For its entry into the downtown Chicago office market, Dallas-based Behringer Harvard REIT I Inc. spent $277.5 million, or about $234 a square foot, to buy a two-building, 1.18 million-square-foot property above Union Station.
“Over the long term, we believe in the Chicago economy and in this property,” said Jason Mattox, an executive vice president at Behringer Harvard Holdings LLC, the holding company for the real estate investment trust, which expects to keep the buildings for seven to 11 years.
“The economy is solid, and the complex has an irreplaceable location and great anchor tenants.”
The purchase of the 35-story office building at 222 S. Riverside Plaza and the three-story Union Station Multiplex health club from Boston Capital Strategic Partners III LP will make Chicago the REIT’s most significant market after Dallas/Ft. Worth, where it owns 1.25 million square feet.
Behringer has confidence in the Chicago area, where it expects employment to grow by 10.5 percent in the next several years.
“Not a boom but substantial expansion for an entrenched urban area,” Mattox said.
The downtown office vacancy rate came down to 17.2 percent at the end of 2005 from 17.6 percent at midyear, and sublease space is being absorbed despite the addition of new buildings, Mattox said.
“That’s positive,” he said.
In the 35-story tower, average asking rents are in the low $20s a square foot. Deutsche Bank and Fifth Third Bank are the anchor tenants in the building, which was designed by Skidmore Owings & Merrill LLP. Occupied in 1971, it has undergone about $30 million in renovations since 2001.
Behringer Harvard has six funds with approximately $2 billion in assets. REIT I owns 24 office buildings with 6.3 million square feet, valued at about $1.2 billion.
Online conference: If you can’t join ’em, just click to attend the first online conference about the U.S. commercial property market being hosted by the commercial arm of the National Association of Realtors.
With so much real estate marketing, data and news communicated digitally, the Realtors Commercial Alliance is joining the fray, said James Marrelli, vice president of the division.
“This saves people money, helps them think differently about how to acquire property and how to add value to online listings,” Marrelli said. “By Day One, it’s already exceeded our expectations.”
Of the association’s 100,000 members, usually 2,000 to 3,000 attend national conferences. But Marrelli said about 10,000 participants preregistered for the online conference, which began Tuesday and ends Monday.
It features virtual tours of booths, professional training sessions and talks by 18 speakers, such as National Association of Realtors chief economist David Lereah and Whitney Peyton, a Minneapolis-based senior managing director for CB Richard Ellis.
The event, free and open to all, can be found at www.commercialsource.com.
No quick decision by United: It may be a while before United Airlines decides if it will move its headquarters from Elk Grove Township. United officials held talks Monday with the California governor’s office and San Francisco officials about a possible move there. The carrier also is considering Chicago and Denver.
Company officials told trade journal Aviation Daily this week that a decision whether to relocate and where will come this year, and that the airline is likely to move in 2007. The carrier wants about 150,000 square feet of office space for 400 managers and support staff, while other operations in the region would be consolidated on the Elk Grove Township campus.
More Top Picks Coffee Maker
———-