CHICAGO—Two up-and-coming tech firms have just signed leases for 24,350-square-feet at the Alter Group's 20 W. Kinzie St., a 17-story, 385,000-square-foot office building in the River North neighborhood. Although Alter needs to prepare for the 2015 departure of Google, which occupies around 160,000-square-feet, the building has a current vacancy rate of around 3% and company officials say the two new deals bode well for the long-term future.
“River North is really Chicago's only 24/7 neighborhood,” Matthew Ward, senior vice president of Alter, tells GlobeSt.com, making it the most attractive submarket for the many firms seeking to attract younger workers. “It's more crowded at 8 o'clock at night than it is at 8 o'clock in the morning, and it's really the only neighborhood you can say that about.”
Modest Inc., a firm recently founded by tech entrepreneurs Harper Reed and Dylan Richard, both formerly of Threadless and the Obama re-election campaign, leased 11,000-square-feet. Modest connects retailers with mobile buyers, and mobile buyers with products. The firm was represented by Kyle Kamin, an executive vice president of CBRE and Dan Lyne, a senior vice president.
"This building and the location are killer," says Reed. “And it's going to help our team at Modest attract the awesome talent we need to scale up our operations and grow here in Chicago.”
In the other transaction, Sittercity, an established online child care solution which connects millions of families nationwide with babysitters and nannies, leased 13,350-square-feet. Kamin also represented Sittercity, along with Jon Milonas, a CBRE vice president.
Gary Denenberg, an executive vice president and managing director of MB Real Estate, along with Mark Buth, also an executive vice president and managing director, and Kathleen Bertrand, vice president, handle leasing for 20 West Kinzie.
According to MB Real Estate, since the end of the recession, River North has seen its direct vacancy rate drop 730 bps from 16.4% to 9.1%. Although much of this decline can be attributed to the technology sector, Ward says the appeal of River North is much broader.
“Tech firms clearly are the top prospects to fill up the building,” Ward says, “but we're also seeing a lot of traditional business firms giving this area a look.” For example, “CB Richard Ellis just moved to River North and we've talked to some big law firms and they are also interested in moving to the neighborhood. It's been really refreshing.”
“And it's encouraging that as space in the building becomes available it gets filled,” he says. “There is a floor that became available today, March 31, and as of tomorrow it's leased.”
“Rents in River North are the highest in the city,” Ward adds, and “we're getting River North rents,” although he can't divulge details on either lease.
But taken together, the two companies present a good cross-section of the city's tech scene and its potential for growth. “Sittercity is a more mature and has been through several rounds of venture capital funding,” Ward says. And Modest, by contrast, is “just taking its first step.” However, the principals' involvement with the now legendary Obama campaign gives the firm considerable cachet. “These are the best and the brightest and have a tremendous amount of capital behind them.”
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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.
