confidential offering memorandum

Transcription

confidential offering memorandum
1124 Tower Road, Schaumburg, IL
Investment Services Group / September 2010
COLLIERS INTERNATIONAL
200 South Wacker Drive, Suite 700
Chicago, Illinois 60606
312-648-9150 main | 312-648-9149 facsimile
6250 North River Road, Suite 11-100
Rosemont, Illinois 60018
847-698-8444 main | 847-698-8445 facsimile
OFFERING MEMORANDUM DISCLAIMER
This Offering Memorandum, which contains brief, select information pertaining to the business and affairs of the
Property, has been prepared by Colliers International. This Offering Memorandum does not purport to be
all-inclusive or to contain all of the information a prospective purchaser may desire. Neither Owner nor Colliers
Internationanl nor any of their officers, employees, or agents makes any representation or warranty, express or
implied, as to the accuracy or completeness of the Offering Memorandum or any of its contents and no legal
liability is assumed or shall be implied with respect thereto.
By acknowledging your receipt of this Offering Memorandum, you agree: 1) the Offering Memorandum and its
contents are confidential; 2) you will hold and treat it in the strictest of confidence; and 3) you will not, directly or
indirectly, disclose or permit anyone else to disclose this Offering Memorandum or its contents in any fashion or
manner detrimental to the interest of Owner. Photocopying or other duplication is strictly prohibited.
The Property and improvements described in the Offering Memorandum are being sold on an “As Is, Where Is”
basis without representation or warranties.
Owner and Colliers International expressly reserve the right, at their sole discretion, to reject any or all
expressions of interest or offers to purchase the Property unless and until a written agreement for the purchase
and sale of the Property has been fully executed and delivered.
If you do not wish to pursue negotiations leading to this acquisition, or if in the future you discontinue such
negotiations, then you agree to return the Offering Memorandum to Colliers International.
This Offering Memorandum shall not be deemed to represent the state of affairs of the Property or constitute an
indication that there has been no change in the state of affairs of the Property since the date the Offering
Memorandum was prepared.
TABLE OF CONTENTS
Executive Summary
Offering Summary
1
Investment Highlights
1
Terms of Sale
2
Property Overview
Aerial Photographs 4
Exterior Photographs 6
Interior Photographs 7
Location Maps 9
Floor Plans
10
1124 Tower Road
13
Property Information
14
Property Description
15
Tenant Overview
Tenant Summary
17
Lease Abstract
18
Area Overview
Woodfield Regional Area Overview
21
Chicago Economic Overview
22
Market Overview
Metropolitan Overview
28
Northwest Suburban Overview
28
Northwest Submarket Market Report
29
Surburban Office Submarket Map
30
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
OFFERING SUMMARY
Colliers International has been retained to offer for sale the 100% fee simple interest in 1124
Tower Road (the “Property”), a 43,070 square foot, single-tenant, net-leased office/flex building
located in Schaumburg, Illinois. Prominently situated in the Woodfield Business Center, 1124
Tower Road was completely renovated and serves as the new corporate headquarters for
Novaspect, Inc., a privately held engineering firm specializing in valve development and process
management.
OFFERING HIGHLIGHTS
Long-term Lease - Fifteen year, seven month, triple-net lease that commenced January 1, 2010
and extends through July 31, 2025.
Class A Renovation - 1124 Tower Road was originally built in 1982 and formerly occupied in its
entirety by Hewlett-Packard. The recently completed renovation transformed the Property into a
state-of-the-art office/flex facility comprised of 60% finished office space and 40% research/
development/light assembly. Total capital expended was $2.5 million or approximately $60 per
square foot of which Novaspect contributed $1.5 million.
Premier Location - Woodfield Business Center is situated along the south side of Interstate 90
(Jane Addams Tollway) between Meacham and Roselle Roads in suburban Chicago’s Golden
Corridor. The planned development was created in a park-like environment including lakes,
jogging trails, and wetland landscaping. The location offers superior access to the entire
metropolitan area and both international airports.
Institutionally Recognized Market - The Schaumburg/Woodfield Northwest Corridor is one of
the four major submarkets of suburban Chicago with an inventory of office space approaching
31 million square feet. The Schaumburg submarket is defined as the preeminent corporate
office destination due to the high density of executive housing and a thriving commercial
corridor.
Single-tenant, Net-leased Investment - Novaspect, Inc. leases the entire facility under a
triple-net lease agreement that commenced January 1, 2010 and expires July 31, 2025. The
annual net rent effective January 1, 2011 will be $439,314 or $10.20 per square foot. The lease
provides for annual base rental increases of 2.0% throughout the term.
High-Quality Tenant - Novaspect, Inc. provides engineering solutions, services, project
expertise and technologies for complex valve process control requirements. They are a longestablished and highly regarded firm in their field having commenced business in 1936. The
company’s move to 1124 Tower Road accommodates growth needs, as they are doubling their
space from the previous headquarters in Elk Grove Village, Illinois.
