Weekly CoStar Column Spotlights Trends, New Projects and Construction Entering (Or Leaving) the Commercial Real Estate Development Pipeline
In this week’s column,
development sites for future high-rises open up in the
Medical District and
West Loop of
Chicago; a report
supports a casino, hotel and other development at Belmont Park in Long Island, NY; a
Miami office tower under constuction loses a major anchor tenant; the city of
Newark, NJ, greenlights a mixed-use residential and retail project; and an electricity provider
acquires land for a substation in
The Allen Group’s Dallas Logistics Hub near Dallas, and
Madison Group plans a 32,000-square-foot eco-friendly building in a former theater, also in Dallas. Plus,
more land sales and new development...
In The Pipeline is a column by Senior News Editor Randyl Drummer on significant land sales, transactions and trends affecting office, industrial, flex, multifamily, mixed-use, hotel and public works developers. Send us news leads about your new project --
and sign up to be added to our distribution list to receive future In the Pipeline columns for free by e-mail.
Read previous columns.
High-Rise Sites Hit Market in Chicago
Though it's relatively rare for urban parcels for potential skyscrapers to open up in downtown Chicago, two sites have hit the market in recent days.
Inland Real Estate Auctions, Inc. announced it will sell a 20,000-square-foot building at 326 N. Michigan Ave. on behalf of owner Loukas Development in a sealed-bid auction. The three-story Mather building, two blocks from Millennium Park, is one of the few developable parcels on North Michigan Avenue. The auction winner will also receive full rights to redevelopment for a venture on the site potentially valued at $93 million, which Inland Real Estate said is ideal for a wide range of retail, office, residential, hospitality and entertainment uses.
Paul Rogers, senior vice president and managing broker of Inland Real Estate Auctions, said "the whole dynamic in that area has changed" since Millennium Park opened, with new condominium developments nearby adding a new residential component to the area. Rogers said "the possibilities for the site are endless," with about 16,000 pedestrians and 37,000 vehicles passing by daily.
Rogers said interest is high and the seller, Loukas Development, wants to use a auction rather than a conventional marketing process to quickly sell the property.
"It's highly unusual for a building on this part of Michigan Avenue to be sold conventionally, let alone at auction. Increasingly, the owners of even high-profile properties are turning to auctions as a way to realize immediate value in a volatile market."
Meanwhile, CB Richard Ellis is marketing a development site with full zoning and entitlements for a 23-story, 325-unit apartment tower in Chicago’s West Loop at an asking price of $11 million.
The 31,838-square-foot site at 1035 W. Van Buren St. includes preliminary architectural plans and schematics, giving investors a turn-key opportunity in one of the most underserved apartment markets in downtown Chicago, said John Jaeger, first vice president with the Investment Properties Group of Los Angeles-based CBRE.
The property owner, Van Buren Financial LLC, a venture controlled by Chicago-area developers Robert Horner and Ibrahim Shihadeh, will also consider a joint venture if it can find a qualified partner.
The property, currently a parking lot, is along the north side of the Eisenhower Expressway, adjacent to the University of Illinois at Chicago campus and near the medical district. It’s also less than a mile from the Loop office market.
"The population dynamics of the surrounding area are very strong with more than 30,000 students and medical professionals and 200,000 Loop office workers within five minutes of the site," Jaeger said. "A developer has the flexibility to position the apartments for students as well as traditional market-rate renters."
Other features of the planned development include up to 12,000 square feet of street-level retail space and a 350-car parking garage, along with agreement with a nearby property owner to sell up to 100 spaces within the garage to reduce the parking ratio.
The development also offers potentially lucrative outdoor signage opportunities and the existing parking lot has parking with 65 cars leased on a month-to-month basis for $125 each, providing cash flow to an owner prior to groundbreaking, Jaeger said.
