Chicago Real Estate News from Bisnow

Pizzuti EVP Michael Chivini is bullish on the recovery of the Midwest industrial market, especially Chicago, over the next two years. Learn why when he speaks at Bisnow’s Industrial Summit, Thursday, Jan. 19 at the Stephens Convention Center in Rosemont. Register here!

Michael tells us that demand for large blocks of space continues, but supply is markedly down. Last year, Pizzuti had 2.5M SF of transactions and started construction on 1.5M SF, mostly build-to-suits. The company is completing the last 300k SF. Among its notable deals: the 650k SF lease to Samsung on spec space Pizzuti built at its Pinnacle Business Center in Romeoville.

Full House for Apartments

Magellan Development co-CEO Jim Loewenberg, with co-CEO Joel Carlins, says its “unbelievable” that the recession has yet to dim leasing at Lakeshore East, a $4B, 28-acre mixed-use community downtown overlooking the lake, the river, and Millennium Park. About half built, its 1,500 luxury apartments are 95% leased. The master plan calls for 4,950 residences (hopefully half apartments, half condos), 2.2M SF of commercial space, up to 770k SF of retail, up to 1,500 hotel rooms, and a park. Jim tells us the city’s apartment market is strong; owners with good locations have markedly reduced concessions and Lakeshore East eliminated them last summer.

The $300M Coast, the community’s 10th building, is now under construction with the completion of its 499 rental apartments slated for February ’13. Jim says leasing will start in a year. The latest additions to Lakeshore East are the Radisson Blu at Aqua, which opened in November, and the 105k SF Village Market. It opened in October with a supermarket, restaurants and will have medical offices and a salon. Jim says that the next new attraction will be a long-awaited elementary school. Stay tuned for an announcement in the next few weeks.

The Coast is the first collaboration between Magellan and BKL Architects, a two-year-old firm started by Tom Kerwin, above with BKL architects Katelin Klepsch, Audry Grill, and Ahmed Constable. Jim (also an architect) and Magellan are part owners of BKL. Tom, formerly with SOM, says the new firm is working in Chicago on projects with Hines and the John Buck Co. Jim tells us that in China, BKL has a few commissions that are moving into construction. Magellan also is permitting a 340-unit apartment project in downtown Minneapolis. Yesterday, Jim flew off to the Mid-East, telling us cryptically, “We’ll see what happens.” (Sounds like the set up to an Indiana Jones sequel.)

$140M for 500 W. Monroe

After the recent CRE turmoil took 500 W. Monroe on a bumpy ride through foreclosure, the trophy tower’s back on solid financial ground. Last week, Piedmont Realty paid off the building’s remaining debt, $140M. That led some to wonder if the Atlanta-based REIT was preparing to sell the West Loop building, which is 50% vacant. It recently sold its 96.5% interest in 35 W. Wacker for $387M to redeploy capital to coastal markets, according to Piedmont’s VP of capital markets Ray Owens. But that’s not the case, he told us this morning. Piedmont’s strategy is also to diversify and be in large leasing cities like Chicago, Houston, and Minneapolis. Furthermore, Ray says, Piedmont wants to maximize the number of unencumbered assets and have the option to perhaps use unsecured debt, i.e. bank loans and credit facilities.

DRIVING AUSTIN

A problem everywhere: traffic congestion. For Austin and San Antonio, the problem compounds with 70% of the NAFTA truck traffic making its way up I-35. But, that also means opportunities, too, according to the experts at the Bisnow Future of the I-35 Corridor in Austin yesterday. Only 80 miles apart, the two major metro areas may one day mesh into one greater MSA with a population of about four million. Major universities, international airports, and the NAFTA superhighway are a recipe for growth between the two cities. (And from there they will continue to grow, overtaking all of the American Southwest, getting hungrier with each major metro they consume.) Read more Thursday in the Austin issue.