Trammell Crow selected as developer for 1m s.f. office tower in Chicago

November 01, 2010  |  Mark Thomton  |  Print Article  |  Email this Article

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The Trammell Crow Company has set its sights high, with its development plans for a new one-million-square-foot class A office space at 301 South Wacker in Chicago.

The development firm has partnered with Oak Brook-based Insite Real Estate LLC to unveil ambitious plans for a 34-story office tower on a highly visible piece of real estate at the corner of West Jackson Blvd. and South Wacker Drive.

New construction has been nonexistent in the downtown market in 2010, with NAI Hiffman’s latest market report showing no current office construction across all property classes. With high vacancy and a stagnant economy, it is no surprise that little to no building has taken place in recent years.

However, with an anticipated goal of completion by 2014, officials at TCC believe that sufficient demand will be in place to justify the Class A office tower.

“We are in the process of moving forward with the project,” says Shaun Frankfort, senior managing director and head of TCC’s Chicago Business Unit.  “We have received a lot of interest from large users in the Chicago market.”

Frankfurt concedes that a significant amount of preleasing will have to take place before a project of this scale would begin. Now, the firm is in the process of wooing potential tenants and securing financing, a delicate process as both parties generally like to see commitment from the other before a decision is made.

“The reality of Class A real estate development across the U.S. is that in this environment, financing validates preleasing and preleasing validates financing,” says Frankfurt. “It is a process that we have to go through.”

Nevertheless, Frankfurt remains confident that the firm can make it work. With the amount of lead time the firm is stated, he believes that the number of lease expirations within the next two years will provide enough potential Class A users to make it possible.

“One way to think about it is, if the average lease is 5-years, one out of five renews each year,” he says. “That is 20 percent of the market every year. Think about the demand in a two-year window.”

The questions remain as to how much pre-leasing is needed to obtain financing and how long potential leases will have to be. The project is estimated to run at a $350 million price tag.

The building will feature 30,000-square-foot plates and TCC plans to obtain LEED Certification.

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