Law firm rental rates: Landlords could be gaining the upper hand soon

Law office space rental rates

Moving into your first office space: What you should know

NewOffice

(The following post originally appeared on the Catapult Chicago Blog)

By Corey Siegrist
Vice President, Tenant Representation
JLL Chicago

Ready to move into your own office space but unsure of how to get started? It’s more than just a space search. We often find that tenants new to the office sector fail to realize the associated costs and requirements necessary to make the jump.

Prioritize Needs Versus Wants

You should set expectations – caviar taste on a beer budget won’t work, unfortunately.

Here are some key questions that new office users should consider:

  • Where are your employees commuting from?
  • How much space do you need? (Typically we recommend 150 sf per person in a benching environment and 250 sf per person in a private office / workstation environment)
  • Would the chosen space enable growth?
  • What is the minimum lease term? How flexible will the landlord be?
  • Building capabilities? Chilled water, condenser water, fiber, redundancy, power capacity, etc.?
  • Do you want to be in a 24/7 neighborhood?
  • What amenities are offered (bike room, dogs allowed, etc.)?

Be Aware of Hidden Costs

Below are additional expenses that tenants should be aware of when budgeting.

  • Security deposit – typically landlords require 2-6 months rent depending on the company’s financial stability.
  • Furniture – unless you’re lucky enough to find a fully furnished sublease or spec suite that fits your needs, you need to decorate! Typically furnishings cost $10-$15 per sf to purchase (rental is also an option and can be less expensive).
  • Wiring – conservatively, this could cost up to $3 per sf and is usually the responsibility of the tenant.
  • Attorney fees – a lease is a legal document and tenants should obtain the advice of a lawyer that specializes in real estate leases. This can range from $1,500 – $3,000 and is a flat fee.

The bottom line: more goes into choosing office space than the location and dollar per square foot!

JLL’s team provides expertise in successfully moving high-growth companies into their first offices. Contact Corey at corey.siegrist@am.jll.com

Chicago’s corporate facilities have global reach

GlobalReach

  • The Chicago metro area is home to more than 1,500 foreign companies, 55 of which are manufacturing firms.
  • Chicago’s skilled workforce and world-class transportation infrastructure — as well as the state’s efforts to reform its pension system — have made the market more attractive to business leaders around the country and around the globe.
  • Site Selection magazine has noted this with its recent inclusion of Chicago and Illinois on its list of “top markets for new and expanded corporate facilities.” Chicago is on top of the list and Illinois is third among the 50 states.

Law firm growth trends and real estate strategy

 

Jones Lang LaSalle is now JLL

JLL-AON

As you’ve probably seen on social media by now, Jones Lang LaSalle has officially shortened its name to JLL.

The shorter name and new logo (see the top left hand corner of this page) are:

  • Easily recognized and visible in the 75 countries around the world where we do business
  • Memorable and easily pronounced in languages worldwide
  • More suitable for digital applications and mobile channels

Here in our global headquarters city of Chicago, we celebrated the change last night by illuminating our new name on the side of our HQ building, Aon Center (see photo above).

The news is also attracting the attention of the media (including the Chicago Tribune and GlobeSt.com) as well as business leaders like Jeff Malehorn, President & CEO of World Business Chicago, the city’s economic development arm, who said the following:

“JLL has a long history in Chicago and deep roots in our community. We’re proud to have this innovative and forward-looking global firm call Chicago home, and we congratulate JLL on beginning this new chapter.”

Click here to learn more about our shift to JLL.

Four reasons why 2014 will be ‘The Year of the Distribution Center’

2014Industrial

And you thought 2013 was good for industrial?

This year, e-commerce is fueling anall-out boom market.

CLICK HERE to read about the four trends driving demand, development and delivery of distribution centers across North America.

Chicago Office Employment Update

JanuaryUnemployment

The U.S. economy added another 113,000 jobs in January, representing a second consecutive month of below-average payroll growth. Unemployment fell by 10 basis points, reaching a recovery low of just 6.6 percent.

Although gains have not consistently met or exceeded the 200,000-job monthly threshold for sustained expansion, growth has been broadening in both industry and geography. Finally, revisions demonstrated that the recovery of late has been more consistent than previously thought, with upward revisions in November and December totaling 34,000 jobs.

Chicago’s unemployment increased for the first time in six months in December, up 10 basis points to 8.1 percent for the month but for the year. Chicago has added 554,500 positions since December 2012.

Check out our full Office Employment Update for a more detailed view of the implications of the recent employment trends on commercial real estate.