P. 1
OFFERING SUMMARY
Address:
1124 Tower Road, Schaumburg, Illinois
Rentable Area:
43,070 square feet
Year Built:
1982
Year Renovated:
2009/2010
Number of Stories:
One
Percentage Leased:
100%
Parking:
240 spaces, 5.6 per 1,000 SF
OFFERING PROCEDURES
Interested parties are asked to submit offers on or before October 22, 2010. A year-end closing
is being targeted, therefore, we anticipate selecting a buyer and executing a purchase and sale
agreement by October 31, 2010. Offers should reflect the following:
Real Estate Taxes - Pro rated on a ‘cash basis’ for the calendar year of closing.
Closing Costs/Seller – Standard title insurance endorsements, survey and Cook County and
State of Illinois transfer taxes.
Closing Costs/Buyer - Special title insurance endorsements and City of Schaumburg transfer
taxes.
CONTACT INFORMATION
For further information, please contact:
Brian P. Nagle
Jerrod L. Wigal
Executive Vice President
Senior Associate
312-612-5935 direct
312-612-5937 direct
847-698-8265 direct
[email protected]
[email protected]
Steven Kling
Jason Simon
PrincipalAssociate
847-698-8256 direct
847-698-8531 direct
[email protected]
[email protected]
Colliers International
312-648-9150 main | 312-648-9149 facsimile
847-698-8444 main | 847-698-8445 facsimile
P. 2
PROPERTY OVERVIEW
WOODFIELD MALL AREA
SITE AERIAL
P. 4
COLLIERS INTERNATIONAL | PROPERTY OVERVIEW
SITE AERIAL
P. 5
EXTERIOR PHOTOGRAPH
P. 6
INTERIOR PHOTOGRAPHS
P. 7
INTERIOR PHOTOGRAPHS
P. 8
LOCATION MAP
P. 9
COLLIERS INTERNATIONAL | MARKET OVERVIEW
FLOOR PLAN – NORTH (OFFICE)
P. 10
FLOOR PLAN – SOUTH (WAREHOUSE)
P. 11
SITE PLAN
P. 12
PROPERTY OVERVIEW
ASSET QUALITY AND DESIGN
1124 Tower Road was originally constructed in 1982 as a build-to-suit for a Hewlett-Packard call
center. Following the expiration of the HP lease, current ownership acquired the vacant building and
upon securing the Novaspect lease, embarked on a $2.5 million complete renovation. The Property’s
total 43,070 rentable square feet is divided roughly 60/40 between the northern, office portion of the
building and the southern, warehouse/light industrial space. The office portion consists primarily of
perimeter offices surrounding an open office space of cubicles along with multiple conference rooms
and work/server facilities. The southern portion of the building is predominantly warehouse space
combined with a renovated break room and training facility, new washrooms and staging areas.
LOCATION & SITE DESCRIPTION
1124 Tower Road is located in the northwest Chicago suburb of Schaumburg near the crossroads of
Interstates 90 and 294. The local office market comprises suburban Chicago’s largest concentration
of office space and is complemented by a significant presence of retail and hospitality space. Beyond
the immediate Woodfield Mall area is a wide variety of residential options, ranging from upscale,
executive level housing to middle-class working professional homes.
1124 Tower Road is located immediately northwest of the Woodfield Mall area. The Property sits on
Tower Road between National Parkway and Meacham Road. The immediate area is populated by a
variety of office, industrial and flex buildings, except for the pond located adjacent to the west side of
the building. The Property is visible from I-90, a major transportation artery in the Chicago
Metropolitan area connecting O’Hare International Airport and the Chicago CBD. Motorists also have
rapid access to I-294, located seven miles east via I-90, which provides access to the north and south
suburbs of Chicago. In addition, State Route 53 is located one mile east, which accesses I-355 and
I-290. O’Hare International Airport is situated seven miles to the east.
AMENITIES
A wide selection of shopping, dining venues and hotels are within close proximity of 1124 Tower
Road. Woodfield Mall, one of America’s largest regional retail centers anchored by Marshall Field’s,
Nordstrom, Lord & Taylor, Sears and JC Penney, is approximately one mile east of the Property. A
variety of restaurants ranging from fast food to upscale restaurants are convenient to Property
tenants.
Amenities and features at the Property include:
•
Substantial power capacity ________________
•
Twenty-one foot clear ceiling heights
•
Two exterior loading docks (one ground level; one recessed)
•
240 car surface parking (5.6 spaces per 1,000)
•
On-site break room with kitchen
•
Training and conference facilities
P. 13
Site Description: 1124 Tower Road, Schaumburg, Cook County, Illinois 60173
P. 14
Location:
The Property is situated on the north side of Tower Road, just west of North
Meacham Road in Schaumburg, Cook County, Illinois.
Access:
There is a four-way interchange at North Meacham Road that is located two
blocks to the east of the Property. The Property is visible from I-90, a major
transportation artery in the Chicago Metropolitan area connecting O’Hare
International Airport and the Chicago CBD. Motorists also have rapid access
to I-294, located less than six miles east via I-90, which provides access to
the north and south suburbs of Chicago. In addition, State Route 53 is located
one mile east, which accesses I-355 and I-290. O’Hare International Airport
is situated seven miles to the east.
Site:
Approx. 92,615 square feet
Year Built:
1982
Ceiling Height:
21’ clear
Loading Docks:
Two loading docks are located at the southeast corner of the building. One
dock is at ground level; the recessed dock was newly installed. Both docks
feature 10’W x 12’H insulated, motorized overhead doors.
