CHICAGO—As recently reported in GlobeSt.com, the Northwest Corridor has the region's highest class A vacancy rate, and bringing it down presents area landlords with a challenge as some firms continue migrating downtown. Class A availability in the submarket did, however, decrease from 30.2% in the third quarter to 29.2% by the end of last year and leasing activity rose to 402,006-square-feet in the fourth quarter, according to a recent report by Studley.
And some very prominent corporations have decided to stick with the suburbs. KBS Real Estate Investment Trust, for example, a Newport Beach, CA-based non-traded trust, just secured 77,167-square-feet in new leases at its Woodfield Preserve Office Center, a 610,462-square-foot complex in suburban Schaumburg. The IBM Corp. signed a renewal totaling 63,483-square-feet, while Merrill Lynch, Fenner & Smith signed a new, 13,684-square-foot lease.
Rob Graham and William Elwood from CBRE brokered the leases for KBS. David Justh and Ralph Gilbertson, also from CBRE, represented IBM, while CBRE's David Saad worked for Merrill Lynch.
Woodfield Preserve Office Center sits along the west side of I-290/Rte. 53 and has two six-story, class A office buildings of roughly equal size at 10 N. Martingale and 20 N. Martingale. It also features 36,734 square-feet of lower-level space currently used for tenant storage, a full-service deli, a new conference center, a tenant Wifi lounge and a renovated fitness center.
"We believe Woodfield's class A buildings and convenient access to local amenities and road systems make it a prime location in a top-tier submarket," says Brett Merz, KBS senior vice-president.
A few deals signed in the last quarter show that many others also still find the submarket appealing. Japanese electronics maker OMRON, for example, decided to stay in the neighborhood by moving its Schaumburg headquarters to 71,139-square-feet in Hoffman Estates' Greenspoint Office Park. Furthermore, Zurich Insurance closed on the acquisition of more than 30 acres at the former Motorola Solutions campus in Schaumburg, where it plans to build a North American headquarters.
But a few troubling developments have also occurred. GoGo, Inc., for example, decided to move downtown and create a 160,000-square-foot vacancy at 1250 N. Arlington Heights Rd. And SCOR US recently decided to leave suburban Itasca and settle in the Willis Tower. Studley researchers conclude in their recent suburban report that such moves "conspire to keep pressure on a submarket that cannot seem to build momentum."
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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.
