CHICAGO—The office market around O'Hare Airport has fully recovered from the recession, but it looks like there is room for even more improvement. A JLL team recently helped complete the $147 million sale of Presidents Plaza, a pair of class A office buildings at 8600 and 8700 W. Bryn Mawr Ave., and even though its occupancy has increased in the past few years from just above 50% to 92.4%, the new owners still have big plans for the property.
New York City-based Angelo, Gordon & Co., bought the 834,893-square-foot property from a partnership between Chicago's GlenStar Properties, LLC and PGIM Real Estate that has owned the property since 2006. Glenstar has decided to stay on as partner and provide further building upgrades. The property has received more than $15 million in capital renovations since 2016.
“The lesson of Presidents Plaza is that if you have the capital, a good location, and do the work, you will lease up,” Michael A. Klein, managing principal and co-founder of GlenStar, tells GlobeSt.com. “We spent a lot of money on new bathrooms, new corridors and landscaping, and took it through the recession.” But “tenants today are focused on recruiting, so they want properties that are super-amenitized.” Therefore, the company will now focus on updating the 17,900-square-foot fitness center and adding outdoor spaces to an existing tenant lounge. “It's going to be the only thing like it among office properties around O'Hare.”
Adding amenities typically found in the top properties of Chicago's downtown will simply bolster the buildings' existing advantages. “We are very bullish on O'Hare,” Klein says, especially properties like Presidents Plaza that are clustered around Cumberland Rd. and the Kennedy Expressway. “That interchange is more than 90% leased and rents continue to move up.”
Part of the reason for this is the CTA's Blue Line, which connects the airport with downtown and is within walking distance. As more millennials choose city lifestyles over the suburbs, suburban companies will pay to be near the train. Klein estimates that when GlenStar first bought Presidents Plaza, about 10% of its workforce commuted by the Blue Line. Today, however, he estimates that as many as 30% use the train.
Furthermore, unlike much of the O'Hare submarket, the land around the Cumberland interchange is inside Chicago's municipal boundaries. “There are a lot of companies that want a city of Chicago address,” Klein says, and “there are a lot of people that don't know Rosemont.”
Developers are also highly unlikely to add much new space to this tight submarket. Other than a parcel of land near Presidents Plaza, owned by GlenStar, “there is no land along the Kennedy where you can build,” Klein says. “So there is a lot of runway left for rents to move up.”
Managing directors James Postweiler and Peter Harwood led the JLL team handling the transaction.
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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.