Parking:
The Property has 240 parking spaces (5.6 spaces per 1,000 square feet).
The parking area was repaved, sealed, and restriped in 2010, including new
curb installation and additional landscaping along the property and building
entrances.
Structure:
Brick-faced, masonry block on concrete slab foundation
Roof:
__________________
P. 15
Interior Finish:
The interior building finishes consist of 60% office space and 40% warehouse/
light industrial space. Interior finishes include primarily gypsum board wall
coverings, carpet, vinyl/ceramic tile and concrete floors, suspended acoustical
tile ceilings, and recessed/pendant fluorescent lighting. Office areas include
tempered glass panel framing and solid core, maple veneer doors for individual
offices.
Utilities:
Plumbing
Domestic water is supplied by the city of Schaumburg. Men’s and women’s
washrooms are located in the center of the building. The newly-renovated
washrooms include ceramic tile flooring, undermount sinks and electronic
faucets.
HVAC
The building is heated by 13 natural gas-fired heating, ventilation, and air
conditioning units located on the roof controlled by multiple, newly-installed
digital thermostats.
Electrical
The main electric from the building enters the building along the east side. Three pad-mounted transformers are located along the exterior east wall of the building. The electrical room includes the following equipment:
• Two dry-type transformers
• Two Challenger 400-amp and 250-amp power mains
• Gould I-T-E power panel with three 200-amp and one 100-amp switches
• One Illinois Switchboard 400-amp and two Illinois Switchboard 800-amp
power mains
• One Illinois Switchboard 400-amp circuit breaker panel, two Gould I-T-E
100-amp and 125-amp circuit break panels and one Square D circuit
breaker panel (noamperage listed).
• Office areas include 20A, 120V duplex and quadraplex outlets. Private
offices and conference rooms include motion sensors.
Fire/Life Safety:
The Property is protected by a wet-type sprinkler system. Additionally, the
building features emergency lighting, battery-powered back-up lighting, life
safety speakers, and strobes per local code.
TENANT OVERVIEW
TENANT SUMMARY
Novaspect, Inc. is an engineering firm and distributor specializing in the sales, design,
installation and training of process controls for manufacturing facilities. Over its 75 year
history, the company has developed a strong proficiency designing solutions for a variety of
industries, including chemical, food/beverage, natural gas, pharmaceuticals, power, pulp/
paper, refining, renewable energy, and steel and mining. The company’s business activities
are spread evenly throughout these industries, therefore no single industry accounts for a
disproportionate share of company sales.
Novaspect has pioneered process management through its representation and distribution of
Fisher Valves, Fisher-Rosemount and Emerson Process Management. Its sales of valves and
replacement parts account for approximately 59% of total company sales.
Besides its sales and representation of hardware products, the company offers process
management services, asset management services, and process control optimization services.
These services all comprise Novaspect’s Total Process Management Solutions which is
designed to optimize clients’ process control investments.
Novaspect serves its existing customer base from seven
locations throughout the Upper Midwest region, including
North Dakota, Minneapolis, Wisconsin, Illinois and Indiana.
The company recently relocated its headquarters operation
to 1124 Tower Road following a 20-year occupancy in a
company-owned building. The relocation was based on
expansion needs as well as the location’s superior location
and upgraded facilities.
Novaspect, Inc. is a 100% wholly-owned subsidiary of Novaspect Holdings, Inc., which was
established in 2009 for the sole purpose of owning the stock of Novaspect, Inc.
P. 17
COLLIERS INTERNATIONAL | TENANT OVERVIEW
FINANCIAL HIGHLIGHTS – NOVASPECT HOLDINGS, INC.
2009
2008
SALES
GROSS PROFIT
OPERATING INCOME
NET INCOME
$54,322,974
$18,803,914
$4,185,463
$3,158,045
$61,035,473
$21,383,173
$6,894,935
$5,520,640
OPERATING CASH FLOW
CAPITAL EXPENDITURES
FREE CASH FLOW (OPERATING CASH
FLOW LESS CAPITAL EXPENDITURES)
$3,222,356
$995,345
$2,227,011
$5,318,160
$328,528
$4,989,632
TOTAL ASSETS
TOTAL DEBT
STOCKHOLDERS’ EQUITY
$14,491,717
$9,394,962
$5,096,755
$15,179,217
$10,847,053
$4,332,164
Additional tenant financial information and 3rd-party credit analysis will be provided to
interested parties upon request. For more information: www.novaspect.com.
P. 18
LEASE ABSTRACT
Tenant: Novaspect, Inc., an Illinois Corporation
d/b/a General Meters and Controls Co.
