(To read more on the net lease market, click here.)
CHICAGO-A 1.3-million-sf office building at 300 N. LaSalle St. has become significantly less speculative. Kirkland & Ellis has signed a 600,000-sf lease, making the law firm the anchor tenant of Houston-based Hines' building, which is scheduled to open in 2009.
Kirkland & Ellis occupies 360,000 sf at Aon Center, having expanded by 65,000 sf in a 2003 deal with Atlanta-based Wells Real Estate Funds. The law firm will move all 1,400 of its employees from 200 E. Randolph St. to 24 floors in the 60-story building that will rise on the north bank of the Chicago River. Kirkland & Ellis' deal is for at least 20 years, according to Staubach Co. local president Steve Stratton.
Hines is proving among the most adept of signing law firms to anchor new office buildings. Sidley Austin Brown & Wood is anchoring the 820,000-sf 1 S. Dearborn building, scheduled to open in November.
Kirkland & Ellis is taking space in the low-rise and mid-rise portions of 300 N. LaSalle St., which bodes well for the leasing effort there, Hines vice president John McDermott suggests. "Since the vacancy rate for high-rise space is about 2%, we feel confident that we can attract other premier users to the building," he says. About 400,000 sf of high-rise space remains available.
Although terms were not disclosed, Hines is asking net lease rates of $24.50 per sf at 1 S. Dearborn St., the company's most recent Downtown development.
Vacancy in the 28.2-million-sf East Loop submarket already is 17.9%, highest Downtown, while the 11.9-million-sf River North submarket had a 14% vacancy rate this summer, according to Delta Associates.
Jock Howland joined Stratton in representing Kirkland & Ellis. The law firm's space committee also got help from architects from Skidmore Owings & Merrill. David Crowell of the Rise Group will be Kirkland & Ellis' project manager.
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