in the Chicagoland area totaling more than 30k SF: Spiros Stamelos purchased an 11k SF building located at 3026-3030 W. Carroll in Chicago as an investment opportunity. The building sold as a short sale with the lender. Paine/Wetzel's Mark Nelson and Michael Nelson repped seller Wicker Heights Contracting Co. Foresite Management purchased a 10k SF building located at 285 Jamie Lane in Wauconda. The IT and electrical contracting firm is relocating from Barrington. Paine/Wetzel's Pat Ryan represented the buyer while Premier Commercial Realty's Bruce Bossow represented the seller. Lolita Ranchero purchased a 5k SF office condo at 1400 W. Fulton in Chicago. Paine/Wetzel's Mark Nelson, Michael Nelson, and Kim Aigner represented the seller, while Garrett Realty's David Fulton represented the buyer. Bid On Equipment purchased a 5k SF building at 2860-54 Corporate Parkway in Algonquin. Paine/Wetzel's Pat Ryan repped landlord Plote Properties. *** Inland Real Estate Brokerage's Paul Montes and Eric Spiess represented the purchaser and the seller in the sale of 1 S 210 Summit Ave., a two-story, 17k SF office building in Oakbrook Terrace. The property also features a 9k SF basement, an exterior truck dock and elevator access on all three levels. The seller was North American Baptist Conference. The buyers, two practicing physicians, plan to convert the property to medical use. The Law Offices of Vincent M. Cannon represented the buyers. *** Marcus & Millichap's Demetrie Livaditis represented the seller in the sale of the 6k SF Swanson Corners Retail Center, a 100% occupied retail center located in Grayslake. The asset sold at a price of $1.25M, which represents a cap rate on current NOI of 8.34%. Leasing Lee & Associates's Justin Fierz and Brian Vanosky represented the tenant, Hosley International, in a long-term lease renewal and expansion for a 469k SF industrial space located at 6750 Daniel Burnham Dr. in Portage, Ind. The value of the lease is in excess of $7M. The landlord, Lincoln Financial Group, was represented by Darwin Realty's Chris Gary and George Cibula. *** Paine/Wetzel · ONCOR International completed three industrial lease transactions totaling 62k SF. Xcell International Corp. leased 31k SF at 20 W 345 101st Street in Lemont. Paine/Wetzel's Jerry Sullivan and Brandon Wright represented the landlord, Manulife Financial, and CBRE's Pete Roberson repped the tenant. Veolia ES Technical Solutions signed a 25k SF lease at 5137 Indianapolis Blvd. in East Chicago, Ind. Paine/Wetzel's Adam Karras repped the tenant, while Paine/Wetzel's Edward Wabick represented the landlord, Sims Metal Management. High Performance Auto Body & Detail signed a 7k SF lease at 450 S. Spruce St. in Manteno. Paine/Wetzel's Brandon Wright and Curtis Nugent Real Estate's Chris Curtis represented the landlord, Manteno RFT LLC. Curtis Nugent's Joe Nugent repped the tenant. *** CB Richard Ellis’ Keith Puritz, Brett Kroner, Ryan Bain, and Zach Graham represented CenterPoint Properties in a 60k SF lease at 1175 Lakeside Dr., Gurnee to Select Marketing Solutions. The company will take occupancy of the entire building this fall. HSA Commercial Real Estate's Doug Reed repped Select Marketing Solutions. *** HDG Mansur awarded Transwestern the leasing assignment for Arlington Pointe, 95 West Algonquin Rd. in Arlington Heights. Built in 1983, the 137k SF Class B office building has two contiguous floors, totaling 50k SF, available for lease. Transwestern's Joe Stevens, Fred Ishler, and Zach Fox are the exclusive leasing agents on the assignment. *** Paine/Wetzel · ONCOR International has completed three industrial lease transactions totaling 50k SF. Chicago Messenger is expanding its lease to 38k SF at 1120 West Exchange. The firm is relocating from 1600 South Ashland. Paine/Wetzel's Michael Nelson and Mark Nelson represented the tenant in the transaction and Colliers Bennett & Kahnweilers' Vern Schultz and Mike Senner repped the the landlord, The Missner Group. ? Fellowship Fleet signed a new lease at 438 W. 43rd St. in Chicago for 6k SF. The limousine service is relocating from its prior location at W. Polk Street. Paine/Wetzel's Albert Schulman represented the tenant and Chicago Industrial Real Estate's Matt Rogatz repped the landlord, a private investor. Robinhood Garcia is relocating his mattress company from 36th and California to 3421 W. 48th Place, signing a new 6k-SF lease. Paine/Wetzel's Michael Nelson and Mark Nelson, represented the landlord, 3421 Building Corp. while the tenant was self-represented. *** TreeHouse Foods will move its corporate HQ to a 48k SF space at 2021 Spring Rd. within the Commerce Plaza office complex in Oak Brook. In addition, MetLife Bank has signed a lease for 14k SF at 2015 Spring Rd. in the same complex. The two leases bring the overall occupancy rate of the 556k SF Commerce Plaza to more than 84%. JLL's Karla Harmon represented the property owner, Arden Realty, Inc., in both transactions. TreeHouse Foods was represented by CBRE's David Lind while MetLife Bank was represented by Jones Lang LaSalle. *** Garrett McKenzie Environmental signed a five-year