CHICAGO—PCCP, LLC recently provided a $27.1 million senior loan to a joint venture to acquire, re-position and lease-up Corridors I & II, a class A office park that has struggled with a high rate of vacancy. The 299,792-square-foot property is located at 2651 and 2655 Warrenville Rd., in Downers Grove, IL, within the East/West Corridor submarket of suburban Chicago about 25 miles west of downtown Chicago. The new owners, Transwestern Sponsorship Equity Partners I and Soundview Real Estate Partners, will use part of the loan to refurbish the building and hopefully boost its occupancy rate, currently at 50.9%.
The property was bank-owned since November of 2011 and over-encumbered by debt since its major tenant vacated the building several years before that. This lack of capital has hampered leasing efforts in recent years, PCCP officials say, but they believe the new owners can revive the five-story steel frame buildings, first completed in 1998 and 1999 by Chicago-based Alter Group.
“This opportunity fit well with PCCP's business strategy,” says Jim Galovan, managing director in PCCP's San Francisco office. “We are teaming with an experienced operator and are financing a value-add, class A asset that was purchased at well below replacement cost. The property offers numerous competitive advantages for corporate users including a strategic location at the junction of two freeways, large floor plates and above-market parking.”
The office market in the immediate area has begun to see more activity, especially among class A offices. Although the submarket continues to struggle with many large blocks of available space, researchers from MB Real Estate say that, in the second quarter, the “East-West submarket continued its strong start to 2013 with nearly 100,000-square feet of net positive absorption. Class A buildings, after a disappearing finish to 2012, have now experienced 402,000-square-feet in 2013 net positive absorption.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
