CHICAGO—KBS Real Estate Investment Trust III bought 500 W. Madison last December forabout $425 million and had high hopes that tenant demand for class A space in the West Loop would help fill up the property. The investor hired Transwestern to handle leasing, and the move appears to have paid off. Transwestern officials say that they have secured leases totaling 73,000-square-feet in December alone, bringing total leasing activity at the building to 145,000-square-feet for all of 2014. KBS has extensive capital improvements underway and tenants now occupy 95% of the 1.5 million-square-foot building.
“KBS's strategy to reposition 500 W. Madison as a premier office address in Chicago through major capital improvements and new tenant amenities secures the building's status as one of the most desirable office destinations in the city,” says Transwestern's Michael Lirtzman, the executive vice president who, along with Courtney Baratz, vice president, lease the building for KBS.
In December, HERE North America, a division of Nokia, leased 8,559-square-feet in its third expansion this year, increasing its occupancy in the building to about 58,000-square-feet. In addition, National Financial Partners Corp. signed a lease extension and expansion for a total of 36,000-square-feet.
Over the past year, KBS started a large-scale capital improvement and repositioning program that includes upgrades to all of the building's public spaces, including a new lobby and atrium, a complete renovation and modernization of the building's food court and newly renovated restrooms and multi-tenant corridors. In addition, KBS will include a new tenant lounge on the lobby level, an expanded and improved conference center and a new 11,000-square-foot fitness center with a basketball court.
“KBS has taken an active asset management approach to 500 W. Madison because we view it as one of the top trophy properties in Chicago,” says Brett Merz, senior vice president of asset management at KBS. “Our investment in upgrades and amenities are helping to bring the building up to the level of quality that it deserves and will significantly improve bottom-line performance to the benefit of KBS REIT III's shareholders.”
500 W. Madison, a LEED Gold certified building, sits atop the Ogilvie Transportation Center and provides a home to major office tenants including Citigroup Inc., W.W. Grainger Inc. and Orbitz Worldwide Inc.
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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.
