CHICAGO—Tech companies have become one of the most sought-after office tenants by downtown landlords, and East Loop landlords in particular want firms from this burgeoning sector to help revive what has been an underperforming submarket. As reported in GlobeSt.com last Friday, GlenStar Properties, LLC just signed Punchkick Interactive, Inc. to 23,401-square-feet at the 55 East Monroe building, its first true high-tech tenant, and company officials say it’s just the beginning.
“Once you get a couple of these firms in your building, you validate yourself as an attractive place for others to locate,” GlenStar managing director Christian Domin tells GlobeSt.com, calling the Punchkick lease a “watershed deal.” To attract more high-tech to 55 E. Monroe, GlenStar has decided to add a host of amenities demanded by many of the younger workers that staff the high-tech world. The company has begun constructing, for example, a 4,000-square-foot bike room in the building.
“It’s no longer uncommon to have a bike room, but this one is uncommon in its size,” Domin says, and can certainly handle the addition of many more young tech workers. GlenStar has also started building for its tenants a giant video conference room on the mezzanine level next to the bike room. “Office buildings that have almost residential amenities are very attractive to these folks.”
“You also need to be located around a real work-live atmosphere,” and that has become a strength of the East Loop submarket, he says. As Punchkick, a mobile marketing expert, was taking its second or third tour of 55 East, Domin felt GlenStar was “losing traction” with the potential tenant. “I sat down and typed out a list of restaurants located within just two blocks,” and when added to the huge food court in the 55 East basement, the proximity of fitness centers and other neighborhood amenities, what he was able to prove to Punchkick was the diversity of options, especially in comparison to River North, Punchkick’s current home.
River North has diversity, he explains, “but it’s very high-end; it’s a luxury condo, hotel and restaurant market. It’s not constructed as a place to be all things to all people.” Furthermore, its access to transportation has deficiencies since “it’s not close to the suburban stations at all.” In the past, high-tech start-ups could ignore these issues because the neighborhood had a plethora of the smaller brick and timber buildings that they favored, and they could just sign a two or three-year lease to get started.
“But once these companies start growing to hundreds of employees, they need to be able to recruit from the whole metro area, even the suburbs,” Domin says, and the East Loop, a submarket which struggles with a vacancy rate higher than its neighbors, now has the chance to siphon these companies away from River North. “There are plenty of white-table restaurants in the East Loop, just like River North, but we have plenty of fast food restaurants as well.”
And unlike the Central Loop, which by 6 PM mostly shuts down, “when you come over to Michigan Ave., everything is humming,” he says. “That’s what these tenants want.” The last seven or eight years has seen the construction of the infrastructure needed for a true, round-the-clock neighborhood, especially the condos and retail outlets that have transformed the East Loop into a residential neighborhood. “All this has set the table and now people are sitting down to dinner.”
“To watch all of these companies move out of 8,000-square-feet on three floors in River North and become substantial tenants,” he adds, “is very exciting and it’s great for the city.”