CHICAGO-Following Bank of America’s renewal of 92,825 square feet at 1600 Corporate Cntr. in Rolling Meadows, IL, the chairman and CEO of building owner Younan Properties talked with me about Chicago. Zaya Younan had been driving pretty hard to the hoop to acquire Chicago properties before the recession, and he said he’s back at it again.
His firm, based in Woodland Hills, CA, owns 200 N. LaSalle St., the 255,440-square-foot Corporate Center building and a handful of properties in the Chicago suburbs. He had some refinancing trouble with his local properties in 2009, but resolved the issues. He also has had several unsuccessful bids on Chicago properties, including a failed $124 million purchase of 180 S. LaSalle in 2009 and a $390 million bid for one million square feet at the John Hancock Center in 2006.
Today, Younan tells me that his firm is bidding on more Chicago properties, and is close to signing a deal for a 610,000-square-foot office here. “We are a heavy participant in bidding for assets in Chicago,” he says.
The Chicago market is improving well compared to the rest of the country, he says. “Look at the Chicago unemployment rate, it’s at 8.8%, well below the national average. The west coast of California is at 12.2%, significantly higher. We see that jobs have been gaining in Chicago for the past year, and the vacancy rate is stabilizing. These positive matrices are absent in about half the country right now,” Younan says.
He says the national market is returning, in part because investors, brokers and owners are realizing that there had been some “Chicken Little” activity going on. “Everybody in our industry thought the commercial world was going to fall apart, to be our Armageddon, that there would be a flood of fire-sale properties on the market. It didn’t happen, and those who hoped for the worst are missing a great recovery,” Younan says.
His firm recently sold three properties in the Dallas and Houston area for about $160 million, “and we hadn’t even wanted to sell,” Younan says. “We were approached by the buyer.” He also says the cap rate is going down, as evidenced by these sales at a 7-7.2 rate. “It seems like our industry is on the fast track to improvement.”
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