lease for 34k SF at 921 Sherwood Dr. in Lake Bluff. CB Richard Ellis’ Keith Puritz, Brett Kroner, Ryan Bain, and Zach Graham were the sole brokers in the transaction. The building is owned by CPIA LLC. *** Inland Real Estate Corp. signed 21k SF of new leases at three far north and northwest suburban shopping centers. The new leasing activity includes a 15k SF lease with Discovery Clothing at the Rivertree Court shopping center, located at 701 N. Milwaukee Ave. in Vernon Hills. At Hawthorn Village Commons in Vernon Hills, Salon GC signed a 1,609 SF lease. European Gourmet Restaurant also leased 2k SF at Hawthorn Village Commons. At Woodland Commons in Buffalo Grove, Stilettos Inc. signed a 1,653 SF lease. Papa John’s Pizza also recently leased 1,244 SF lease at Woodland Commons. *** Gyu-Kaku, a Tokyo-based restaurant chain, has leased 12k SF at 210 E. Ohio St. for a new restaurant. Gyu-Kaku features a Japanese barbecue concept. @properties Lee Ffrench and Nancy Simon Cooper repped the building owner, a partnership known as CORU 210 LLC. Redac's Yoshi Nakaoka repped the tenant, Reins International, USA, a subsidiary of Tokyo-based Rex Holdings Co. *** Cawley Chicago Commercial Real Estate's Tom Gath secured eight leases on behalf of his clients in the O'Hare market. Seven of the eight deals were done direct, totaling 25k SF. On behalf of his client AMB Property Corp., Tom leased four units in the AMB O'Hare Center at 9755 Farragut in Chicago and 9812, 9818, & 9848 Farragut in Rosemont. At 605 Country Club Lane and 854 Eagle Dr., both in Bensenville, Tom secured leases for his client RREEF. Finance Aries Capital's private commercial real estate lending affiliate, Aries Real Estate Fund has concluded a $3.2M venture organizing the completion and sale of all units within The Atwood Condominiums of Chicago. Aries Capital has also launched a new division of the firm—Aries Asset Management Services. Located just east of Clark Street in the Andersonville neighborhood of Chicago, The Atwood Condominiums is a 12-unit development. Led by Aries' Andrew Wilson, the project began in November 2009, when the firm accepted a deed-in-lieu of foreclosure on the vacant property. Keller Williams' Liz LaTour brokered the sales of the renovated one- and two-bedroom units which were sold within five months of the completion of construction. Canmann &Chaiken's David Chaiken provided counsel in closing the 12 units. Kalamper Construction served as the general contractor for the project. Construction The second phase of engineering to support the electrical systems for a 315k SF data center facility on Chicago’s Near South Side has begun, developer JRM Technology says. The design and construction team is now working with ComEd to finalize engineering for the data center’s significant power needs. The facility, to be located at 111 E. Cermak Rd., will be the first structure in downtown Chicago designed and built specifically as a data center. James McHugh Construction Co. is the design-build contractor, with ESD Inc. as lead architect/engineer, Archideas is the consulting architect and CS Associates is structural engineer. *** Development Solutions was retained by Career Education Corp. to renovate an existing building for their new medical education school Sanford Brown College. During construction, DSI removed and replaced all of the buildings mechanical and electrical equipment to upgrade them to CEC's strict usage requirements. *** Summit Design + Build has been selected as GC for an extensive remodel to an existing 26k SF facility for Daily Meat Supply Co. in at 2323 W. Fulton in the West Loop. The renovations include a new 10k SF-10 degree freezer, 13k SF of refrigerated cooler space, processing and loading dock area, and 2k SF of office space with mezzanine. The entire MEP system is being completely redone from new HVAC units, to all new refrigeration units, and new incoming electrical service. The construction also includes resurfacing of the parking lot and a new roof. Completion is scheduled for Fall 2010. Executive Moves Tim Gallagher joined Cushman & Wakefield as a director in the industrial brokerage practice. He will be based in C&W’s Rosemont office after spending the last seven years as president of his own company, Gallagher Realty, which focused on the acquisition, development, ownership and management of industrial and office property. He is a graduate of University of Wisconsin. *** Meghan Marschall joined JLL to oversee business development for the Project & Development Services group in the Midwest. Meghan comes to JLL from HOK, where she served as director of business development in the firm’s Chicago office. She is a graduate of Purdue and a board member for CoreNet Chicago, where she chairs the Emerging Leaders committee. *** Lou Jacobsohn has been promoted from associate to senior associate at Transwestern's Tenant Advisory Services Group. Most recently, he completed include a 29k Sf long-term lease at 350 West Mart Center on behalf of TCS Education System; a 22k SF lease at 222 N. LaSalle on behalf of TCS. He is a graduate of Indiana University.

