Eric Myers, principal at Avison Young, has a difficult job. Myers has been tasked with leasing up the office portion of Barrington Village Center, a new mixed-use development in the northwest suburbs, one of the toughest suburban office markets in Chicago. Illinois Real Estate Journal recently spoke with Myers about why he thinks Barrington Village Center will be a success as well as the commercial real estate market in the Chicago suburbs.
Illinois Real Estate Journal: What is your role regarding Barrington Village Center?
Eric Myers: I just started on the assignment two months ago as purely the office specialist. The retail on the bottom 27,000 square feet is off to the races and humming. It’s been very well received because it’s the perfect retail location. It also has a location advantage to all the other office pieces in Barrington. Of the entire northwest suburbs, it’s got a great downtown location. I’m on board to find the office tenant. Once I find the office tenant for this developer, the shovel goes in the ground and they start construction. They’ve got most of the retail pre-leasing figured out, but without the office piece, they’re not allowed to break ground.
IREJ: What do you think is going to make this development unique?
Myers: All of the amenities that a metropolitan core would have are already there in downtown Barrington. Lunch, your barber, your doctor, your financial planner, they’re all there. If you need to have a business lunch with your associates, you can walk outside and pick one of 10 restaurants and then walk back to your office. That’s the unique environment about Barrington. The Metra line also is there. If you’re a software developer who’s a CEO and you want to recruit new talent, you’re not going to get too many people who live downtown to drive to Barrington every day. But they can get on the Metra in Bucktown, Lincoln Park or downtown Chicago and get to Barrington that way. That’s a much different environment than someone who has to come out to a corporate center in whatever suburban market. That person has to have a car. That person has to commute and that commute is not fun. Plus, if you look at Barrington, there hasn’t been a lot of brand new development near the downtown city core. This will be the first new project in Barrington in a very long time. If you look at the product types that surround Barrington in Schaumburg, Glencoe, Vernon Hills or wherever, the office product type is old and never originally designed for office. Everything that is going to occur at (Barrington Village Center) is brand new like you would get in a new 400,000 square foot corporate center building, but it’s in downtown Barrington.
IREJ: Why do you think Barrington Village Center will be successful?
Myers: The product type is going to be welcomed by any business owner who wants to provide that new environment. You’re not fitting a square peg into a round hole. It’s almost a design-to-build. If somebody needs 10 watts per square foot for electrical use because that’s the type of data center that they have in their space, we can provide that. That’s pretty unique. You can’t get that in a lot of other buildings. The trick now is finding an office tenant. There’s no denying that the suburbs right now are on the bottom of that business pendulum. When is the market going to pick up and when are a lot of the suburban firms going to start hiring again? They’re probably lagging the downtown office core, and this is true of almost every market in the country. That’s one of the harder things for us to do. We’ve got to find that right firm that says, “We want to invest in our infrastructure and we’re getting ready to hire for the future.” That’s the type of tenant we’re looking for in Barrington, and right now that market is pretty thin.
IREJ: Are you seeing any more commercial real estate activity in the suburbs today than you did two years ago?
Myers: It’s definitely picking up. It’s not robust, but we’re starting to see life sprout from the ground. If you’re a corporate center in the middle of an old cornfield and people are driving to and from your office, your employment pool of new hires most likely is going to come within a 10- to 15-mile radius. You’re not going to get smart, MBA graduates or people who are right out of school that are willing to accept a job in Schaumburg. They’d rather work downtown. So we’re still seeing a lot of firms looking to pick up their entire operation and move it downtown just to get that different employee base. That’s what I like about Barrington Village Center being in a downtown city center and close to the Metra rail. It gives an owner the ability to say, “I don’t want to move downtown. I’m not ready for it, but at least I’ve got the opportunity to grab some of that talent.” Barrington’s downtown is much more different than downtown Chicago, but it’s got something as opposed to the cornfield experience.
IREJ: How are the northwest suburbs faring?
Myers: The northwest suburbs, which Barrington is a part of, is one of the hardest-hit markets in the entire Chicago MSA. It’s lagged in velocity, it’s traditionally had the most vacancy over the last five years and it’s the market that is smarting the worst from the 2007 timeframe until now. The trend of corporate relocations to downtown has really hurt the Schaumburg marketplace. I will see tenants looking in downtown Barrington that are also looking in Schaumburg. It’s the toughest market in my opinion, and most people I think will say that.
IREJ: What do you foresee for the future of the suburban office market?
Myers: Things will improve. It’s challenging for suburban office landlords right now. Rents have been really depressed. Vacancy has risen. A lot of the office product that was bought in 2006 and 2007 has either gone back to the lenders or they’ve had to reconstitute their notes with the banking institutions. It’s tough. It’s pretty depressing to hear what landlords have to do to keep tenants and attract new tenants. Are things improving soon? No. Next year? Probably, but not at a great clip.
IREJ: What sectors of the suburbs are seeing strong office activity?
Myers: I think some good things are happening up north. The East-West Corridor is doing OK, but I think that as you move farther west in the East-West Corridor, they’re still having some issues. I can’t say the suburbs are healthy anywhere in the country. Nobody is going to build a new building in the northwest suburbs. If there’s a big tenant that wants to be in the northern suburbs, maybe you might see something, but it’s doubtful.