SF:43,070
P. 19
Date of Lease:
July 1, 2009
Commencement:
January 1, 2010
Expiration:
July 31, 2025
Term:
Fifteen (15) years, seven (7) months
Base Rent Schedule:
$10.00 NNN w/2% annual base rent increases (see below)
Begin
End
7/1/2010
7/31/2010
8/1/2010
Monthly
$/RSF
-
$10,200.00
$2.84
12/31/2010
-
$35,891.67
$10.00
1/1/2011
12/31/2011
$439,314.00
$36,609.50
$10.20
1/1/2012
12/31/2012 $448,100.28$37,341.69 $10.40
1/1/2013
12/31/2013 $457,062.29$38,088.52 $10.61
1/1/2014
12/31/2014 $466,203.53$38,850.29 $10.82
1/1/2015
12/31/2015 $475,527.60$39,627.30 $11.04
1/1/2016
12/31/2016 $485,038.15$40,419.85 $11.26
1/1/2017
12/31/2017
1/1/2018
12/31/2018 $504,633.70$42,052.81 $11.72
1/1/2019
12/31/2019 $514,726.37$42,893.86 $11.95
1/1/2020
12/31/2020 $525,020.90$43,751.74 $12.19
1/1/2021
12/31/2021 $535,521.31$44,626.78 $12.43
1/1/2022
12/31/2022 $546,231.74$45,519.31 $12.68
1/1/2023
12/31/2023$557,156.38$46,429.70 $12.94
1/1/2024
12/31/2024 $568,299.50$47,358.29 $13.19
1/1/2025
7/31/2025
Annual
$494,738.92
-
$41,228.24
$48,305.46
$11.49
$13.46
Abatement:
First seven (7) months base rent reduced to $10,200/month
CAM:
NNN – paid directly by Tenant. Tenant reimburses LL $700/ month for LL
insurance (per Lease Amendment)
Taxes:
NNN – paid directly by Tenant. LL expects to be granted Cook County Class
6(b) tax classification (reduces tax obligation for a period of 12 years). If LL
is not successful in obtaining the 6(b) classification taxes are calculated at the
lesser of current taxes or $2.25 psf with annual increases capped at 3.75%
(compounded and cumulative).
Note: Current ownership has already obtained the resolutions from the Village of
Schaumburg and the Cook County Board of commissioners in favor of the 6(b)
Incentive. The last step in the process is to file a 2010 incentive application with the
Cook County Assessor for implementation of the incentive. In tandem with the
application ownership is also asking for a property classification change for the
subject property from commercial to industrial. This classification change is critical
to receiving the incentive. Currently, the property is classified as commercial and,
therefore, would not qualify for the Class 6(b) INDUSTRIAL incentive. It is due to the
renovations and changes to the property made by ownership of the tenant should
allow the class change to industrial, and thus qualifying for the Class 6(b) incentive.
The Cook County Assessor will open the Schaumburg Township for 2010 complaints
in early 2011, and ownership expects their decision in mid to late March.
P. 20
Security Deposit:
$107,675.00
Options:
None
Termination:
None
Insurance:
Workers Comp - $500,000 per occurrence
Bodily Injury and Property Damage – $5,000,000
Automobile and Professional Liability - $1,000,000
Guarantee:
Corporate Only
AREA OVERVIEW
WOODFIELD REGIONAL AREA OVERVIEW
1124 Tower Road is located in the Woodfield Regional Area, the preeminent community for business,
family and entertainment in the northwest suburbs of Chicago. The Area combines a strong
diversity of employment, industry, commercial and office development with residential, educational,
recreational and cultural amenities that contribute to both a thriving local economy and first-class
residential services.
The Woodfield Regional Area is acclaimed for its nationally renowned schools, accessible location
near O’Hare International Airport, proximity to Chicago, ease of living and family emphasis. Areas
included in the Woodfield Regional Area are Schaumburg, Palatine, Elk Grove VIllage, Arlington
Heights, Roling Meadows, Hoffman Estates and Mount Prospect.
The Woodfield Regional Area is centered around one of the world’s largest indoor retail centers, the
Woodfield Mall. The majority of the area’s commercial buildings are located in close proximity to
the mall and this dynamic location has become home to many world-renowned corporations and
retailers. Top employers and corporations in the are include Motorola, Zurich American Insurance
Group, Direct Marketing Technology/Experion, Cingular, IBM and GE Financial Assurance.
The property also benefits from its close proximity to the Woodfield Mall and nearby access to the
Northwest Tollway and Route 53 (I-355), which are the major thoroughfares in the northwest
suburbs. Just 30 mins from downtown Chicago and minutes from O’Hare International Airport,
1124 Tower Road offers an easily accessible. convenient location.
The property also benefits greatly from a high concentration of amenitites an a skilled labor pool in
the area. In addition to local restaurants and shops, the Woodfield Mall is located one-half mile to
the east of 1124 Tower Road. The Woodfield Mall is the premier shopping destination in the Midwest,
and one of the world’s largest enclosed retail shopping centers. Anchor tenants such as Nordstrom,
Marshall Fields, Sears, Lord & Taylor, and such well-known retailers as Coach, Crabtree & Evelyn,
Crate and Barrel, Brooks Brothers, J. Crew, Ann Taylor, Gap and Banana Republic are all located
within the mall.
The Woodfield Regional Area is recognized as the epicenter of the hospitality market in the northwest
suburbs. The Embassy Suites, Extended Stay America, Hyatt Woodfield, Homewood Suites, Holiday
Inn and Country Inn & Suites are all located within close proximity to the Property.