VIDEO: 2014 Commercial real estate lending forecast

Last month, our JLL Chicago Investor Services team welcomed more than 50 clients and guests for our 2014 Downtown Chicago Investor Forecast Breakfast at the Peninsula Hotel.

Among the speakers was JLL Managing Director David Hendrickson, who offered his predictions for the year ahead relative to the commercial real estate lending markets. Click on the video above (1 minutes, 15 seconds), to watch Dave give his forecast.

Looking for more? Email him at david.hendrickson@am.jll.com  for access to the materials that accompanied his presentation.

VIDEO: 2014 Suburban Chicago Office Investment Sales Forecast

Recently, our JLL Chicago Investor Services team welcomed more than 20 clients and guests for our 2014 Suburban Chicago Investor Forecast Breakfast at the Hyatt Regency O’Hare.

Among the speakers were Managing Directors Jim Postweiler and Bruce Westwood-Booth, who offered their predictions for the year ahead relative to the office investment sales market. Watch the video above (2 minutes, 17 seconds) to hear their outlook for 2014.

Looking for more? Email Bruce at jim.postweiler@am.jll.com or bruce.westwood-booth@am.jll.com for access to the materials that accompany this presentation.

VIDEO: 2014 Chicago CBD Investment Sales Forecast

Last month, our JLL Chicago Investor Services team welcomed more than 50 clients and guests for our 2014 Downtown Chicago Investor Forecast Breakfast at the Peninsula Hotel.

Among the speakers was International Director Bruce Miller, who offered his predictions for the year ahead relative to the office investment sales market. Watch the video above (3 minutes, 46 seconds) to hear his outlook for 2014.

Looking for more? Email Bruce at bruce.miller@am.jll.com for access to the materials that accompany this presentation.

Sizzle or Fizzle? North-suburban office market ends 2013 with mixed signals

NorthSuburbanQ1Snapshot

By Dan McCarthy and Henry Lee
Jones Lang LaSalle

As was detailed in this recent article by Crain’s Chicago Business, the North submarket had a mixed fourth quarter with some positive and negative gains.

On the positive side, the largest lease transaction of the year was signed when our client Zebra Technologies agreed to a 230,000-SF lease at 3 Overlook Point in Lincolnshire. The company will be consolidating its offices from two other buildings in the submarket.

On the flip side, the start of Capital One vacating its 500,000-square-foot building in Mettawa had a negative effect. While the credit card giant will not be abandoning the suburbs all together, the vacancy will leave another large gap in a submarket that is already plagued by an abundance of large vacancies. With half of the building beginning to empty out this quarter, the other half will be vacated in the second quarter of 2014. Although this impacted total vacancy, direct vacancy decreased in both counties falling 40 basis points to 13.1 percent in Cook County and dropping a full percentage point to 18.7 percent in Lake County.

Looking ahead, we predict that the north-suburban market will continue to tighten in 2014, but that the improvement will be gradual, with tenants retaining their upper hand over landlords for the duration of the year.

Click here to dowload JLL’s complete Q42013 Suburban Office Market Insight report.

Dan McCarthy and Henry Lee advise a variety of large-space users in the North submarket, most recently representing Zebra Technologies in its lease in Lincolnshire.

JLL Chicago team gives back at Ronald McDonald House

RMH1

Our JLL Chicago Tenant Rep team kickedoff 2014 with a night of service at Ronald McDonald House near Lurie Children’s Hospital. About 20 team members — led by Managing Director Len Caldeira and his wife, Chantal — planned, prepared and served a home-cooked dinner to families staying at the house.

RMH’s Meals from the Heart program gives the families time to relax and replenish after spending a long day at the hospital at their children’s bedside.

All of our JLL volunteers left the event inspired by the difference an evening of service can make in the lives of others.

Other team members participating included Todd Schaefer, Laura Klancnik, Jamie Pabst, Amy Binstein, Adreinne Fasano, Brian Means, Ben Erskine, Jack McPherrin, Evan Stamatoukos, Chad Buch, Kim Rankin, Mark Kolar, Patty Theokas, Mike Bennett, Beth Myers and Joe Klosterman.

Chicago digital startups raised more than $1 billion in 2013

ChicagoStartupFund-Raise

According to a report from Built in Chicago, an advocacy group for the Chicago digital startup community, local startups raised more than $1 billion in 2013, a 169% increase from the previous year.

Additionally, the 18 digital companies that were acquired and the one that went public generated more than $3 billion, a huge spike compared to the $700 million generated from exits in 2012, prompting the group to dub 2013 as ”the best year to date for Chicago’s digital ecosystem.”

