More O'Hare Office Towers Getting Upgrades
It's already one of the tightest submarkets in the region, and new owners feel putting in urban-style amenities will make it even more attractive younger workers.
CHICAGO—Bridge Investment Group just acquired O’Hare International Center, a pair of nine-story class A office towers at 10255 and 10275 W. Higgins Rd. in Rosemont, for $64 million from The Blackstone Group, which has now unloaded much of its suburban portfolio.
It’s just the latest in a string of significant suburban office transactions. Demand has strengthened for class A space in certain portions of the suburbs, and investors now look quite favorably on properties in towns like Oak Brook, Schaumburg and Rosemont.
Brian Tretinik, managing director with Bridge, tells GlobeSt.com that his company likes buildings “in locations that have a sense of place.” The Salt Lake City-based firm also just bought the 32-acre Lenox Park office campus in Buckhead, a suburb of Atlanta, another area that, like Rosemont, includes concentrations of retail and amenities. These are essential in an office environment where talent recruitment and retention have become so important.
“You want to have an attractive place for younger workers,” he says. And Rosemont, which just opened the Pearl District, a mixed-use development that includes a Dave & Buster’s and a soon-to-open boutique hotel, has transformed itself in the past several years. But that’s not the only factor that will help Bridge lease up this 517,640-square-foot acquisition, now 83% occupied.
“You’re not going to find a better-connected building,” Tretnik says. The O’Hare Transfer Metra Station sits less than 100 yards away, providing quick access to downtown Chicago, and the new Consolidated Rental Car Facility located across the street will provide direct tram connection to O’Hare International Airport. Other nearby transportation options include the CTA Blue line and both I-90 and I-294.
Blackstone was already transforming the OIC, originally built between 1984 and 1987, into a property which could match the amenity-rich towers that dot Chicago’s CBD. Nearly $4 million was spent on renovations since 2012, with a new state-of-the-art fitness center and upgrades to the 1,800+-space parking deck among the enhancements.
But even though the OIC “is in very good physical condition, we still think there are a lot of opportunities to improve it,” Tretnik says. The company plans to spend another $5 million on the campus, renovating both lobbies, adding a new tenant amenity lounge, as well as next-generation spec suites and a conference center. Furthermore, Bridge will create a new outdoor amenity space connected to the tenant lounge. “Despite the weather, Chicago is a fun city and a young city, and people want access to the outdoors.”
He expects these latest renovations to begin in mid-October, and once complete, the OIC will be as desirable as any other building around O’Hare, one of the region’s tightest submarkets. “We definitely think this is an opportunity to bring its rent in line with other properties in the market.”
Although Bridge has recently bought some properties and done a quick turnaround, in general it likes to spend between three and five years building value and being a hands-on manager, Tretnik says. “I’d expect that to be no different here.”