Office N Illinois

Why Chicago continues to compete nationally on office growth

Why Chicago continues to compete nationally on office growth,ph01
The 78, a new mega project by Related Midwest, will incorporate Savills Studley input on how best to attract employers and employees with live-work-play amenities.

Growth is good. And with a growing number of headquarters calling the Chicago MSA home, the area’s magnetism for regional, national and global office users is only strengthening.

“We as a city are a really strong value proposition when you think about companies that can continue to grow workforce,” said Robert Sevim, vice chairman and co-head of the Chicago region at Savills Studley. “They look around the country at what options they have, and I think Chicago has a very strong mix of high-quality lifestyle, talent access and livability.”

Strong cultural and educational entities sustain Chicago’s corporate institutions, making it a world-class city, yet one with relatively low rents. In a national office market report by Savills Studley last October, asking net rents per square foot in the Chicago CBD were $34.37, just a few dollars above the national index—but miles away from the rents in Washington D.C. ($53.07), San Francisco ($68.53) and New York ($74.21).

Add to that Chicago’s central location geographically and the two excellent airports in Midway and O’Hare that allow executives to easily conduct business elsewhere, and Chicago is well-located for future office growth.

Savills Studley facilitated a recent transaction in the CBD, with Benesch Law leasing 63,749 square feet at 71 S. Wacker. The AmLaw 200 business law firm will move into former Hyatt space on the 15th and 16th floors later this year.

The situation is rosy outside of the downtown as well. Savills Studley also represented GCG Financial in the long-term, 45,000-square-foot office lease expansion at Three Parkway North in Deerfield, Illinois. The company specifically cited the highly visible campus, premium housing, lifestyle amenities and access to O’Hare and transit in their decision to not just remain in Chicagoland, but to grow here.

This opportunity for growth is also evident in the number of master-planned developments finally taking shape in Chicago after sitting fallow for years. One such project, Related Midwest’s 62-acre riverfront development, The 78, aims to create the city’s next great neighborhood with new residential, retail, entertainment and, yes, office uses. Related Midwest has tapped Savills Studley to consult on how best to engage with tenant wants and needs and to connect the developers to key office users.

“Our role is to work with the team at Related Midwest to help them understand exactly what the user market is looking for and how they can best design around the workforce,” Sevim said, “and design around what companies are not only doing today, but more importantly what they are going to be doing in the near- and long-term future.”

Bordered by Roosevelt Road, Clark Street, 16th Street and the Chicago River, the site will feature more than 11 acres of publicly accessible open space with riverfront restaurants and entertainment. The project will also knit together the surrounding neighborhoods of the South Loop, Chinatown, Bronzeville and Pilsen—long segregated from the CBD by highways, the river and train lines—by creating a new Red Line CTA station, protected bike lanes, walking paths and waterfront access.

“It’s absolutely a progression of downtown, that will unite a number of different constituents in a site that is unique for Chicago with such a clean parcel of land,” Sevim said. “It’s also extremely compelling as a live-work-play environment. Employees and/or residents can now think dynamically about what they do in a given day, from the time they leave home to when they return. They will have tremendous flexibility in the choices they make inside the office and outside of it.”

Plans also call for a new organization, Discovery Partners Institute (DPI), which will be a University of Illinois-led, world-class research and innovation center. DPI will serve as a major technology research hub that would attract talent from around the world, in addition to other office users drawn to the new development.

“What this site is, and why it is so unique, is that you can build an incredible, mixed-use campus and you’re in the city,” said Sevim. “You typically only see that in the suburbs, so what you have are amenities that you find in the city, but you have the ability to design a super-efficient and very contemporary campus environment that includes residences, retail, restaurants and cultural institutions.”

Whether it’s in new megaprojects like The 78, the CBD, inner neighborhoods or out in the suburbs, office users have shown a willingness to locate and grow in the Chicago area. This corporate trust validates the city and the region as a good value proposition and we should see continued growth for some time.