Paul Reaumond is the youngest professional to be named vice chairman in CBRE Chicago’s history. It’s a title well earned, as he has helped engineer numerous deals bringing high-profile corporate relocations to Chicago.
As a member of CBRE’s occupier advisory and transaction services group, Reaumond has facilitated leases in Chicago’s central business district on behalf of Gogo Inc., Groupon, Snapsheet and others. Perhaps his most notable deal saw Uber ink a 450,000-square-foot lease earlier this year in the redeveloping Old Post Office.
Reaumond will bring his expertise to the 18th Annual Commercial Real Estate Forecast Conference on January 9th. Before he discusses the state of the office market there, we sat down with him to see why companies have chosen to move to Chicago and where things may be headed.
The Chicago CBD enjoyed a number of high-profile corporate relocations in the past few years. Do you see that trend continuing in 2020 and beyond?
Companies want to be in downtown Chicago because that’s where a lot of the talent is. Many of Chicago’s most prominent suburban companies have already relocated to downtown Chicago or have opened an office here, whether it be a headquarters or satellite. I think that trend will continue, but I don’t think we’ll see as many headline companies coming downtown because many of them are already here.
As you mentioned, a good number of those relocations came from the suburbs. Can Chicago attract out-of-state or even foreign firms to open a satellite or relocate their headquarters here?
Chicago is very attractive compared to many coastal competing cities on price, both from a real estate and from a labor cost perspective. Also, any company considering coming here is thinking about getting employees from all over the world to and from Chicago, and this region is great when it comes to access to airports. I believe good things for Chicago will continue—subject to stability and predictability. Specifically, things like schools, crime and taxes, making sure that companies understand what they’re signing up for. When you relocate, whether it be from overseas or from another city, that’s a long-term commitment, so predictability and stability are the two most important things because Chicago already has so many other positives going for it.
The suburbs have of course noticed this office emigration, and many are trying to create their own urban environments to attract some of these people back. Do you see this trend—coupled with an expectation for millennials to more rapidly form families and begin buying homes—leading to a reversal whereby more companies opt to rebuild a presence in the suburbs?
From what I’m seeing, yes, millennials are moving to the suburbs and having families there. However, they still want to work in the city, so they are migrating to suburban locations that have good proximity to either the Metra or the “L” tracks. Plus, the prominence of rideshare makes it easier to get to your suburban home. I don’t foresee a scenario any time soon where the trend of office locations leaving the suburbs is going to flip.
Location, transit and access to a strong labor pool are all strong enticements. But what are the latest property features and amenities that owners/operators should be cognizant of to remain competitive?
I hear more of our clients asking to engage with the building and amenities digitally, more so than ever. Things like being able to badge in and out of your office via your smartphone, or being able to engage with the fitness center, such as signing up for a spin class on your phone. We are also seeing partnerships with companies like Uber, where landlords are subsidizing rideshare to their buildings to improve access, or companies like Fooda who are engaging outside restaurant providers and bringing in more food opportunities to the building.
Additionally, things like all-hands space are more and more popular with our clients because they’re looking for places to gather as a group; maybe outside of their physical office space, somewhere else in the building where they can host a monthly all-hands meeting or quarterly get-togethers with all their employees.
Those are the things that I’m seeing more from the buildings that are on the cutting edge in terms of the amenities that they’re offering. And people continue to trend towards buildings that have a more hospitality-type feel, that make it feel less like an office building and more like a residential hotel environment.
Another amenity that we’re seeing more of is building owners adding food halls to their properties. But I wonder if we are nearing a saturation point. Is there a limit to how many food halls one particular area can support in terms of foot traffic?
It probably makes it more difficult for landlords and restauranteurs to pencil in the numbers and make it work financially. But as the end user it’s only a benefit. If I have four food halls within walking distance of my office location, for me as the tenant I benefit from that. From a financial liability standpoint, the food halls staying in business and landlords being able to profit off the rent that they pay will be more challenging as we see more saturation. But for now, from the end user standpoint, I think it’s only a good thing.
To hear more from Reaumond and approximately 50 other industry experts, sign up now for the Commercial Real Estate Forecast Conference, which will be held at the Hyatt Regency Chicago on January 9th.