One of the REIT's biggest occupancy problems can be found in the East-West Tollway Corridor, where 28% of its 148,514-sf Lisle Executive Center is vacant.

Almost 17% of the REIT's 5 million sf of space in Chicago, Milwaukee, Minneapolis, Detroit, Denver, Cincinnati and Columbus, OH is up for renewal this year. Meanwhile, Great Lakes REIT's goal is to lower its vacancy rate to 6% this year, May added during a recent conference call.

"We are determined, even in the face of softer markets, to meet this objective," May said while announcing fourth-quarter funds from operations of $0.55 per share, up 5.8% from the fourth quarter of 1999.

The East-West Corridor's vacancy rate stands at 12.2% now, May said, with 1.6 million sf of new space coming on line. Lucent Technologies, which has 1 million sf in the submarket, has announced layoffs of 1,000 employees, he added.

"We are aggressively marketing Lisle Executive Center space at gross rents 15-20% lower than those of competing buildings," May said. "We have several proposals, but the submarket is rather thin right now." Net operating income for Lisle Executive Center was down 32% in the fourth quarter and 12.2% in 2000 to $1.7 million, according to the REIT's fourth-quarter report.

The REIT also is dealing with occupancy issues with the 198,304-sf Park Plaza in Milwaukee. There is 28,000 sf of vacant space now, with another 67,000 sf being vacated in the second quarter. Revenues, according to the fourth-quarter report, were down 3.5% to $2.03 million. "We lost two large tenants to new developments nearby," May said. "We have several strong prospects to fill this space."

The Columbus, OH market is another area of concern this year, May said. However, the REIT's vacancy rate there at the end of the year stood at 5.3% and net operating income was up 21.5% last year.

Besides occupancy, May said the REIT will strive to grow in 2001 and bring its stock price up to net asset value. The value of the REIT's holdings was $17.75 at the end of 2000; its most recent stock price was $16.80.

For the year, funds from operations were $2.15 per share up 10.8% from 1999. The increase was suppressed by the company selling properties for $41 million in 2000, including $27 million for 183 Inverness Drive in Englewood, CO in December.

Great Lakes plans up to $40 million in acquisitions in the first half of 2001, and closing on the 99,500-sf Two Riverwood Place in Pewaukee, WI in early 2002. The 2001 purchases are likely to include two 200,000-sf buildings in a Denver suburb as well as a development in Chicago, company officials indicated.

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