A 32,500-sf parking lot, which according to the published report is being bought from Toronto-based Manulife Financial, is across the street from a site that will see a 60-story office being anchored by the Pritzker Co.'s Hyatt Corp. Buck also is building at 1 N. Wacker Dr. one block north. However, the report comes in the same week ABN Amro announced plans to build up to 2.5 million sf of high-tech office space two blocks west across the Chicago River, resulting in the Netherlands-based banking firm leaving Loop office space.

Suddenly, the Downtown office market pendulum has swung swiftly back to tenants. Even with vacancy rates recently reported to be 8% or lower in the Downtown area, owners are advised to start cutting their best deals now before the Netherlands-based bank exits properties it currently owns or leases.

"We're looking ahead to a time between the beginning of 2002 and end of 2003 where there's going to be a tremendous amount of space with the construction by ABN Amro and Quaker, as well as their creating second-generation space," said John Goodman, executive vice president for Julien Studley. "As a result, I think we're going to have a significant oversupply, particularly in class A space, which we haven't seen in a while."

Already, demand for Downtown space was softening with the tech industry downturn. The looming ABN Amro Plaza development, which will create vacancies in four Loop office buildings, makes it a good time for tenants who have time to shop and can wait for occupancy.

"Large users have a lot of options, and they can make deals on space today," Goodman said.

Kent Ilhardt, executive director of Cushman & Wakefield's Downtown office, said it may be possible to use caisons that once supported the US Gypsum building at the Manulife site. Ilhardt, whose company was involved in the sale of the property to Manulife, questioned how the reported design would fly past the City Council and planners.

"It's interesting he'd build the first 12 floors without offices," said Ilhardt, referring to the reported plan to build the structure on a platform supported by 120-foot columns. "I don't know if the city would allow that, or if the tenants would like it. They must be putting in a false curtain wall." Rich Curto, chief executive officer of Prime Group Realty Trust, likes the reported design. "I think it's a unique concept of trying to avoid a potential view problem with the lower floors."

Officials from Lohan Associates, identified as architects for the project, were unavailable for comment.

Ilhardt also questioned whether Buck's due diligence would result in the developer going ahead with a project creating further competition in the office market. "Does the demand keep up? Does the absorption keep up? Does the economy keep up? We're all looking at the same picture," Ilhardt said. "I hope it's not a repeat of an ugly cycle, but I don't think it's going to be a repeat of the overbuilding we saw in the early '90s."

Despite Ilhardt's reservations, he's among those who aren't ready to bet against Buck. "Certainly he's a quality developer with the track record to make it happen," he said. And Curto suggests Buck will be required to have more than a few ducks in a row before the projects moves forward. "One of the key things to do is to talk to lenders, and they're not going to be involved with any buildings unless they're significantly pre-leased," Curto said.

Instant Insights /

John Buck Co. Reportedly Plans Office Building at Wacker Drive and Monroe Street

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