SCHAUMBURG OVERVIEW
1124 Tower Road is located in the northwest suburban city of Schaumburg, a preeminent community
for business, family and entertainment. Strategically situated in the heart of the growing economic
and commercial zone knows as the “Goldern Corridor.” Schaumburg provides quick access to
O’Hare International Airport and five major interchanges that can be reached from any direction.
Illinois Route 53 (I-290) and the Northwest Tollway (I-90) provide direct routes to and from Chicago,
which is only 30 minutes away. Nearby, I-355 provides access to the metropolitan highway ststem.
State Routes 62 (Algonquin Road) and 58 (Golf Road) serve the southern sector. Primary arteries
on the northern edge are Northwest HIghway (US 14), and the Chicago and Northwestern Railroad.
Other affluent suburbs, including Arlington Heights, Palatine, Hoffman Estates and Inverness,
surround Schaumburg. The region has earn the nickname “Silicon Prairie” due to the influx of
major technological, manufacturing and distribution corporations that have relocated here.
P. 22
COLLIERS INTERNATIONAL | AREA OVERVIEW
CHICAGO ECONOMIC OVERVIEW
Chicago is one of the world’s most vibrant and diversified economies, and the region’s strength is
centered on the leadership of the many companies who do business in its famed CBD, known as
“The Loop.” The city’s location at the geographic center of the world’s largest economy makes it a
uniquely accessible location for international businesses of all kinds, from manufacturing-based
industries to the service sector and technology-based firms. While Chicago was a strong force in
the technology boom of the 1990s, the metropolitan area’s more traditional industries thrived as
well, and continue to provide the economic base that insulates the “City of Big Shoulders” from the
economic ups and downs of the two coasts. As a global transportation, financial and cultural hub
city, Chicago - and its thriving 24/7 downtown community - is attractive to a myriad of Fortune 500
companies and smaller businesses alike.
INDUSTRY
Major Corporations. The Chicago CBD submarket has been nationally recognized as the business
epicenter in the Midwest. The economic crux of the community is home to many multinational
public and private corporations. The top ten, Chicago-based, Fortune 500 companies are a testament
to the strength and diversity of Chicago.
Boeing Corporation
Abbott Laboratories
Sears Holdings
McDonalds
Walgreen Co.
UAL
Motorola
Sara Lee Corporation
Allstate Corp.
Exelon Corporation
Banking & Finance. Chicago is an international financial center with a long history as a world
leader in the investment field. The city has three of the four largest futures exchanges in the United
States and is home to one of the world’s largest stock option exchanges. The Chicago Mercantile
Exchange’s recent acquisition of the Chicago Board of Trade solidifies Chicago’s position as the
world leader in derivatives trading. Further, the LaSalle Street financial district is one of the largest
centers of finance in the world. Chicago’s banking community, which includes many of the largest
financial institutions in the nation, controls 80% of all financial assets in the state.
Technology. During the late 1990s, both the city and suburbs experienced unprecedented growth in
companies at the leading edge of advancing technologies. Computer programming and software
development spawned more than 2,000 new firms in the Chicago area and continues to grow today.
Venture capital continues to invest in the region’s thriving biotechnology and healthcare research
firms. The world’s largest single internet exchange point is located in Chicago, whereby the most
advanced networks in the region connect, offering high technology corporations immense
connectivity capabilities.
Communications. The Chicago Cook County area is second only to New York in the business of
publishing, and supports a booming sector manufacturing a wide range of electronic
communications equipment.
Law. Some of the largest and most successful law firms call Chicago home. In fact, the Chicago
Bar Association is one of the nation’s oldest and most active metropolitan associations, with 22,000
members.
P. 23
Chemicals. Chemicals, especially industrial organic chemicals, are an important part of the region’s
industrial picture. Chicago has more chemists than any other city and is second in the number of
engineers. Area universities help to maintain a highly skilled work force that is the key to success
in the high-tech industries that will carry Chicago through the 21st century.
ARCHITECTURE
As the birthplace of modern high-rise design, Chicago is fiercely protective of its architectural
legacy. The city has been shaped by Daniel Burnham, Mies van der Rohe and Louis Sullivan, and
every new project is assessed for its architectural contribution before construction can proceed.
The magnificent postwar cityscape has been carefully developed and preserved with a focus on
maintaining the architectural heritage. The city’s greatest designs include 1930’s vintage architecture
like the Merchandise Mart and postmodern designs such as 333 West Wacker Drive.
While Chicago evokes countless images, from railroad yards to jazz-age gin mills, and Al Capone to
Michael Jordan, the image that has an even more powerful association with the city is that of the
skyscraper. Indeed, Chicago is often credited with being the birthplace of that architectural form
that came into being with the successful development in the 1880s of the fireproof steel frame and
the safety elevator. In many ways, Chicago’s skyscrapers of today are linked structurally and
architecturally with their predecessors over the past century and before. Like those earlier buildings,
the high rises since the 1950s have been commissioned to turn a profit for their investors. It is this
entrepreneurial spirit that helped make building in Chicago a tangible expression of its business
environment. Unlike the result in many other American cities, in Chicago developers and architects
have given this flat yet dramatic site on Lake Michigan a spectacular skyline. It testifies to a
continuing vitality of design.