For more than $1 billion, you can buy Christopher Kennedy's Merchandise Mart Properties Inc.

Parent company Vornado Realty Trust has been dropping hints along Wall Street and with potential buyers that it wants to sell the subsidiary, including the fortress-like structure along the Chicago River. The New York real estate investment trust purchased it from the Kennedy family in 1998 for $630 million.

Vornado's efforts already have yielded a $1.25-billion offer, but that deal died last month, people familiar with the negotiations say.

A sale could portend big changes for Mr. Kennedy, 47, who as Mart president since 2000 has led a major expansion of the business, which stages trade shows and leases showroom and office space in eight buildings nationwide. The Mart's management team is likely to be a key part of any deal.

Vornado executives are expected to continue to troll for a buyer for the Mart, which has been battered by recession and tenant defections and doesn't fit with the REIT's core business of owning office and retail properties in New York and Washington, D.C., analysts say.

“The Mart division has been identified by management as an asset best owned and operated by someone else,” says John Guinee, an analyst at Baltimore-based Stifel Nicolaus & Co.

Mr. Kennedy declines to comment on whether the REIT wants to sell off the Mart but says Vornado's management “will look at yield above everything else, and if they can reinvest at a higher yield, they will. Always.”

The Kennedys have been associated with the 3.5-million-square-foot Merchandise Mart since 1945, when patriarch Joseph Kennedy paid $12.5 million for the architectural gem. Under Christopher Kennedy's management, the Mart has expanded from four buildings in two markets to eight buildings in six markets totaling nearly 8.9 million square feet.

The Mart acquisition, along with the 1997 purchase of a stake in a cold-storage company, helped solidify Vornado Chairman Steven Roth's reputation as an unorthodox real estate investor. He's also acquired short-term stakes in public companies, such as local giants McDonald's Corp. and Sears Holdings Corp. The REIT still owns a nearly 33% stake in New Jersey-based Toys ‘R' Us Inc., acquired in 2005.

Even before the recession, analysts and institutional investors complained that Vornado had become too complex, hurting the stock price. Two years ago, after selling off its cold-storage business, Mr. Roth publicly pledged to “simplify and prune” the REIT.

Cohen Bros. Realty Corp., a New York-based firm that operates four home design centers nationwide, was ready to assist in that process, offering $1.25 billion this summer for most of the Mart's assets, sources say. It's unclear why a deal couldn't be reached. Company CEO Charles Cohen did not return calls requesting comment.

The pool of other potential buyers is likely to be small because of the size of the Merchandise Mart and the uniqueness of the showroom business.

The Mart division has struggled over the last eight quarters, recording a cumulative loss of $12.8 million, earning the distinction of being the REIT's worst-performing business segment. The Mart's EBITDA, or earnings before interest, taxes, depreciation and amortization, plunged nearly 14%, to about $100.5 million, in 2009, down from $116.4 million in 2008.

In March, a Mart affiliate defaulted on a $218-million mortgage on a showroom complex in High Point, N.C., after the property failed to generate enough cash to cover the payments. Mart executives are in talks to restructure the debt.

“This is a business that public investors won't sufficiently appreciate during good times, so I think that the Vornado story, at the end of the day, would probably be better off without it,” says analyst Michael Knott, of Newport Beach, Calif.-based real estate research firm Green Street Advisors Inc.

