CHICAGO—GlenStar has acquired 10 acres of land located on the north side of the Kennedy Expressway at the Cumberland Ave. interchange in Chicago from Chesapeake Hotel Limited Partnership and Host Hotels & Resorts, LP. Tenants have already occupied much of the class A office space in the neighborhood, and company officials say new projects at the interchange will benefit those that need to attract both young city residents and older suburbanites.
“This is one of the only suburban submarkets directly connected to the CTA's Blue Line,” Michael Klein, a GlenStar principal, tells GlobeSt.com. And along with the almost instant access to O'Hare International Airport, that makes this corner of the office market a standout.
The occupancy rate in the buildings around the interchange is north of 90%, Klein says, partly because the surrounding O'Hare submarket has seen the kind of corporate migration typically associated with the hot downtown neighborhoods.
In the past ten to twelve years, tenants from other suburban submarkets and from outside the Chicago region have occupied 1.75 million square feet of O'Hare space, according to Klein. “You really don't see that in other suburban submarkets.”
According to Colliers International, absorption in 2017 for the overall O'Hare market totaled 123,026 square feet. And at 14%, it continues to have the lowest class A vacancy rate in the suburbs. Currently, landlords have only three class A spaces with more than 100,000 square feet of contiguous space available.
Companies that choose O'Hare offices might have an easier time adjusting to long-term demographic shifts, Klein adds. Right now, millennials may prefer living downtown, but “when they start to have families, a number will begin looking at the suburbs.”
Upon closing, GlenStar subdivided this property into three parcels. The largest parcel, at 3.6 acres and fronting the Kennedy Expressway, is available immediately for build-to-suit opportunities. The smallest parcel, approximately 2.4 acres, is in the process of being rezoned. The remaining parcel, at 2.8 acres, was sold to an unnamed buyer that subsequently retained the developer to build a new, 150,000-square-foot office building on its behalf.
“This is the last remaining site on the Kennedy Expressway,” Klein adds. Any company that occupies space there will have remarkable visibility and a chance to build its brand recognition. And unlike much of the O'Hare market, these properties have Chicago addresses, rather than Rosemont or Des Plaines.
He expects that over the next 12 to 18 months, other companies will come forward with proposals that will eventually create around 600,000 additional square feet of space.
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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.