TOURISM
Every year, Chicago’s reputation as a tourist destination grows, thanks to the economic development
efforts from the city to make the CBD a vibrant, 24-hour community. The area’s tourism population
grows with an influx of visitors from the region, state, nation, and much of the world. Recent
surveys indicate that Chicago is more popular than Boston as a destination for international visitors
and is increasingly attractive to those from nearby suburbs and border states. Chicago hosted 44
million domestic and overseas visitors in 2006, including 18 million domestic leisure travelers and
14 million domestic business travelers. These visitors contributed nearly $10 billion to Chicago’s
economy, according to the Chicago Convention & Tourism Bureau.
Chicago is also one of the nation’s leading convention destinations. Chicago’s central location
attracts millions of attendees and exhibitors to some of the nation’s largest and best convention and
trade-show facilities each year. The city is home to more conventions, trade shows, and corporate
meetings than any other city in the world. McCormick Place, the largest exhibition space in the
United States and seventh largest in the world, encompasses 2.7 million square feet of exhibit space
and 700,000 square feet of meeting room space. In 2006, more than 2.2 million people attended
events at McCormick Place.
P. 24
Top Tourist Attractions
Navy Pier
John G. Shedd Aquarium
Chicago Trolley & Double Decker Co.
Chicago Zoological Society
Lincoln Park Zoo
Art Institute of Chicago
Millennium Park
Museum of Science and Industry
Six Flags Great America
Sears Tower Skydeck
Field Museum
HOSPITALITY
The Chicago hotel market as a whole has experienced substantial growth across all segments
over the past ten years. Within the CBD, there are approximately 83 hotels with a total of over
30,000 rooms, compared to the entire Chicago metropolitan area which has over 100,000 rooms.
The Chicago CBD has also been the beneficiary of significant investments in hotel development
and renovation over the past ten years, demonstrating the universal belief in the strength of the
Chicago market. Since 1998, twenty properties (a total of over 6,000 rooms) have either been
built or renovated in the CBD. Currently, a number of new hotel brands have announced intentions
to capitalize on the strong demand for luxury accommodations in the CBD area.
As a major travel and business destination, Chicago is already home to a number of luxury hotels.
These properties boast an abundance of high-end amenities, exceptional service, and picture
perfect locations that make a stay in Chicago both pleasurable and convenient. Located along and
adjacent to North Michigan Avenue, The Park Hyatt, The Ritz-Carlton, The Four Seasons, and The
Peninsula are just steps away from hundreds of upscale boutiques and premier shops, including
Tiffany & Co., Neiman Marcus, and American Girl.
EDUCATION
Chicagoland is home to a number of the Midwest’s leading colleges and universities, including the
University of Chicago, Northwestern University, University of Illinois at Chicago, DePaul University,
and Loyola University. In Chicago alone, there are 95 institutions of higher learning, attracting a
large number of resident students. Approximately 52,000 college students reside within the Loop
alone.
The University of Chicago is one of the foremost universities in the country, known for the fact
that more Nobel Laureates have been associated with it than any other university in the world. Its
Medical Center and Pritzker School of Medicine are considered among the top ten healthcare
training and service centers in the nation. Created by the 1982 merger of the University of Illinois’
Medical Center and its Chicago campus, the University of Illinois at Chicago serves more than
25,000 students at its city campus. Chicago is also the site of the medical, dental, and law
schools of Northwestern University, whose main campus is in Evanston.
Chicago is a world leader in training future business executives, with two MBA programs
consistently ranked among the top business schools in the world. In 2007, BusinessWeek ranked
the Graduate School of Business at the University of Chicago and Northwestern University’s
Kellogg School of Management numbers one and three, respectively, in the world.
P. 25
MUSEUMS AND CULTURE
Chicago is home to some of the finest museums in the world, and the architecture of their buildings
is an integral component of the downtown environment. In an impressive building designed by
Daniel Burnham, the Field Museum is one of the world’s outstanding museums of natural sciences.
Arts and culture are housed in grand style in buildings such as the Civic Opera House and Art
Institute of Chicago, which is immediately recognizable by the stone lions that flank the entrance.
The Museum of Science and Industry is the nation’s preeminent center for learning about science
and technology. The Adler Planetarium, on the lake near the Field Museum, became the first
planetarium in the Western Hemisphere when it opened in 1930. The adjacent John G. Shedd
Aquarium, the world’s largest indoor aquarium, is home to nearly 6,000 aquatic animals from waters
around the world.
ENTERTAINMENT/SPORTS
Long known for their proud tradition in sports, Chicago is the home of the 2010 Stanley Cup
Champions, the Chicago Blackhawks; 2005 World Series Champions, the Chicago White Sox; as well
as the 2006 NFC champions, the Chicago Bears. While the Bears play at Soldier Field, the White Sox
play at U.S. Cellular Field, the Cubs at Wrigley Field, the NBA Bulls and NHL Blackhawks play at the
United Center, and the Chicago Fire play at Toyota Park. All are located within the city of Chicago.
World-class golfing is readily accessible, and Lake Michigan provides miles of parks, beaches, and
boating activities for all residents.
