Motorola Mobility leaving suburbs for Merchandise Mart

As reported here in May, Motorola Mobility is leaving it’s longtime digs in Libertyville for a swanky new space in the Merchandise Mart.  Taking up the top four floors with access to the roof deck, Motorola will lease 600,000 sq ft for the next 15 years.  The announcement is a coup for Mayor Rahm Emmanuel who is working with the business community to create a technology hub in the city.  Motorola Mobility, who was acquired by Google in May, entertained offers to relocate to California and Texas but opted to stay in Illinois.  Of the 3,000 jobs that will be moving to the city, 2,000 will be engineers, a continuing trend with young, tech savy workers.

See article for more info:http://www.chicagotribune.com/business/breaking/chi-motorola-mobility-leaving-libertyville-for-downtown-chicago-20120726,0,7862959.story

Green Roof to Farmer’s Market in NY

Although Chicago leads the nation in total square feet of green roof space, New York is taking it a step further—actual green roof farming.  Check out the article from the New York Times:  http://www.nytimes.com/2012/07/12/nyregion/in-rooftop-farming-new-york-city-emerges-as-a-leader.html?hpw

The walls keep coming down

While the legal profession seems to be holding on to ideas about private offices and square feet per employee, the tech world keeps going smaller and smarter.  The standard of 225 sq ft in 2010 is now 176 sq ft in 2012—and even this is projected to drop below 100 sq ft within five years.  See the article for more details:

http://www.usatoday.com/money/workplace/story/2012-06-05/tech-creates-workplace-everywhere/55405518/1

Medical Office Demand

Demand for medical office space continues in the Streeterville neighborhood. In advance of the opening of their new— and already full facility—Children’s Memorial signed a lease to pick up 98,000 sq ft of space. See the accompanying article for more details

http://www.chicagorealestatedaily.com/article/20120328/CRED03/120329776?template=mobile

Market Trends in Chicago

With the national unemployment edging towards 8%, commercial real estate executives are hoping that this points towards better times ahead.  According to CoStar, the Chicago office vacancy rate fell to 14.8% in the fourth quarter 2011, down from 15% in the third  quarter.  Respondents to a Real Estate Roundtable Economic Survey found that, “industry executives’ expectations for growth this year are improved, but hindered by concerns about underlying macroeconomic and political risks”. 

What does this mean for office tenants? Building owners are starting to pull back on concessions such as free rent and tenant improvement allowances while being more conservative with increases in asking rent.  If the unemployment rate keeps on dropping ( Bureau of Labor expects the rate to be mid 7% by November) we could see asking rents going north quickly.  In other words, if’ you’re considering a move or lease renewal in the next twelve months, now may be the time to act.

Update on Proposed Accounting Rules

https://byobroker.wordpress.com/2011/08/18/chages-to-accounting-standards-will-affect-office-leases/

In a developing story (and a follow up to our Aug 11 post here ), the International Accounting Standards Board (IASB) is preparing a draft of proposed accounting changes that may have a dramatic effect on commercial real estate lessees, owners and investors.  The new rules call for companies to capitalize office and equipment leases as long term liabilities that diminish over time.  While this may bring US accounting standards more in line with international norms, it would also have the effect of increasing balance sheet liabilities and reducing access to capital.  From a commercial real estate perspective, signing a long term lease would negatively affect the amount of credit available to a company.  Shorter term leases usually mean higher rental rates, effectively raising the operating costs for a business.  Landlords, while getting higher rental rates, would see their property lose value as a building full of short term leases is not as valuable as one with long term leases.

Free Chicago Office Market Report

At BYOBroker we know that information is power, and our mission is to provide our clients with the same information that professional commercial real estate brokers use.  In the same spirit, another brokerage house, Jones Lang LaSalle, recently published a free report that gives commercial office tenants a chance to see behind the curtain of the Chicago office market.  The report features information on average rental rates and vacancies for 54 downtown buildings and shows vacancy on a floor by floor basis.  It also provides an analysis of occupancy trends by building class (A,B and C) as well as their take on where the market is and where it’s headed.  For a free copy, send an e-mail request to: Chicago.Skyline@am.jll.com

JLL Graphic

For more information see David Roeder’s article in today’s Sun-Times: http://www.suntimes.com/business/roeder/10943558-452/take-a-peek-at-where-chicago-office-space-rentals-are.html

We’re back!

The BYOBroker took some time off from the blog but is now back with recharged batteries!  We will be posting a lot of new info on the office leasing market in the next few days so check back often.

More Businesses Moving Back To City

Motorola Solutions CEO Greg Brown is ditching the suburbs and is lobbying other companies to do the same.  In an interview with Crain’s Chicago Business recently he detailed plans to create as many as 400 new jobs by the end of 2012.  While the newly spun off company has existing space in Illinois Center, there’s not nearly enough space to accommodate everyone there.  He said that the new location would likely be downtown or in the O’Hare area, which follows a trend we covered lasts month: https://byobroker.wordpress.com/2011/08/02/new-trend-of-businesses-moving-back-to-the-city/

While he says he was influenced by Mayor Emanuel to move back to the city, he follows the lead of other tech firms like Groupon and Google that recognize that talented younger workers prefer to live and work in the city, avoiding suburban commutes.  Mayor Emanuel recently named Brown to the board of World Business Chicago, the economic development agency for the city, and he has been out proselytizing other CEOs to follow his lead.   See the full article here: http://www.chicagobusiness.com/article/20110920/NEWS08/110919878/motorola-hunting-for-office-space-in-chicago

Office Market Improving?

Jones Lang LaSalle is reporting that the national office market is showing signs of a rebound in demand for office space.  Well, at least it was before the last round of economic news.  Forget what we know about the latest bit of job news that we got today–that the US added NO new jobs in August–this report says that things had been trending in the other direction.  According to the report, nationwide office vacancy dropped from 18.4% down to 18.1%, with most markets showing a decline in available space.  With 11 million square feet of positive absorption in the second quarter, the trend was almost triple the 4.3 million of absorption in the first quarter.  This all pointed to an improving office market which, as a lagging indicator of the economy, meant that businesses were feeling positive about the economy and picking up space to hire additional employees.  The question now is will this trend continue?

Read the full article here: http://www.globest.com/news/1991_1991/chicago/313616-1.html?ET=globest:e27124:483812a:&st=email