The UIC/Medical District submarket has seen little new high-rise apartment development since 1971, when the 410-unit Medical District Apartments property was developed at 901 S. Ashland Ave. Similarly, the West Loop, which is the second largest residential submarket in downtown Chicago, has seen relatively little new apartment development since a wave of new condominiums, restaurants, bars and art galleries transformed the area into a hotspot for city dwellers beginning in the mid 1990s.
"The area has suffered from a lack of new rental housing," Jaeger said.
Study Backs Belmont Park Rasino Plan
A new report recommends that a casino and hotel be built at the Belmont Park racetrack in Nassau County to generate jobs and revenue for state and local government.
Options for the redevelopment of an approximately eight-acre parcel adjacent to the racetrack grandstand include a hotel and racino, according to the Belmont Park Redevelopment Study, released this week by the Empire State Development Corp. and the New York State Racing and Wagering Board.
Redevelopment options for a larger parcel of about 28 acres include retail, a small hotel, senior housing and recreational opportunities.
Before the project can go to bid, however, the state and other stakeholders must conduct further financial and economic feasibility analysis to determine a preferred option based on the most marketable and beneficial uses for the property. Once that once is approved by the state, requests for proposals could go out, followed by a public and environmental review process.
New York Gov. David A. Paterson said Belmont Park is an enormous economic development asset for the state, and "in these times of fiscal crisis, it’s important that we move forward with projects like Belmont, which can create new jobs, generate additional tax revenue and bolster economic development in the surrounding communities in Nassau and Queens Counties."
Although Belmont Park is the third jewel in racing's storied Triple Crown and has been an enormously successful horseracing venue for more than 100 years, "its full development potential has never been realized," said John Sabini, chairman of the state Racing and Wagering Board. With the study, "we are reawakening this sleeping giant of a state and community asset," Sabani said.
Download a copy of the redevelopment report.
Anchor Tenant Parts Ways With Brickell
By Andrew Burr
Bilzen Sumberg, the South Florida-based law firm, has pulled out of a lease agreement for 115,000 square feet at Brickell Financial Centre in Miami.
Neither the law firm nor the tower’s developer, Foram Group, said why the contract was terminated, although both parties consented to the decision, according to a statement Thursday from CB Richard Ellis, the brokerage firm that represents the building.
The move leaves the 40-story office tower without an anchor tenant with less than a year to go before it delivers.
Brickell Financial Centre broke ground in 2007 and
topped off last month. The 600,000-square-foot property is being constructed at 600 Brickell Ave. in Miami’s prestigious Brickell submarket. It is pre-certified for LEED Silver certification from the U.S. Green Building Council.
Bilzen Sumberg is back shopping for space, although with commercial rents falling nationwide as the recession has worsened, it is seeking more favorable lease terms than those of its April 2008 lease with Foram, one of the firm’s executives indicated in a
story posted by the South Florida Business Journal.
That deal was valued at $58 million over more than 10 years, the Journal reported.
Construction at Brickell Financial Centre is continuing according to schedule and Foram Group is negotiating with "several other major tenants" for space at the tower, CB Richard Ellis said.
Newark, NJ Okays Project Near Performing Arts Center
The City of Newark, NJ, has announced that a mixed-use residential and retail project proposed by a partnership between the New Jersey Performing Arts Center and Dranoff Properties Inc. is one of the city’s "top economic development priorities."
At 40-plus stories, the Two Center Street project on 1.2 acres near the performing arts center is envisioned to become the tallest building in Newark, including 300 residential units, and more than 20,000 square feet of ground-floor retail. The project also includes parking for 550 vehicles.
Twenty percent of the residences will be set aside for artists. The proposed retail includes restaurants, cafes, shops, galleries and possible cultural uses. The parking will serve residents, performing arts center patrons and growing numbers of shoppers in the area.
"This project will strengthen our downtown, add hundreds of new housing units and create construction jobs in our city," said Newark Mayor Cory A. Booker, who announced the heightened emphasis on the project during his recent state of the city address. "We pledge to move this project forward intensively this year, securing the resources we need to make it a go for construction in the coming years."