World-class shopping can be found on the world-renowned “Magnificent Mile” along Michigan
Avenue between Oak Street and the Chicago River. With four major shopping centers, countless
boutiques and locally acclaimed designers, Chicago’s Magnificent Mile area is a shopper’s paradise.
With over 460 retail stores, there is something to offer every style. After shopping or strolling,
guests can enjoy one of the many exceptional restaurants or enjoy Chicago’s famous skyline. On
State Street, visitors not only enjoy shopping and dining, but can take advantage of Chicago’s superb
theatres such as The Chicago Theatre and the LaSalle Bank Theatre. Additional points of interest
include Macy’s at Randolph and State, the Reliance Building at 32 North State, the Chicago Building
at State and Madison, and the Harold Washington Public Library at State and Congress.
TRANSPORTATION
Chicago’s city and suburban mass transit system is one of the country’s most technologically
advanced, with three autonomous divisions of the Regional Transit Authority (RTA) servicing the
entire metropolitan area. The transportation system is not subject to the enormous growth pressure
and subsequent traffic sprawl experienced by Los Angeles, Atlanta, Dallas, and other post World War
II cities.
The Chicago Transit Authority (CTA) provides bus and train service within the city and some of the
close-in suburbs. Its rapid transit trains include both subway and the famous “L” or elevated lines.
The Metra commuter provides rail service to many suburban areas within a 40-mile radius of
downtown Chicago. In freight transport, Chicago is the only gateway in which all six Class One North
American railroads can interchange with one another.
P. 26
Both of Chicago’s two international airports, O’Hare and Midway, are within a four-hour flight to all
major United States cities, with over 134 total nonstop domestic routes. O’Hare International Airport
is consistently ranked as one of the country’s busiest, moving over 200,000 passengers through
daily. O’Hare offers nonstop flights to over 69 international business destinations. Midway
International Airport recently completed an eight-year renovation and expansion program, including
a new 900,000-square-foot terminal building. The new terminal offers expanded ticket counters,
spacious baggage claim areas, traveler information, and a short walking distance to airline gates. The
expansion project also resulted in the addition of 14 gates, with the airport now providing 43 gates
on three concourses. A new 6,300-space economy parking garage was also constructed to ease
commuting.
EMPLOYMENT
Chicago retains one of the most diversified economies in the nation. Historically known as a
manufacturing and transportation hub, the city has grown into a world leader in the financial markets,
banking, and law industries. Manufacturing still remains a vital and strong element of Chicago’s
economy. Sales figures for manufactured steel, metal products, furniture, household appliances,
food products, chemicals, communications equipment, and electronic goods produced by industrial
firms located in Chicago continue to increase.
The services sector of Chicago’s employment has rapidly expanded in recent years with particular
strength in the convention/trade show industry, financial services, research and development, and
the airline industry. All of these categories are major employers in the Chicago metropolitan area.
The NIPC Board of Commissions recently endorsed the agency’s 2030 employment forecasts, which
anticipate continuing growth in the six-county metropolitan area over the next three decades. The
number of jobs in northeastern Illinois will grow by 1.2 million, approximately equal to the growth in
the previous 30-year period. Employment in the six counties will increase from 4.4 million in 2000
to 5.6 million in 2030.
RESIDENTIAL
Downtown Chicago continues to attract new residents. The unprecedented growth and absorption
of CBD condominium units in recent years continue to fuel the expansion of office space and
entertainment options in the Loop area. The residential explosion in the CBD is well documented by
the over 40,000 new units delivered since 2000, with an additional 10,000 units planned for delivery
through 2010. These units are housing both young professionals and middle- and upper-management
executives seeking the many benefits of the city of Chicago lifestyle.
With the revival of Chicago’s downtown environment, young professionals no longer automatically
migrate to the suburbs to start families. The construction of new city schools and the expansion of
private schools enable families to stay and enjoy the many benefits of downtown Chicago.
P. 27
MARKET OVERVIEW
MARKET OVERVIEW
METROPOLITAN OVERVIEW
Chicago, the economic capital of the Midwest, is consistently recognized as one of the premier
cities for business, both on a national and international level. Chicago’s future lies in its
transportation and distribution network, its strong export-orientated manufacturing industries, as
well as its status as a dominant financial and services center.
The Chicago metropolitan area is the largest office market in the Midwest and consistently one of
the strongest markets nationally. The strength of the commercial real estate market is a result of
the diversity and stability of the business base. The Chicago metropolitan area attracts preeminent
businesses from across the Midwest. A concentrated core of traditional manufacturing companies,
complemented by market leaders in the legal, finance, banking, and high-tech industries, have
fueled the Chicago metropolitan markets.
NORTHWEST SUBURBAN OVERVIEW
1124 Tower Road is located in the dominant Northwest suburban office submarket. The submarket
includes the northwestern communities of Addison, Arlington Heights, Barrington, Bloomingdale,
Carpentersville, Elk Grove Village, Hoffman Estates, Itasca, Palatine, Rolling Meadows and
Schaumburg. The Northwest submarket contains approximately 25.7 million square feet of office
space and is the largest submarket in suburban Chicago.
