WEDNESDAY, NOVEMBER 12, 2008
by Jenn DankoChicagoIf confidence is key in the current commercial real estate market, Michael Newman says that lenders have plenty of it when it comes to the redevelopment of Block 37.
The president and CEO of Golub & Co. announced last week that it successfully refinanced the mortgage on 22 West Washington with ING Real Estate Finance US, sending a clear message to lenders and borrowers.
"Lenders have made it clear that they may give credit for the 'right' transaction, and we believe 22 West Washington may be an example of that," Newman says. "We agree with industry analysts that it will be awhile before the lending market comes back to normal activity levels. In the meantime, borrowers must create an undeniable win/win for both themselves and their potential lender in order to achieve their goals."
The first commercial building to open on Block 37 in the past quarter century was completed in June 2008 and is currently 93 percent leased. J.F. McKinney & Associates is handling the office leasing, which includes tenants CBS, Morningstar and Sterling Business Center.
Newman says that given the uncertainty and volatility of the market, Golub &. Co. made a sound decision in refinancing now versus at the end of the initial loan term.
"Everything in this market is about specific circumstances-underwriting has never been more important than it is today," he says. "Though our situation may not be reflective of the overall CBD market, it clearly demonstrates the possibilities that exist when the right parties, the right property and the right circumstances come together."
Newman adds that the new loan-issued for upwards of $100 million-was based on the overall value of the property, which stands at the crux of the downtown business, municipal, retail and entertainment developments.
"While we can't predict whether a similar project would be able to find a comparable situation, it is evident that capital does exist out there for those who can bring the compelling package to the table," Newman says.
Michael Goldman, senior vice president of acquisitions and finance, also represented Golub & Co. in the transaction; the original first mortgage on 22 West Washington was issued by Bank of America.
Meanwhile, on 1 South State Street, retail confidence sank as upscale grocer Fox & Obel announced it has abandoned its plans to open in the base of the 1 million square foot Sullivan Center (the former Carson Pirie Scott & Co. building). Joseph Freed and Associates is the developer of the project. They did not return a request for comment.
In May 2008, Fox & Obel announced it would open its second Chicago location in 25,000 square feet space at the forthcoming mixed-use center, becoming the first grocery store to open in the central Loop.
Chicago Loop Alliance Executive Director Ty Tabing had expressed the positive implications of the move when it was announced last spring, before the retail sector fully slowed.
"I think (the announcement) bodes incredibly well and speaks to the fact that the Loop is coming into its own as a real neighborhood-more importantly a mixed-used neighborhood," he said during a previous interview with Illinois Real Estate Journal.
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