CHICAGO—Peppercorn Capital LLC, a Chicago-based real estate investment and development company that owns a lot of property in the West Loop, recently signed three medical office leases for its Clausing Building at 1229 W. Washington Blvd. The new leases are another example of how this once-industrial area is rapidly transforming into a real neighborhood with resident families and a growing demand for services and retail.
“These leases are not something I would have expected three or four years ago,” Phil Denny, chief executive officer of Peppercorn Capital, tells GlobeSt.com. “But the West Loop is maturing and it now has a broad spectrum of tenants.”
The firm closed on a 3,000 square foot lease for Washington Dental, a 2,000 square foot lease for Smiles Pediatric Dentistry and a 1,700 square foot lease for West Loop Orthodontics. Commercial brokerage and property management firm Joseph Rossi & Associates helped secure these new tenants. These individual leases may be on the smallish side, Denny adds, but they are “a commentary on how quickly the neighborhood has changed” and part of a “rising tide of service-oriented leases.”
Denny's company owns 19 West Loop properties, making it one of the largest landlords in the neighborhood, and although he is a pioneer in its transformation, he is also very willing to give a lot of credit to Sterling Bay, the largest local landlord, for accelerating this process. Above all, Sterling Bay's transformation of the Fulton Market Cold Storage building at 1000 W. Fulton into 1K Fulton, the new local headquarters of Google, has changed the perception of neighborhood from one of food distribution buildings and warehouses into one of luxury rentals, world-class restaurants and sleek offices.
“Sterling Bay really changed the neighborhood faster than anyone expected,” Denny says. Partly, this is because it has very deep pockets, but also partly due to the nature of the area. Unlike Pilsen for example, where transformative projects are difficult because it would require buying up many tiny patches of land, in the West Loop “you're able to buy up hundreds and hundreds of thousands of square feet of real estate at a time.”
1229 W. Washington Blvd. has four stories and 34,000 square feet of space. It offers onsite parking and will be fully renovated in 2015. It is blocks away from restaurant row, and is also close to Montessori Academy of Chicago, Whitney M. Young Magnet High School, Skinner West Elementary School and Mary Bartelme Park.
The first floor spaces are garnering $25 to $35 net, Denny adds, whereas just a few years ago similar spaces would have brought in $15 to $17. He envisions high-tech firms occupying the upper floors, attracted by the building's rooftop deck and the imminent arrival of Google in the neighborhood. “We're getting calls on a regular basis from these types of companies.”
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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.