Go to the Built in Chicago website for more details …

North-suburban office building offers rare opportunity for single user

2111WaukeganRoad

Despite a Class-A vacancy rate slightly above 20 percent, Chicago’s north-suburban office market offers surprisingly few options for mid-sized users looking to lease or own a full building.

A new listing being brought to market by Jones Lang LaSalle, though, offers just that.

2111 Waukegan Road is a two-story, 36,400-square-foot, headquarters-quality building just south of Half Day Road in Bannockburn now available for sale or lease. Asking rent is $21.50/SF (gross). Listing price is $5.2 million.

As noted on the community news site Patch.com, the property is easily accessible from the nearby suburbs of Northbrook, Highland Park, Lake Forest, Lincolnshire and Deerfield.

For more information, contact JLL’s Brooke Houghton.

Industrial vacancy inching toward a cyclical low

metalbuilding

JLL Research just released its quarterly highlights of the U.S. industrial sector – here are some key observations:

  • Industrial markets nationwide have been quietly recovering for quite some time, demonstrated by 15 consecutive quarters of positive net absorption.
  • Now, nearly all U.S. markets are appreciating, and the national vacancy rate is moving closer to its cyclical low of 7.5 percent.
  • Based on intensifying market fundamentals, landlords (especially those of larger assets) are enjoying the gift of rent growth.

Read our Industrial Highlights, for a quarterly look at industrial leasing, sales and construction activity in the U.S. as a whole and here in Chicago.

JLL and Roger Staubach betting on the Broncos

RogerBroncos

For the fourth straight year, JLL and our Executive Chairman, Roger Staubach, are taking sides when it comes to the Big Game, betting on the Denver Broncos to outman the Seattle Seahawks this Sunday night.

While the talking heads and Vegas odds makers look to point differentials, QB ratings and other on-the-field stats, Staubach and our JLL team are once again sticking with what we know best — commercial real estate — to make our pick.

According to our analysis of the last 13 season finale games, teams based in cities with the higher office vacancy rate (i.e. more space available for lease) have won the Lombardi Trophy 62 percent of the time, including last February when Baltimore (15.5 percent vacancy) edged San Francisco (11.8 percent vacancy). This year, the overall vacancy rate in the Mile High city stands at 13.9 percent compared with 12.5 percent in the Emerald City, making the Broncos the firm’s favorite to win the crown:

“Peyton Manning is one of the greatest NFL quarterbacks of all time,” Staubach said. “I believe in our JLL formula, but more importantly, I also believe in Peyton and I know he’s going to get the job done for the Broncos and the great people of Denver on Sunday night. I love Seattle’s ‘D,’ I love [quarterback] Russell Wilson and I love ‘The 12th Man,’” he said. “But this is Denver’s year.”

Click here for a video of Roger talking about his pick.

Flight to quality drives suburban office leasing activity

3OverlookPoint

Despite the much-publicized trend of office tenants leaving the suburbs for downtown, the suburban office market saw no shortage of big deals in 2013, with companies taking advantage of favorable conditions to trade up to better space.

Two major deals recently completed by the Jones Lang LaSalle tenant representation team illustrate this dynamic at work:

  • In the largest office lease of 2013, Zebra Technologies Corp., represnted by JLL’s Dan McCarthy, is vacating two separate Lake County office buildings to consolidate all of its local employees under one roof in a 230,000-SF space previously occupied by Aon PLC in Lincolnshire (photo above).
  • Additionally, Omron Corp., a Japanese electronics firm, is selling its two-building, 75,000-SF office complex in Schaumburg and will move this spring to a new 70,200-SF space at the Greenspoint Office Park in Hoffman Estates. JLL’s Sean Reynolds and Andrea Van Gelder represented Omron in their site search and lease negotiations.

Sean tells Crain’s Chicago Business that the soft suburban market conditions allowed Omron to upgrade to a truly Class-A space and “drive a very low rent that, historically speaking, these buildings have not seen in a very long time.”

Other companies who’ve followed similar paths in recent months include Follett Corp. and, before that, in late 2012, Catamaran Corp.

Is it time to take off the training wheels?

GarageStartup

The following post first appeared on the Built In Chicago Blog.

By Brooke Houghton
Statrt-up Real Estate Advisor

Jones Lang LaSalle

Starting your company in a garage is legendary in the tech world. What’s not legendary, or often talked about, is the downside of working from home — be it from your garage, home office or even the local coffee shop.

The noise, nagging and lack of networking can not only drive you crazy, but it can also hinder the growth of your business. At some point, most small businesses hope to graduate into space that is conducive to growth and productivity. And perhaps, if you’re one of the few and lucky, you’ll be able to bring out an IPO and all the spoils one entails.

