Patrick Kearney wants to shed light on the Chicago Loop.
Kearney, a 14-year veteran of Tishman Speyer, takes over asset management for AmTrust Real Estate in Chicago as head of development, acquisition and operations.
He wants AmTrust’s upgrades — lounges, cafes and fitness centers on the upper floors — to be visible. So the racquetball courts on the top floor of the Illinois Center’s two towers at 111 East Wacker Drive may soon be replaced by a panorama of windows offering skyline views. And bringing retailers into lobbies, adding drop-off rooms to buildings with plenty of attorneys, and finding ways to create outdoor hangouts are likely within reach of the rest of AmTrust’s portfolio, which also includes the 33 West Monroe Street, 30 North LaSalle Street and One East Wacker.
As Chicago landlords vie for tenants amid the return to offices, new hires like Kearney are the foot soldiers of the amenity wars and they’re spending big bucks. AmTrust properties include five in the Loop where the owner plans to invest $100 million in renovations, and he’s not the only one making new hires or planning to position himself for the post-pandemic rebound of the downtown Chicago.
Murphy Real Estate Services, a Chicago-based company that owns several downtown residential and hotel properties, including the Loop, has just recruited Bill Rogalla as chief investment officer, with plans to continue multi-family development in the north of the river and the near west side. certain areas of the city, confident in the city’s reputation as an employment pool, will attract more residents. And Vancouver-based Onni Group is planning a $1 billion investment in downtown Chicago, including the renovation of a 31-story Loop office building at 225 West Randolph Street.
“Tenant representation brokers understand what we do and communicate it to their clients and have been enthusiastic about our plans,” Kearney said.
Although installing equipment in the highest parts of buildings can take away floor space that landlords previously rented to office tenants at preferential rates, AmTrust is betting such measures will pay off in attracting more tenants as the Loop wakes up from the pandemic.
“We’re bringing those amenities to better, light-entering parts of the building that were typically reserved for higher-paying office tenants,” said Kearney, who left Tishman in 2019. “Even tenants who occupy less than space in the building with more economical offers can always discover the top of the building, discover a first-class fitness center, discover a large lounge where they can have a coffee or a cocktail if they wish in the after- noon.”
Murphy has held onto his hotel assets in the crowded downtown market even as two other lodging investors recently left Chicago and a list of the city’s most troubled commercial mortgages is dominated by hotels, according to Trepp. .
“It’s safe to say there are abundant sources of equity available for real estate in Chicago, it’s just a matter of matching the right project to the right location,” Rogalla said. “We’re still bullish on Chicago in the right places from a multifamily standpoint.”
As Murphy’s moves forward with its $1 billion multi-phase project in Harrison Square in Illinois’ medical district and AmTrust’s $100 million commitment are both big bets on Chicago. as a workplace, both appear to be cautiously optimistic.
AmTrust skipped putting money into 135 South LaSalle Street, where former tenant Bank of America leased about 830,000 square feet before moving to its namesake new tower on Wacker completed in 2020. And Murphy didn’t immediate plans to move forward with new office projects, although it proposed twin 49-story office towers at 301 and 321 South Wacker several years ago and has yet to innovated.
“Nothing on the office front at this point, although we would be open to new office construction with a major anchor tenant,” Rogalla said, speaking generally and not just of Murphy’s potential Wacker Drive project.
AmTrust is betting its planned renovations will help the Loop battle for tenants with the hot West Loop and emerge from the pandemic as a destination for Chicago office tenants. While the two recent hires said some conversions of Loop properties to housing or office accommodation will be needed for the area to thrive again, AmTrust properties were not candidates for such projects, Kearney said. . All are still more than 50% let.
The aim is to compete with Fulton Market, which was the only area in town to defy the health crisis and its assault on occupation, by winning new tenants during the crisis.
“The Loop can continue to compete effectively with Fulton Market, which is getting a lot of headlines,” Kearney said. “At the end of the day, you have 150 million square feet in the Loop and less than 10 million in Fulton Market. The Loop will continue to be the center of gravity for a variety of employers who want to be in these very large buildings set up near train stations.