CHICAGO—The tech sector in this city has been impressing many observers with its energy and rate of expansion. And experts who spoke at yesterday's 13th Annual Commercial Real Estate Forecast Conference felt that this growth will continue. Sponsored by the Real Estate Publishing Group, about 1,000 conference participants gathered at the Hyatt Regency to hear what the coming year could bring for the region's commercial real estate.
And when it comes to technology companies, Roger Heerema, principal of Wright Heerema Architects, told a morning panel moderated by Geoffrey Kasselman of NGKF that they will keep their focus on the downtown, primarily due to the lifestyle choices of younger employees. “What we have here is a very immobile workforce,” which unlike past generations remains attached to urban living. “They've got to come to the workers” and this need “will just feed on itself.”
“I think I look at things a little bit differently,” said Constance Freedman, managing director of Second Century Ventures, the strategic investment arm of the National Association of Realtors. Freedman evaluates the market more as an investment expert rather than from a strictly real estate standpoint, but she also sees hopeful signs. Early-stage tech companies in San Francisco have attracted about $11 billion in venture capital this year, as much as the next four regions combined. But even though Chicago is far behind the West Coast powerhouse, “we are number five on that list,” with about $1.5 billion invested. “That's the highest since the first dot-com boom.”
And the proliferation of tech firms in the downtown has begun to transform the market in significant ways. Freedman believes, for example, that landlords have become more willing to take a risk on early-stage tech firms in the hopes they will stabilize, grow and occupy more space. And Heerema adds that most landlords and developers now realize they need amenities far more extensive than those provided in the past. For example, anyone who wants tech tenants and their young employees needs more than “just a check-the-box fitness center.”
But although the needs and wants of tech firms have also helped drive the trend toward more open offices, the speakers were ambivalent about the trend's staying power. Many employers have started to notice that workers tend to leave open areas and retreat to more private offices to get projects done.“The pendulum may be tilting away” from the open office concept, Heerema said. Still, “I don't know if we're quite there yet.” He advises companies to retain as much flexibility in office design as they can.
Other changes, some hard to predict, could be on the way due to the tech boom. “As a broker, I'm always going to find the space my clients want,” Ari Klein, executive director, brokerage at Cushman & Wakefield, told the gathering. But with technological advances constantly transforming how office space gets used, many clients will probably start pushing for shorter leases. In the past, experts could predict how offices would be used for the next 5 to 10 years, but these days, the quickening pace of innovation means things “change every 18 months.”
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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.
