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OAK BROOK, IL-Despite their leasing agents’ best efforts, Great Lakes REIT officials expect vacancy across their portfolio to top 20% by the end of the year. President and chief operating officer Patrick Hunt predicts occupancy across its six-million-sf office and medical portfolio, with 45% of it located in suburban Chicago, will be in the 77% to 79% range.

“Leasing activity is picking up, but leasing economics remain under pressure,” Hunt says.

Great Lakes REIT set a 2003 goal of renewing leases or signing new deals on 30,000 sf of space per month. The company averaged 40,000 sf a month in the second quarter, Hunt says, when occupancy settled at 80.2%, down seven-10ths of a percentage point from the first quarter.

Great Lakes REIT hired Cushman & Wakefield earlier this year to explore potential property sales as well as one involving the entire portfolio. Great Lakes REIT officials say that process continues, and declined to comment on reports the ultimate move may be taking the company private.

Deals involving at least three properties are in the works, company officials indicated during their second-quarter conference call Thursday.

Great Lakes REIT sold 165 and 175 Hansen Ct., Wood Dale, which is a northwest suburb, for $3.9 million last month, or $96 per sf. However, the deal was at a 6.6% overall capitalization rate, according to CIO Raymond Braun, and with occupancy at 67%. The REIT also saw a 20.1% internal rate of return during its nine years of ownership of the buildings, which were among a package of five it acquired in 1994.

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