Chicago’s tech scene is clustered in the River North area (a.k.a. “the Silicon Loop”). Co-op and co-working locations have blossomed all over the city but especially in this area. Places like 1871, Catapult and WeWorks are beginner alternatives to working from home and offer many of the benefits of having your own space. But it’s still not your own space.

Here’s how you know when it’s time to take off the training wheels:

  • Your rent obligation at a co-working location is more than $1500 per month. At this point you can find your own space for approximately the same price. A good rule of thumb is to designate approximately 200 square feet per person to determine how much office space you need. For example, LaunchPad Lab , which used 1871 for a while before subleasing some space, just recently leased 1,500 square feet of space at 650 Lake Street for its expanding business.
  • You have clients visiting. The open layout and collegial feel of 1871, Catapult and others is great for energy and creativity but it’s not awesome for presenting to clients or investors. Why have your product, tool or offering clouded by the bells and whistles of the space and other companies?
  • You need to add 10 employees by next Friday. With your own office space, you control the layout and arrange employees to best suit your business and maximize productivity.

You’ll find that Chicago’s rents are far more affordable than in Northern California, with average rents around $31.89 versus $54.64, respectively. The River North area (bounded by the River, North Ave and State Street) is the second-tightest submarket in Chicago with a 10.7% vacancy rate. So what’s this mean to you, the start up? If you want space near the rest of the tech market, know that it’s going to be hard to find and not cheap. Look for direct and sublease options (sublease options typically offer a discount of 30% or more in terms of rent).

If you have the 4-6 person firm and need some space right now, there’s a 1,347 sf sublease option at 444 North Wells. At $24 psf gross, it’s a steal for this neighborhood. Contact me if you’re interested!

The best advice out there is to hire someone to help you with your real estate so that you can keep your eye on the ball (fyi, landlord pays for your broker; not you!)

Here’s some info on how Singlehop found their space – their challenges and opportunities!

VIDEO: Chicago industrial market shows signs of continued recovery in Q3

The Chicago industrial market showed signs of continued recovery in Q3 with more than 3.4 million square feet of total net absorption in July, August and September.

Watch the 90-second video above for a quick update on what’s been happening in the marketplace and click on the links below for additional recent reports:

Why Fulton Market / River West?

Fulton Market District

NOTE: The following post originally appeared on the Catapult Chicago Blog.

By Corey Siegrist
Vice President, Tenant Representation
Jones Lang LaSalle

From dozens of new restaurants to Sterling Bay’s purchase of 10+ buildings, the Fulton Market/River West area is quickly becoming one of the most sought-after neighborhoods for tech and emerging growth companies. It may not be as centrally located as the West or Central Loop, but its unique environment sets it apart.

Here’s a look at Fulton Market/River West by the numbers:

5 Reasons Start-Ups Love Fulton Market and River West:

  • The neighborhood has a laid back vibe and culture. It’s not as formal as other office submarkets making it the perfect place for growth companies seeking to avoid the congestion of the CBD.
  • This emerging area is the place to be – there are new restaurants, nightlife and hotels that can’t be missed from The Soho House to Rick Bayless’ upcoming spot.
  • The addition of the Lake and Morgan Green Line stop and the proximity to 90/94 make the neighborhood easy to get to from around the city.
  • The River North market has been so hot for the last few years that there is a shortage of cool, contemporary office space available. Plus it’s cheaper than office space in River North (for now)!
  • “The Google Effect” – companies want to be by like-minded organizations.

5 Things JLL Can Do To Help You Understand Fulton Market/River West:

  • JLL has a great relationship with Sterling Bay that we can leverage.
  • We can use our expertise to help identify risks within buildings (e.g. dealing with less sophisticated landlords than River North).
  • JLL’s tenant rep team provides an in depth knowledge of general office market conditions and availability.
  • Our brokers have an understanding of this new neighborhood and an idea of how it will develop from here.
  • We have a ton of experience with tech and high growth companies in Chicago and nationwide.

3 New Cool Buildings in Fulton Market:

  • 1000 W Fulton – Google’s soon-to-be Chicago office
  • 300 N Elizabeth – Sterling Bay recently purchased this brick and timber building
  • 210 N Green St – WeWork’s office

Corey’s 3 Favorite Neighborhood Places:

Want to hear more about Jones Lang LaSalle’s experience working with tech/start-up companies or get advice on Fulton Market and River West? Talk to Corey Siegrist (312-228-2947)