CHICAGO—Rental rates are going up throughout the CBD, perhaps not dramatically, but an upward trend has definitely set in, and before the reviving economy pushes rents even higher, some office tenants have decided to sign long-term renewals long before their current terms expire.
Fieldwork, Inc., for example, a provider of market research services and focus group facilities, has just extended its commitment at 111 E. Wacker Dr. With a little less than two years remaining on its lease, the company has signed a long-term renewal for its 16,041-square-feet of space. The company occupies the 2nd floor of the building, which functions as its national headquarters and a focus group space.
“They have been in this location for years and it's been quite successful,” Terry Mostrom of Savills Studley, who helped broker the deal, tells GlobeSt.com. Although he can't divulge exact details about the new lease, he does say that “we were able to maintain their below market rate. If they waited another year, the terms would be less desirable.” Furthermore, the firm also secured some concessions from the landlord, Equity Commonwealth REIT, namely a “substantial commitment to remodel the space. The space is now nine years old; it's time for a facelift.”
Mostrom and Jon Azulay, also of Savills Studley, co-brokered the transaction with Craig Levine of Washington Partners, all representing Fieldwork. The team has also advised the company on its other offices in suburban Schaumburg and in the O'Hare submarket. Monica Moore of JLL represented Equity Commonwealth.
“We started early enough that if we were dissatisfied we would have had the wherewithal to move,” Mostrom adds. But Fieldwork had developed an attachment to their East Loop headquarters. “They had invested a lot in the space,” he says, which includes a HVAC system that can cool an office that, by hosting many focus groups, has an unusually high density of users, and a number of specially-designed rooms that handle all the groups coming in. And the East Loop location has quick access to public transportation and a lot of parking options, both important to a company like Fieldwork that constantly brings in large groups of people who may not be familiar with the downtown.
The underlying reason that developer John O'Donnell decided to launch the construction of 150 N. Riverside in the West Loop and Hines Interests L.P. decided to do likewise with its 444 W. Lake St. project shows why office tenants are considering their options a bit early. “These projects are indicative of the fact that rental rates have increased enough to justify new construction,” Mostrom says. Although rents are increasing faster in hot neighborhoods like the West Loop, “what's happening in these submarkets will happen in the East Loop. The pressures are still there.”
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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.
