I recently read an article in a Costar release entitled “Flight to quality continues in Chicago.” For the past 50 years I have been actively involved in the Commercial Real Estate industry in Chicago and to say it mildly, I would beg to differ with this assumption.
What is really happening is a FLIGHT TO HIGH RENT! If your definition of quality is NEW and SHINY the statement is believable, but in comparison to those iconic buildings of the early 1970’s, it is certainly a falsehood. In the early 1970’s, properties like 330 N. Wabash, IBM’s then Midwest headquarters, Sears Tower (now Willis) and the Amoco building (now AON Center) became available in the Chicago downtown market. Physically, in my opinion, these buildings were/are far superior to any recently built. They are all column free, have underfloor duct systems for the distribution of electric and telephone, and, for the most part, are over elevatored. Additionally, through changes in ownership, they not only possess superior physical attributes, but the amenity package they offer can easily be compared with any amenity package in new properties. Even older buildings like Chase Plaza (formally First Chicago) have all the physical qualities needed to occupy space in today’s economy, but also have greater access to public transportation and every amenity currently needed. In the case of Chase Plaza, 10 S. Dearborn and 30 W. Monroe (the former Inland Steel building), their floor plans are better suited to the current trend in open planning than any of the new buildings based on an offset core configuration. It is my opinion that the buildings I have mentioned clearly exceed quality-wise any of the recently completed new buildings, and those currently under construction in Chicago. Their central location and access to public transportation is paramount and key to the current workforce. Additionally, the cost of occupancy in these real quality buildings will be, in my opinion, lower than the cost of occupancy in the perceived new quality buildings!
If you’re interested in a meaningful discussion about real quality and the resulting economics in commercial office buildings don’t hesitate to give me a call as I know the difference!