Winter Issue 2022 - 36

" [For investors] who need to put out a lot of money, the
office market is still the best place to do that. "
-ALEJANDRO ROMERO, ACCESSO
generation Z, wanted to continue to work
from home, while 37 percent of millennials,
44 percent of generation X, and 58 percent
of baby boomers wished to continue remote
working.
Some ambivalence toward returning to the
office may be attributed to changed working
conditions, Romero pointed out. In 1990, the
average office allowed 280 square feet (26
sq m) of space per employee. By 2019, that
figure had fallen to an all-time low of about
240 square feet (22 sq m). As companies
seek to attract workers back to the workplace,
they will be willing to reverse this so-called
densification trend, Romero believes, though
he admits that no matter what working
conditions are, " Nobody knows how many
employees will actually come back to work
every day. "
The evidence suggests that cities with the
highest-income workers-places like Encinitas,
California, and Alpharetta, Georgia-have
had the highest percentages of remote workers.
In the top 10 work-from-home markets,
income levels average $100,000 or more
per year.
The two presenters at the session agreed
that big cities like Chicago and New York
would remain major office centers. But
future growth is likely to be concentrated in
places with a lower cost of living, they said.
They singled out cites like Austin, Charlotte,
Raleigh, and even Dallas. " The growth now is
in Raleigh, not New York, " Rivard said.
To fuel new development, debt markets,
which had been frozen in mid-2020, are in
the process of full recovery. " There is so much
capital that has to [get invested], " he said.
New leases, however, have become a problem.
In one building after another, it is the
smaller, lesser-credit tenants, bullish on the
future, that are willing to sign long-term commitments.
The biggest national-credit tenants,
meantime, either are not yet willing to sign at
all or are committing to just short-term contracts
of a year or two. It is unclear when that
Ranadip Bose, Cynthia Roubik, Scott Goodman, Tim Jeffries, Morgan Malone
Bronzeville Lakefront: How Chicago and the GRIT
Development Team Envision the $3.1 Billion
Mixed-Use Redevelopment
Give Chicago credit for its boldness. When
the old Michael Reese Hospital, dating to the
1880s, closed in 2009, the city rounded up
the money to buy the 50-acre (20 ha) site,
added more land around it, and then submitted
a bid to host the 2016 Summer Olympics
with a new stadium replacing the hospital as
the centerpiece.
Chicago eventually lost that bid but has not
given up on the site since, despite its location
in Bronzeville, a minority neighborhood
known for crime, low incomes, and vacant
housing. After years of planning, developers
are nearing the launch of a $3 billion
mixed-use project that provides a lesson in
34
URBAN LAND
WINTER 2022
municipal fortitude-the product of countless
meetings over the past five years with the
lead developer, Chicago-based Farpoint, and
a long line of community groups, bankers,
tenants, and architects.
" It was difficult to put this deal together, "
said Ranadip Bose, a senior vice president
at SB Friedman Development Advisors in
Chicago, who helped referee the process. " It
could have cratered over a single issue, like
land price. "
A request for proposals on the site went
out from the city in October 2016, and the
team led by Farpoint, called GRIT Chicago (the
acronym denotes Global Research and Integration
Team), got the green light to proceed
in 2017. The backers were an eclectic group
that included Loop Capital Management,
McLaurin Development Partners, Draper &
Kramer, Chicago Neighborhood Initiatives,
and the Bronzeville Community Development
Partnership. An advisory council of 20 members
joined with expertise in culture, design,
and transportation, and a master plan was
drafted, followed by five years of zoning and
entitlement efforts.
Scott Goodman, Farpoint's founding principal,
hardly needed convincing to get involved.
With the city paying to tear down the hospital,
Farpoint was presented with a clear-cut site
process will get unstuck, Romero said.
The fortunes of the office sector are likely to
continue to ebb and flow for a while. In the
days before the Fall Meeting, insurance giant
Allstate put its suburban Chicago headquarters,
spanning 1.9 million square feet (177,000
sq m) on 186 acres (75 ha), up for sale, suggesting
that more and more of its 42,000
employees would be working from home or
smaller satellite offices in the future.
A little earlier, paradoxically, Google
announced it was paying $2.1 billion for a
Manhattan office building, the St. John's
Terminal building in Hudson Square. Romero
predicted the Allstate property would eventually
find a buyer and marveled at the Google
acquisition, saying that for investors " who
need to put out a lot of money, the office
market is still the best place to do that. "
H. LEE MURPHY is a Chicago-based journalist who has written
regularly for the Chicago Tribune, Crain's Chicago Business, and other
publications across the country.
Winter Issue 2022

Table of Contents for the Digital Edition of Winter Issue 2022