The Performing Arts Center and Philadelphia-based Dranoff Properties, Inc. entered into a letter of intent last year to develop Two Center Street. The project underwent a rigorous evaluation conducted by a "scorecard committee" convened by the Brick City Development Corp., the city’s main economic development organization.
Oncor Acquires Land at Dallas Logistics Hub
Oncor Electric Delivery Co. LLC has acquired 9.3 acres in the Dallas Logistics Hub for construction of an electric transmission substation.
Construction of the new substation is scheduled to begin by May and is being built in part to support the more than 60 million square feet of planned industrial growth within the 6,000-acre Dallas Logistics Hub, according to The Allen Group, developer of the multi-modal logistics park in southern Dallas County. The site will become the third substation within the boundaries of the logistics hub. Oncor will plan, build, operate and maintain the transmission system -- from the generator to the distribution substations -- in portions of northern, western, and central Texas.
Daniel J. McAuliffe, Texas Division president for The Allen Group, noted that the infrastructure for the logistics hub continues to grow and that the new substation will provide redundant electrical power to end users and tenants of the complex. Jason Elms and Dan McAuliffe represented the The Allen Group, and Wendell South and Billy Dearmon represented Oncor in the transaction. The sale price was not disclosed.
Madison Partners to Develop Theater Site in Dallas
By Celina Sanchez
Plans are under way to develop an eco-friendly building to take the place of the former Arcadia Theater at 2001 Greenville Ave. in Dallas. Madison Partners, owner of the site, will begin construction on the Greenspace project this spring and hope to have it completed within a year. The 32,000-square-foot project will cost an estimated $8 million to develop.
The project will have approximately 20,000 square feet of retail and restaurant space on the first floor and 12,000 square feet of office space on the second floor. Madison will apply for LEED certification. The building will include: a sod roof for improved thermal and sound insulation, awnings for shade, green vines as shade on the building’s west wall and dual photovoltaic panels to provide common-area electricity.
Madison Partners has shifted its focus to developing sustainable projects. As members of the U.S. Green Building Council, Madison is committed to building environmentally responsible communities.
In The Pipeline is a column by Senior News Editor Randyl Drummer on significant land sales, transactions and trends affecting office, industrial, flex, multifamily, mixed-use, hotel and public works developers. Send us news leads about your new project --
and sign up to be added to our distribution list to receive future In the Pipeline columns for free by e-mail.
Read previous columns.
More Land Sales and New Development
Matrix Development Group has sold 1 million square feet to National Freight Industries at Matrix's Gateway Business Park in Oldmans Township in Salem County, NJ. National Freight Industries is a a trucking, warehousing and third-party logistics firm with nearly 60 trucking facilities nationwide and more than 14 million square feet of contract and public warehouses. Sales and broker information was not disclosed.
Union Community Partners, taking title as UCP Barclay III, LLC, purchased nearly 29 acres of land located at 1241-1463 Locan Avenue in Clovis, CA for $9.432M or $329,213.51 per-acre. The plans for the land are to develop a single-family home community. Included in this sale were 144 lots at $65,500 per lot. All the fees except for school fees were included in the price. The buyer also acquired properties located on Bloomfield Lane, N. Notting Hill and Harlan Ranch Road. Ann Bierbower of Wathen Castanos, Inc. represented the seller, CVEC Group, Inc., taking title as Neescan, L.P. The buyer had no broker representation. (By Dean Buenaventura, CoStar COMPS #1648817)
Your Community Real Estate Group purchased 2.36 acres at 120 Barnhardt Street in Greensboro, NC, from a private seller for $1 million, or approximately $445,000 per acre. Located in the Greensboro central business district, the land is planned to be redeveloped into a restaurant and entertainment complex. Robbie Perkins of NAI Piedmont Triad represented the seller. Wrenchel Stokes represented Your Community Real Estate Group, in-house. (By Melanie Lamb, CoStar COMPS #1630881)
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