CHICAGO—Many suburban office submarkets are plagued by extremelyhigh vacancy rates, and theoretically that should make it easy fortenants to find suitable spaces. But since many of those emptyoffices sit within obsolete buildings and campuses, a new wave ofoffice build-to-suits has begun flooding the suburbs.

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“We happen to be running a bunch of suburban build-to-suitprojects that are in the ground right now or still in the planningstages,” Scott Ohlander, senior vice president ofJLL, tells GlobeSt.com. “Something is happeningout there. I've been doing this for 10 years and this is the mostbuild-to-suit activity I've seen.”

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“The trend really started in 2009 with theCisco development at O'Hare,” Ohlander adds,referring to the Rosemont Corporate Center, a121,000-square-foot building located at 9501 Technology Blvd. thatCisco anchors. But the trend has become much more noticeable in thepast two years. JLL is now involved in suburban build-to-suitprojects, both planned and under construction, that total more than1.3-million-square-feet.

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JLL pegged the suburban vacancy rate at 24.3% at the end of thefourth quarter, where it has stubbornly remained for several years.But Ohlander points out that even though the suburbs as a wholehave a high vacancy rate, several desirable submarkets such asO'Hare and Oak Brook saw significant tightening in that timeperiod. Furthermore, financing still remains relatively attractiveand construction and land costs lower than average. All of thesefactors have aligned and opened up build-to-suit opportunities.

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“I think all organizations considering a build-to-suit willstart with some kind of unique driver,” Ohlander says, such asoutgrowing an old space. And “if they need to be in a class Aoffice space with a hotel next door there are not many existingoptions, so they will consider building.”

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Ohlander is representing the American Academy ofOrthopaedic Surgeons in the development of its new165,000-square-foot build-to-suit headquarters at River and HigginsRd. in the O'Hare submarket. The project will include aHampton Inn & Suites and the academy will onlyhave to move a few blocks from their present headquarters at 6300N. River Rd. when the building opens in the first quarter of nextyear.

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And the American Society of Anesthesiologists,represented by CBRE, recently outgrew its ParkRidge headquarters and opted for a 70,000-square-footbuild-to-suit, now under construction at 1110 American Ln. nearGolf Rd. and Meacham Rd. in Schaumburg, and set for delivery in thefourth quarter.

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Likewise, the Big Ten Conference outgrew its25,000-square-foot headquarters in Park Ridge and chose a50,000-square-foot build-to-suit in Rosemont. The new building, at5420 Park St. in MB Financial Park, opened lastyear.

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“For them, having access to hotels and access to the airport iskey,” Robert Sevim of Studley,who represented the athletic conference, told GlobeSt.com. And “fortheir size requirement, there was nothing that presented anopportunity to just go in and open up shop.”

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But the decision of Zurich Insurance to acquirea 40-acre chunk of Motorola Solutions' campus inSchaumburg last year and launch a 720,000-square-foot build-to-suitheadquarters remains the biggest change to the suburban officemarket. The development will be completed by the fourth quarter of2016. JLL recently helped secure more than $333 million infinancing for the project, now billed as the largest build-to-suitsingle-tenant, net-leased project in North America in 2014.

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“The fact that one of the largest insurance companies in theworld is choosing to remain here is proof of the solid trajectoryof the submarket,” said Bruce Westwood-Booth,managing director of JLL's capital markets division. “Chicago'ssuburbs are definitely on the upswing.”

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But that stubborn vacancy rate will probably stay high foryears. “The large vacancies in these markets, such as Schaumburg,”Ohlander says, “will remain because many of our clients are leavingbehind empty headquarters space. The new owners will eventuallysay, 'to fill the vacancies we're going to have to reposition theseassets.'”

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Brian J. Rogal

Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.