An avalanche may be looming over the Loop office market just when it seemed to be heading into a sunny spring of steadily increasing demand and shrinking space available.
Rumors are rife that BP Amoco Corp. could unleash up to half of its 900,000 or so square feet of space in the 2.5 million-square-foot Amoco Building at 200 E. Randolph St. as a result of layoffs and other staff moves following British Petroleum Co.’s takeover of Amoco Corp. in December.
If the rumors are true, “it’s certainly going to throw the East Loop market, which was just showing recovery, into a tizzy,” said Sam Delisi, a senior vice president at U.S. Equities Realty.
Despite some strong recent leasing activity, business moves are torpedoing the area. Midas Inc. is exiting 225 N. Michigan Ave, at Illinois Center, heading for suburban Itasca, which will put 90,000 square feet on the market.
And Smurfit-Stone Container Corp., known as Stone Container Corp. until its merger last year, is said to be putting more than 100,000 square feet out for sublease at its 150 N. Michigan Ave. headquarters.
In addition, towers at 205 and 233 N. Michigan Ave. (both in Illinois Center) still have some 700,000 square feet left to fill between them.
All told, that could add up to almost 1.4 million square feet of high-class space open in the compass of a few blocks–the equivalent of a big empty Loop office building.
BP Amoco spokesman Howard Miller said relocations of some units from Chicago to the Cantera Development in Warrenville, where the company has a 200,000-square-foot facility, will open up some space in the Amoco Building.
And layoffs by the new global petroleum giant, totaling 1,300 people in the Chicago area, will open up more, he added. He said he’s heard about only 50,000 square feet coming free, but he talked as if the company could be breaking camp on a much bigger scale now that it is headquartered in London, not Chicago.
“Some of the justification of necessarily being where we were was the fact that this was the global corporate headquarters, and that equation has changed slightly,” he said. Chicago is now the company’s North American headquarters.
Miller wouldn’t specify how many people would be leaving the Amoco Building itself, which was sold in December to a joint venture led by New York investment firm Blackstone Group but still houses Amoco.
But even if only 1,000 leave the Amoco Building, that could well add up to 450,000 square feet. Allowing 450 square feet a person is on the high side of office requirements, but Amoco, having owned the building for a long time, “was probably not using space at maximum efficiency,” noted one source.
Steady erosion: While the loss of Chicago business activity to London is big news, the losses to the suburbs are a steady erosion. Transilwrap Co., a manufacturer and converter of plastics and plastic films, is leaving its Chicago headquarters to lease a 257,000-square-foot office and industrial facility in Franklin Park.
The company is consolidating its office at 2828 N. Paulina St. and a nearby production plant, according to Mark Levy, managing partner of Sequoia Realty Group in Oakbrook Terrace, who brokered the lease.
The buildings that Transilwrap is vacating in the hot Lake View area will probably be converted to loft residences, Levy said. What else?
Wells Streetscape: Wells Street merchants in Chicago’s Old Town are looking forward to getting Mayor Richard Daley’s magic beautification touch with a streetscape project scheduled to start next summer, adding landscaping, historic-reproduction street lamps, historical markers and ornate pedestrian gateways between Division Street and North Avenue.
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The $2 million city Transportation Department project will not only enhance the commercial and tourist appeal of the street, it will provide a greater neighborhood feel for all the new residents living in the condos that have been springing up along Wells, according to Paula Washington, executive director of the Old Town Chamber of Commerce.
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