CHICAGO—The high vacancy rate for office space in much of suburban Chicago sometimes masks the portions of the region that remain healthy. Oak Brook, an office center on the eastern side of the East-West Corridor submarket, for example, continues to attract companies that want suburban prices without having to occupy the type of obsolete structures seen in many suburban towns.
Middough Inc., an international engineering services company, for example, has just signed an early extension of their existing lease, originally set to expire in 2018, for 68,748-square-feet at 700 Commerce Dr. in Oak Brook, but only after taking a good look around the immediate area.
“They weren't willing to veer too far west, but they were willing to take a look at space in Downers Grove and Lombard,” says Robert Sevim, executive managing director of Studley's Chicago office. He represented Middough in this transaction and Jeff Mann of CBRE represented the landlord, Principal Financial. The 214,065-square-foot building was completed in 2000, and Middough, the largest tenant, first moved in six years ago.
Oak Brook, however, had “all the attractions of being in the suburbs in terms of cost,” Sevim says, and in addition, “you're not far from Chicago, you're not far from the airports,” and the highly-educated workforce needed by Middough is just at hand.
"The East-West Corridor's class A availability rate decreased by 40 bps to 23.0% in the third quarter," a recent study by Studley found. "The submarket has outperformed all other suburban submarkets in the last year, with a 250 bp decrease in its class A availability rate, five times Suburban Chicago's 50 bp year-on-year decrease from 26.4% to 25.9%."
Although the parties did not reveal the details, Principal agreed to re-engineer the lease, increasing its flexibility and allowing Middough to make changes to the footprint or design if the need arises. Furthermore, the company also gained the rights to have signage on the building, an important factor in the highly-trafficked area. “That's going to be great for them.”
“Vetting the market was important for Middough. It supported the fact that 700 Commerce Dr. will continue to serve the company well for the long term,” remarks Sevim. “The new lease arrangement is a real win-win.”
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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.
