CHICAGO—CBRE Global Investors, an investment arm of Los Angeles-based CBRE Inc., has agreed to sell the 380,360 square foot One O'Hare Center at 6250 River Rd. in suburban Rosemont to a partnership represented by MDC Realty Advisors and Nicola Crosby, a subsidiary of Nicola Wealth Management, for $83 million. CBRE bought the 12-story property in 2012 for $67 million.
“This sale provides evidence that institutional investors are gaining more confidence in high-quality suburban office buildings,” says Paul Lundstedt of CBRE, who along with his colleague Dan Deuter represented the ownership group in the transaction. “With literally no new supply in the pipeline, investors are recognizing the opportunities that exist to push rents for high-quality assets in the suburbs.”
According to Colliers, there are a few buildings that, although not yet officially in the development pipeline, are at least on drawing boards. Proposed projects in Rosemont could add 1.4 million square feet to the O'Hare market if launched and completed, the firm says. “In addition, Hosts Hotels & Resorts, Inc. is currently trying to obtain a zoning amendment to develop a 750,000 square foot office building on the land next to its O'Hare Marriott property.”
Tenants currently occupy 95.9% of One O'Hare Center, including 24 creditworthy tenants, according to CBRE. The building offers tenants immediate access to the airport and direct connections to several major interstates, as well as public transportation like the CTA's Blue Line, allowing for a quick commute to the CBD.
Nicola Crosby and MDC Realty Advisors are new to the Chicago market and feel that a lot of positive trends are taking place in the suburbs, says Deuter.
“The suburban market is a very positive story right now. There has been a lot of attention given to the health of the CBD, but the demand for office space in the Chicago suburbs has actually been stronger than the CBD market for the past several years.”
According to CBRE research, since the beginning of 2012, the suburban market has posted 3,817,227 square feet of positive net absorption versus the CBD market total of 1,904,948 square feet in that same period.
Furthermore, rental rates have increased in the O'Hare market by 10.4% in the past four years, while overall rental rates in the CBD have increased by 12.2% off the cyclical low recorded in 2012.
“Underlying supply and demand fundamentals are healthy for high-quality assets, and investors are attracted to the fact that cap rates spreads between CBD and suburban assets remain at historical highs despite the cost of financing being relatively equal,” says Lundstedt.
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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.
