High rise space may be a premium in Chicago typically reserved for large-scale users, but Jack McKinney Jr. is selling the prospect to mid-sized firms.
“You don’t need to be a 100,000-square-foot user to get excellent views in prime space,” says McKinney, vice president with J.F. McKinney and Associates.
McKinney’s latest assignment is 123 N. Wacker, a 25-year-old high rise that will soon be 80 percent occupied after Mann Financial’s lease runs out next year. The largest space available is a 44,000-square-foot, three-story block that formerly served as the executive offices for Aon Corp.
Leasing commercial real estate is a far cry from McKinney’s first job, working in the marketing department for the NFL’s San Francisco 49ers, but it’s something that logically rings familiar with him. He started off with CB Richard Ellis and then in 2003 joined J.F. McKinney, the firm his father had built into a landlord representation powerhouse.
McKinney cut his teeth in the East Loop, overseeing leasing efforts at 111 East Wacker and 233 North Michigan Avenue. At 111 E. Wacker, McKinney and colleague Brian Whiting were responsible for 360,000 square feet of new leases and 150,000 square feet of renewals over a five-year period. The new leases included Bankers Life & Casualty, Combined Insurance, Silliker, Inc., and Urban Retail Properties. Their efforts took the property from 84 percent leased to 99 percent leased.
At 233 N. Michigan, the team kept the building more than 90 percent occupied by negotiating 500,000 square feet of renewals from 2006-20011.
He’s now taking his expertise to 123 N. Wacker.
JF McKinney has history with the property, where in 1999 it helped then-owner Prentiss Properties release almost the entire building after Aon left for the East Loop. Andrea Saewitz, senior vice president with the firm, leased 86 percent of the building in 36 months. McKinney then took over and brought it to 95 percent leased and Prentiss was eventually able to sell.
The assignment may appear less daunting this time around, but with ample opportunities available for tenants searching for mid-sized space, it may still prove to be quite a challenge. According to MB Real Estate research, 69 blocks are available in the downtown market for 50,000-square-foot users.
However, the availability of high-rise views in that size range is actually quite scare. The three-story block begins on the 28th floor, giving it excellent views of the West Loop. McKinney believes that this is one of the prime selling points for the space.
McKinney is targeting traditional users for the space, such as financial or law firms, but he also is on the lookout for what he calls “next gen” users. Technology and software firms, like Google, have been opening satellite offices in Chicago and these firms often look for a different office environment than the traditional floor plan provides.
“These companies are looking for open floor plans and collaborative space,” says McKinney. “They want it to be an urban campus with a loft-like atmosphere.”
JF McKinney has had recent success at 180 N. LaSalle by reconfiguring floor plans to accommodate users looking for this type of office space. The firm has recently leased 50,000 square feet to various firms at the location and McKinney says that this option is possible for firms looking at 123 Wacker.
The two mortgages loans at 123 Wacker have been recently modified by 35 tenant-in-common owners to the tune of $135 million, giving McKinney the capital structure necessary to take on the assignment. So far, the prospects have been promising.
“We’ve had really good traffic so far,” says McKinney. “The lack of development has helped the leasing market and downtown has proven to be very resilient.”
Unlike the suburban office market, the downtown office market has rebounded rather well. Vacancy rates are still above historical averages, but leasing activity has been steady and many suburban firms are looking to the city for potential relocations as its proximity to public transportation and ability to draw young talent is very appealing. Downers Grove-based Sara Lee is the latest firm rumored to be leaving the suburbs for the big city.
JF McKinney has had a very impressive run as a specialty provider, competing with a team of 15 professionals against corporations and often coming out on top. The firm currently represents 20 million square feet of office space in the Chicago area, with the majority of it in the downtown market.
“We tackle the big assignments and we are able to differentiate the product better than anyone else,” says McKinney.