A pair of developers is cooking up plans for a big project just down the road from the Oakbrook Center mall that could include office and retail space and maybe even homes and hotel rooms.
A joint venture of Dallas-based Lincoln Property and Hinsdale-based Foxford Communitiesbought an office and retail property at 22nd Street and York Road in Oak Brook, a 16-acre site that includes three empty parcels, Lincoln confirmed.
The venture acquired the property, which includes 206,710 square feet of office and retail space, from a venture of Chicago developer John Buck and New York Life Real Estate Investors.
“We love the location and the mixed-use zoning,” said John Grissim, a Chicago-based executive vice president at Lincoln. “We’re going to develop those parcels. It could be retail, restaurants, hospitality, residential or office. We’re going to take a look at it and consider a variety of alternatives.”
Grissim declined to disclose a price for the property, which is less than a mile east of Oakbrook Center. Buck and New York Life, which paid $31.8 million for the property in 1998, wanted to build a condominium tower and hotel there, but the recession halted those plans.
John Buck, founder and chairman of his namesake Chicago firm, did not return a call. CBRE brokers including executive vice presidents George Good and Paul Lundstedt represented the firm in the sale.
The property includes the 84,844-square-foot Clearwater shopping center, built in phases in 2009 and 2013, and the 121,866-square-foot office building at 2122 York Road, built in 1978.
Existing retail space is more than 85 percent occupied by tenants including LA Fitness, Charles Schwab, Protein Bar, Chipotle Mexican Grill and Roti Mediterranean Grill, according to a CBRE flier. The office space is about 69 percent leased. The undeveloped parcels total just over 1.5 acres.
While they evaluate uses for the land, the new owners plan to soon begin upgrades to the three-story office building, including expanding surface parking and upgrading areas such as the lobby and restrooms. The venture is already in talks with tenants for existing office space as well as a potential build-to-suit structure of 75,000 to 100,000 square feet, Grissim said.
The developers also are considering building condominiums and retail space and have been approached by a developer interested in buying some of the land for a hotel, Grissim said.
“You’re going to see a lot of development on the eastern end of Oak Brook,” Grissim said. “There are some nice sites, the market has gotten better, and there are a lot of amenities within a mile.”
‘FINALLY SEEING A REBOUND’
Suburban office vacancy hit a seven-year low of 21.3 percent during the first quarter of this year, down from a peak of 25.4 percent during the recession in 2010, according to Chicago-based Jones Lang LaSalle. Overall vacancy in the eastern portion of the east-west corridor, where Oak Brook is, was 21 percent during the first quarter.
“I think we’re finally seeing a rebound in the market, especially on the east end (of Oak Brook),” said west suburban office tenant broker Todd Schaefer, a senior vice president at JLL. “Oak Brook’s the gateway to the western suburbs, and it seems to rebound the quickest.”
A lack of large blocks of office space could create demand for a build-to-suit building on the Lincoln venture’s site, Schaefer said. But new construction could cost a tenant $24 per square foot in net rent, compared with a high end of around $18 for existing buildings in the market, he said.
“Rents around the Oak Brook mall still don’t support a new building (on speculation), but if you’re a tenant and you can’t find what you’re looking for, you may take a bite at that apple,” Schaefer said. “If you’re a 60,000-square-foot user, you’ve got very limited options in Oak Brook. The challenge is, that’s an extra $6 per square foot.”
Article from Crain’s Real Estate Daily – Crain’s Chicago Business