The Northwest market encompasses northwest Cook County and a portion of northern DuPage
County. The market is considered to be one of the most diverse suburban office markets in the
country. The Village of Schaumburg has the highest concentration of office space in the entire
non-CBD. Within the Northwest market, over 55 percent (or 13 million square feet of inventory)
was built in the 1980s as the Northwest market emerged as a major suburban business corridor.
The development of the Northwest market was largely due to its proximity to executive housing
along with the growth of the Northwest Tollway system. The area is characterized by low-density,
upper-end housing that supports both corporate executives and entry-level personnel. The
availability of land and close proximity to both O’Hare and Palwaukee airports, as well as the
Woodfield Mall, precipitated developers to pursue commercial opportunities. The result is a wellbalanced, highly desirable market that effectively meets the needs of both residents and
corporations.
The Northwest market lies at the convergence of two major Chicago expressways, the Northwest
Tollway (I-90) and Route 53/I-290. The market has evolved into a business corridor with
corporate headquarters to a diverse group of corporations, including Motorola and Zurich America.
The growth of the Northwest market is the result of the substantial concentration of these
corporate headquarters, coupled with outstanding quality of life offered in the northwest suburban
communities.
The balance of this section will provide a broad overview of the Chicago suburban office market
with special focus on the Northwest market. Details regarding vacancy, rental rates, absorption,
tenant improvements and new construction are provided to assist potential investors in accurately
underwriting the offering. The market statistics are derived from Colliers Research Services
group. The data is updated quarterly and is available to prospective investors for further review.
P. 29
VACANCY
Vacancy in the Northwest market continues
to rise, ending the second quarter of 2010 at
27.8 percent, up from 27.7 percent last
quarter and 26.9 percent during the same
time period in 2009.
There are eleven properties in the Northwest
market that can accommodate large
(100,000 square feet and above) users, ten
of them being Class A.
LEASE AND SALE ACTIVITY
Top Northwest lease transactions for the
second quarter include Cyber Workplace
Recovery Services’ 43,250-square-foot
lease at 1221 E. Business Center Drive in
Mount
Prospect
and
Tegrant’s
42,000-square-foot renewal/expansion at
Commerce Point Tech Center in Arlington
Heights.
MARKET INDICATORS
Recent investment sales in the Northwest
market include Imperial Realty’s purchase of
3501 Algonquin Road, a 209,000-squarefoot property in Rolling Meadows for $4.5
million, creating a new low watermark for
the Northwest market.
Northwest
Mid-Year
2009
VACANCY 26.9%
Mid-Year
2010
27.8%
ABSORPTION -477,379 sf -58,559 sf
ABSORPTION
Second quarter net absorption was negative
40,736 square feet, bringing year-to-date
net absorption in the Northwest market
down to negative 58,559 square feet.
Absorption at mid-year 2009 was negative
477,379 square feet.
CONSTRUCTION
No new construction was completed in the
Northwest market during the second quarter
of 2010.
There are no noteworthy developments
currently underway in the Northwest
market.
RENTS
The Northwest suburban Class A average
asking rate measured $26.22 per square
foot gross, up slightly from the mid-year
2009 rate of $26.19.
The average asking rate for all classes was
$19.80, down from $20.05 in the same time
period last year.
Continental Towers, a three-building
complex in Rolling Meadows, was recently
acquired by CW Capital, putting the building
in a strong capital position for leasing.
$20.05 psf $19.80 psf
RENTAL RATE
gross
gross
2600 Forbes Avenue, a 90,000-square-foot
property in Hoffman Estates is currently
under contract.
UPDATE
0.8
0.6
0.4
0.2
0.0
-0.2
TENANT
SIZE (SF)
ADDRESS
TYPE
25%
Career Education
317,216
Woodfield Point Office Center, Schaumburg
New
20%
FDIC
150,000
Woodfield Corporate Center I, Schaumburg
New
15%
Verizon
123,288
Woodfield Corporate Center II, Schaumburg
Renewal/ Restructure
5%
Cyber Workplace
Recovery Services
43,250
Kensington Business Center, Mount Prospect
New
0%
Tegrant
42,000
Commerce Point Tech Center, Arlington Heights
Renewal/ Expansion
Swiss RE
30,995
Woodfield Corporate Center, Schaumburg
Renewal/ Expansion
CORAM, Inc
32,059
Kensington Business Center, Mount Prospect
Renewal
10%
-0.4
-0.6
-0.8
TOP TRANSACTIONS – FIRST HALF OF 2010
30%
2003 2004 2005 2006 2007 2008 2009 2010
P. 30
Vacancy Rate
Square Feet Absorbed (Millions)
New Supply, Absorption and Vacancy Rates
SUBURBAN OFFICE SUBMARKET
P. 31
CONTACT DETAILS
Brian P. Nagle
Jerrod L. Wigal
Executive Vice President
Senior Associate
312-612-5935 direct
312-612-5937 direct
847-698-8265 direct
[email protected]
[email protected]
Steven Kling
Jason Simon
PrincipalAssociate
847-698-8256 direct
847-698-8531 direct
[email protected]
[email protected]
www.colliers.com/chicago
No warranty or representation is made to the accuracy of the foregoing information.
312-648-9150 main | 312-648-9149 facsimile
847-698-8444 main | 847-698-8445 facsimile

confidential offering memorandum

Transcription

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