The marketing of Amoco Corp.’s 80-story white granite (formerly marble) tower in downtown Chicago suggests that the city’s tallest buildings may get picked off one by one.
No. 1 Sears Tower has already been snapped up by Toronto-based TrizecHahn Corp. and No. 2 Amoco is getting caught up in a bidding war.
What about No. 3, the John Hancock Center? Will John Hancock Financial Services, the real estate arm of John Hancock Mutual Life Insurance Co. that owns the commercial portion of the building, go for the gold instead of the girders?
John Hancock officials say they aren’t marketing the landmark, but their comments don’t close the doors to potential buyers.
“Ownership has no immediate plans to dispose of the property, but John Hancock Financial Services reviews the disposition strategy of all its assets on a continuing basis,” said John Nagle, senior investment officer for the financial services group.
But Casey Wold, president of TrizecHahn Office Properties, the Chicago-based office building division of TrizecHahn, said he thinks the Hancock people really do want to keep the building.
“I think they’re holders,” said Wold.
If they do decide to sell, they might do worse than use one of their new tenants to do it.
Christie’s, the art auctioneers, is moving its Midwest operations from 200 W. Superior St. to 875 N. Michigan Ave., doubling its space with the relocation.
Chicago boosters, architecture fanciers and building buffs would generally agree that the Hancock is a rare work of art with great appeal to collectors of the right kind.
Doing for others: The prospective sale of the Amoco Building also means the soaring spike with its alpine hue and eminence, long a symbol of corporate power, may become a symbol of corporate outsourcing.
Amoco is selling its headquarters because the building may no longer be a “strategic core asset,” according to an Amoco spokesman.
The oil giant is following a trend set by IBM Corp., which has been unloading its corporate property such as with the 1996 sale of One IBM Plaza, its regional headquarters.
While the trophy building sell-offs get the big publicity, outsourcing is having a real estate impact in a humbler fashion in suburban industrial corridors.
David Kahnweiler, president of Rosemont-based Colliers Bennett & Kahnweiler Inc., a leader in industrial real estate services, said one of the big factors in the roaring pace of industrial building development and leasing has been the rise of providers that specialize in handling warehousing and distribution for big companies that no longer want to do it for themselves.
Those providers, known as “third-party logistics” firms, have been a “huge driver” of the industrial activity in the Chicago area, which is the nation’s biggest industrial property market with a total of about 910 million square feet of space.
“The companies want to focus on their core competencies,” said Kahnweiler. “If you’re Kraft (Foods Inc.), you’re more concerned with making cheese” than storing it and transporting it to market, he said.
Kahnweiler said ten of the biggest leases in the market last year were for warehouse and distribution operations, and most of them involved third-party providers.
His firm recently brokered a 260,000-square-foot lease in Bolingbrook for Central American Warehouse, a third-party logistics company that stores and distributes food products for manufacturers.
These deals and others in which companies have consolidated their distribution centers into mega-hubs have been accompanied by increasing specialization and computerization of the warehouses, so that often the equipment costs more than the real estate, Kahnweiler added.
“For years and years, the technology of the warehouse never changed. Now there’s no such thing as a standard new industrial building any more,” he said.
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If warehouses continue this line of evolution, the term “warehousing” will take on a whole new and more positive meaning.
Going for brokers: Brokers, watch out. Your company could be next.
The consolidation in the commercial real estate brokerage business continues, with the newest deal an upcoming merger between Tanguay-Burke-Stratton LLC and Paine/Wetzel & Associates, both Chicago firms.
Steve Stratton, president of Tanguay-Burke-Stratton, said the deal would bring his firm added strength in industrial brokerage, where Paine/Wetzel is strong.
Only the strong survive. That could be the title of a movie about the Chicago property business.
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