Block 37 Signs 13,100 SF In Five New Leases

"The economy has made leasing tougher across the board, but there are a core group of retailers looking to expand," says Paul Fitzpatrick, SVP of development for owner Joseph Freed and Associates, and project manager for Block 37. "Bigsby & Kruthers chose this product and this time to relaunch their brand. Some retailers see opportunity in this market and are excited about Block 37 and excited about Chicago in general."

Block 37 has seen the loss of two significant tenants in recent months. In late November, the retail component's first and largest tenant, David Barton Gym, which had planned to take nearly 40,000 square feet, reportedly pulled out of the development. Just last week, it was reported clothing retailer Lululemon had also canceled plans to open a store in the development.

Despite a rocky road of late, Fitzpatrick says Freed expects to announce other new leases in the coming weeks. Tenants already confirmed for the four-story retail component of the development include movie venue Muvico, Lettuce Entertain You, Au Bon Pain, Rosa Mexicano, Auntie Anne's, Beard Papa's, Gateway News, Freshii, Godiva, Sabon, Steve Madden, Zara, Aveda, Ben Sherman, and Anthropologie. Asking lease rates in the development range from $40 to $170 per square foot, net, based on location in the building.

Freed purchased the Central Loop property in 2007. Construction is nearing completion on the exterior building, and work is expected to begin soon on interior tenant build-outs. The development is expected to bring 2,000 jobs and more than $17.5 million in annual tax revenue when it completes and space delivers this fall.

"There has been a continued expansion of the daytime office workers, residential components, student populations and tourists," Fitzpatrick tells GlobeSt.com. "This project is succeeding because of that evolution of demographics in the Loop itself."

Thanks to a $12 million subsidy for the project from the city of Chicago, a 385-room Loews Hotel, complete with conference and ballroom space, is planned to be built atop the retail component, expected to deliver by early 2012. Block 37 will additionally offer 400 rental apartments, which are expected to include a mix of one- and two-bedrooms, that are expected to deliver by early 2012 as well.

Already completed in the development is a 440,000-square-foot office tower, which is now more than 90% occupied. Asking lease rates are around $39 per square foot gross in the Central Loop submarket, where average occupancy rates are 87%, according to Cushman & Wakefield's year-end office market report.