Trizec Holdings Outperform Loop Submarkets

Trizec Properties' Central Loop asset, 2 N. LaSalle St., boasts a 97.4% occupancy rate. By comparison, U.S. Equities Realty pegs the vacancy rate in the West Loop at 11.5%, with the rate rising past 19% when available sublease space is factored in. U.S. Equities reports the vacancy rate in the Central Loop was 8.6% at the end of the quarter, but it approaches 13% when sublease space is considered.

It doesn't hurt that Trizec Properties' tenants are paying rents averaging $13.10 per sf, 20% lower than the second-largest US office REIT's estimate of the market. However, U.S. Equities' estimate of asking net rates across the Downtown submarkets is a range beginning at $18 per sf, 9% higher than where Trizec Properties pegs the going rate.

Nonetheless, senior vice president Stephen Budorick gets kudos from president and chief executive officer Christopher Mackenzie, noting that in addition to 110,000 sf in leases, prospects are lined up for as much as 445,000 sf, nearly three times the amount of space that could come back in leases expiring in 2002.

"We're confident we'll exceed our target occupancy of 96% this year," Mackenzie says of the 5.9-million-sf Chicago portfolio.

Despite speculation that it would suffer in the wake of the Sept. 11 destruction of the World Trade Center, the tallest building in North America appears to have overcome initial fears that its visibility and trophy status would result in an exodus of tenants.

"Sears Tower is doing fine," Mackenzie says. "We've had a number of tenants increase the number of people they have working at Sears Tower."

Trizec Properties is expected to convert its controlling interest in the property it has managed since 1997 into full ownership in January.

Besides Sears Tower, Trizec's West Loop holdings consist of 10 and 120 S. Riverside Plaza, each 685,000 sf, and the 372,000-sf 550 W. Washington Blvd. The latter two buildings have occupancy rates of 96.9% and 96.1%. All three are within a block of at least one of the market's two major Metra commuter terminals.