Posted by: union03g | August 3, 2009

East Loop Losing Air Pressure As Vacancies Jump

The East Loop commercial buildings are continuing to lose key tenants to their newer, better located competition in other submarkets. I’ve been working at the prudential building over 3 years and have witnessed the struggles firsthand. Buildings up and down the Michigan Ave. corridor are aging and becoming obsolete very quickly these days. This along with the difficult trek to the west side Metra stations in the winter are causing firms to relocate. Mega-firms are jumping at the opportunity to consolidate from multiple floors and buildings and one centrally organized space with recession adjusted rates.

Notes on the East Loop’s Commercial decline:

  • Kirkland and Ellis LLP moved to a an incredible tower at 300 N. Lasalle stripping thousands of employees from the East Loop.
  • Once considered luxury Lakeshore Athletic Club on Stetson is now a ghost town because of Kirkland moving, corporate membership cuts and the construction of a much newer LA Fitness at Randolph and Michigan. RIP LSAC.
  • Salad Spinners shut down their prime location in the Pedway under the Aon building 8 months ago and no one has moved in. Consumer lunchtime spending has fallen precipitously in the area.
  • Tavern at the Park has delayed plans to build their rooftop terrace which will be one of the best in the city should it get finished.
  • Baker Mckenzie signed an agreement to move across town (from Prudential). If this actually happens it will be another severe setback.

“The East Loop’s vacancy rate jumped dramatically during the second quarter to 16% compared with 12% in the first quarter, as giant law firm Kirkland & Ellis LLP moved to a new tower at 300 N. LaSalle St. in River North, leaving Aon Center and Prudential Plaza.

There’s only so much a landlord can do when his building is old, ugly, has fragmented office space, no gym or locker rooms, is far from the Metra and newer vacant space is available.

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