CHICAGO—The suburban office market may suffer from an overall high vacancy rate, but some investors still see opportunities. As reported in GlobeSt.com yesterday, for example, Golub & Company and its partner Alcion Ventures just bought Oak Brook Executive Plaza, a 389,000-square-foot office complex on W. 22nd St. in west suburban Oak Brook.
“In the suburbs there are a few core markets that stand a good chance of capturing more than their share of tenants,” Michael Newman, chief executive officer of Golub, tells GlobeSt.com, and this area, “right in the heart of Oak Brook next to the Oak Brook Center Mall and I-88,” easily qualifies.
Furthermore, “the basic guts of the buildings are in great shape.” And although the complex was originally built in phases between 1968 and 1980, Newman says it is far from obsolete and has an occupancy rate of nearly 90%. But the rents it commands do lag somewhat behind other top properties in Oak Brook, and that creates an opening for Golub and Alcion to add value.
“We've been in the suburban office market throughout our history,” he says. “And when we do see something that presents an opportunity we're going to go at it hard.”
“Just because the building was built some time ago does not mean you can't bring in what today's tenants want,” he adds. The partners currently aim to spend roughly $5 million to refurbish the property, although plans remain fluid. In addition to redesigning the lobby and sprucing up the interior corridors, they also want to liven up the surroundings, possibly by attracting a destination restaurant to the ground-floor that would serve tenants and bring in Oak Brook residents. Outdoor dining is also a possibility, and the structure that connects the plaza's two main towers could have a green space on its roof.
Eventually the new owners plan to increase the rental rates. Newman expects rents to rise between 10% and 20%, although “that depends on how much we do to the building and what we can create on the lower level.” The renovation should take place over the next 12 to 18 months. “Our goal is to get moving and do it.”
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
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.
