The Shamrock Companies, Inc. has just signed a lease on 15,000 square-feet in a combined office and warehouse facility in Buffalo Grove, Illinois.
“This downsized us actually,” David Fechter, executive vice president of operations for the Ohio-based marketing and design firm, told GlobeSt.com. “We were not fully utilizing the office or warehouse space in the old location,” which was nearby, and this helped force Shamrock to look elsewhere.
Zach Graham, Keith Puritz, Brett Kroner and Ryan Bain from the Los Angeles-based firm CBRE, Inc. assisted Shamrock in negotiations and the new landlord, TA Associates Realty, was represented by Darwin Realty.
The deal seems a typical one for the struggling suburban Chicago office market, which for the past year has seen no growth. Instead, many firms still not recovered from the economic crisis have opted to rent smaller spaces. In the final quarter of 2012, the suburban office market had an overall vacancy rate of 24.5%, a level unchanged from last January, according to Chicago-based real estate firm Jones Lang LaSalle Inc. CBRE, Inc. recently reported that the rate in downtown Chicago was only 14.9%.
Fechter added that the company, which has offices in nine states, considered moving this administrative and distribution operation back to Ohio. They eventually decided that keeping the 15 employees in suburban Chicago, but in somewhat smaller quarters, would save money and provide more stability. The new lease will run for five years and four months and the rate of $6.70 per square-foot is roughly equal to what Shamrock previously paid.
The demand for industrial and warehouse space in the Chicago area has also been limited. Colliers International, a Seattle-based commercial real estate services firm, found that tenant demand in the third quarter of 2012 was only 7.8 million square feet, a decline of 28.5% from the second quarter, although the vacancy rate was relatively steady at 10.04%. Lake County, Shamrock’s location, has struggled even more. “Sluggish user demand negatively impacted Lake County’s net absorption which totaled a disappointing negative 145,700 square feet,” Colliers found. Most of the quarter’s leasing activity came from small to mid-sized companies like Shamrock.