But Mr. Kennedy says the Mart has been a very good long-term investment for Vornado shareholders. A turnaround in performance is already under way, he says, citing several new lease deals that have not yet taken effect.

Mr. Kennedy also is looking to snare more government work, like the management of a new $425-million medical mart and convention center in Cleveland scheduled to open in 2013.

He also says he'd be interested in taking over management of McCormick Place. If Mart executives could come up with a creative plan for the South Side convention center, “we'd love to do that.”

Whatever his plans for expanding the Mart unit, Mr. Kennedy says he has no interest in leading a buyout of it.

“The business is in very good hands with Vornado,” he says. “The balance sheet, which has access to billions of dollars of cash, gives us an enormous competitive advantage.”

Source: Crain's Chicago

Baum Realty Group has announced that Roka Akor has signed a lease to open in River North.  The contemporary Japanese restaurant has locations in Hong Kong, London, and Scottsdale, Arizona making Chicago Roka’s 2^nd North American location.

CRL Senior Living Communities will break ground on a new Alzheimer’s/memory care and assisted living residence in Morton Grove on Sept. 14 .North Grove Manor, located at 5520 Lincoln Ave., will offer 84 large private and semi-private suites with a total of 112 beds.
Scheduled to open next fall, the $20 million facility will offer a host of amenities designed to improve the wellbeing of residents, including private bathrooms with walk-in showers, activity stations, outdoor walking paths and sensory gardens.

The floor designated for memory care will feature access to an enclosed outdoor courtyard and tall, circular hallways that enable residents to safely explore their surroundings. Staff members will be specially trained in managing the psychological and safety needs of Alzheimer’s patients and other residents with dementia.

Source: REJournals

It has been reported that investors are buying office buildings that promise reliable rental streams. The same can be said for a property type that doesn't always get much respect -- self-storage units.

MJ Partners Principal Marc Boorstein arranged the sale of four such facilities in the Chicago area to a private investor from New York. The asking price was $11.8 million for properties encompassing about 260,000 square feet, including some warehouse space.

The portfolio generated bids from 14 different parties nationwide, demonstrating renewed interest in the market for income-producing commercial properties," Boorstein said. The seller was Australia-based Babcock & Brown. Three of the properties are near Midway Airport: 4821 W. 67th St., Bedford Park; 7131 W. 60th St., and 4222 S. Pulaski. The fourth is at 200 Parkway Drive, Lincolnshire.

Boorstein also is marketing four more self-storage facilities in Chicago and Cicero on behalf of seller JPMorgan Chase & Co. He said 80 percent of the space is occupied and the asking price is $15 million.

INDUSTRIAL SALE: An Indianapolis-based investment group, Scannell Properties LLC, bought 33 acres in the Grayslake Business Park southwest of routes 83 and 137 in Grayslake. It plans to build a 215,000-square-foot distribution center for FedEx. Property records showed Scannell paid $6.24 million to seller Delos Inc. Paine/Wetzel Oncor International represented Delos in the sale and is marketing 100 other acres in the park. The property has a unique selling point: It can take methane gas from a nearby landfill and convert it into heat or electricity for its buildings.

CALENDAR NOTE: Friends of Downtown hosts Rachel Weber, associate professor of urban planning at the University of Illinois at Chicago, who'll talk about tax-increment financing districts and their impact. The free program is at 12:15 p.m. Thursday at the Cultural Center, 78 E. Washington.

DOING THE DEALS: Select Marketing Solutions Inc. leased 60,000 square feet at 1175 Lakeside Drive, Gurnee, with CB Richard Ellis Group Inc. and HSA Commercial the brokers. . . . Christopher Hill, former planning commissioner for Mayor Daley, and David Ariola, onetime member of the city's Community Development Commission, have merged their firm, Chicago Realty Co., with Daccord Group, run by Len Skiba. The new firm, CR Daccord, promises a boutique approach to brokerage and development. . . . Chicago Messenger leased 38,000 square feet at 1120 W. Exchange in a relocation from 1600 S. Ashland. Paine/ Wetzel Oncor International handled the deal. . . . After more than 50 years in Des Plaines, Arthur J. Rogers & Co. real estate has moved its headquarters to 1559 Elmhurst Road, Elk Grove Village. It sold its former property, 3170 Des Plaines Ave., for the suburb's new casino.

Source: Chicago Sun-Times