From Bike Factory to Dream Factory


Ron Sklar

Chicago’s 213 West Institute Completes the Loft-Office Wishlist

 

Forget brick-and-mortar — how about brick-and-timber? 

Chicago’s hot River North submarket can barely keep up with the insatiable demand for its brick-and-timber vintage office space, a Shangri-La for millennials, startups and tech/creative firms. 

Although the product supply itself remains fixed and the vacancy levels remain low (vacancy level below 10 percent for 26 consecutive quarters with a 7.5 percent average vacancy since 2010), KBS has been tirelessly scouting the area for the ideal property.

River North is Chicago’s most mature neighborhood, it’s also its most dynamic when it comes to mixed use. Even the Class C market has thrived here, and it has fed a youthful population from three neighboring universities: DePaul, Northwestern and Loyola.

“It’s catering to the millennials and the younger workforce,” says Dan Park, KBS senior VP and the asset manager for the property. “They’re demanding cool bars, restaurants, lounges, music venuesanything more experiential — cool and hip, if you will. This market has the older propertiesthe brick-and-timber buildingsthat give it character. When you add in the walkability, it’s uniquely positioned.” 

Because KBS looks for properties where there is strong population and job growth. Central regional president, Ken Robertson, along with his acquisition team, were successful in acquiring this vintage property for KBS Growth & Income Real Estate Investment Trust, the first KBS fund to be offered directly to investors without up-front fees or commissions through KBSDirect.com.  

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A standout in the River North submarket and the expanding apartment development scene, the building meets most millennials’ requirements for live/work/play. 

213 West Institute is a Class A converted loft office building valued at $43.5 million. A brick-and-timber building that is popular with creative and tech tenants, the property once served as a bicycle factory. Rentable space: 155,454 square feet. 

A huge advantage to 213 West Institute Place: It’s one of only five loft-office buildings that offer large floor plates over 20,000 square feet and on-site parkingan extremely rare amenity for this submarket. Those floor plates offer more tenant options and flexibility as well as greater density and efficiency. 

A $5.4 million recent capital improvement program allows KBS and its tenants to capitalize on the increased value and visibility of the property. Improvements included roof replacement, lobby renovation, corridor upgrades, a new fire panel and installation of freight elevators. 

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“We believe this property fits seamlessly with the character and demand of today’s workforce with its great location, walkability to amenities and access to transportation and housing,” adds KBS SVP Brett Merz. 

As a 100-year-old, repurposed and renovated buildingand having once been a bike factory213 W. Institute is a rare combination that’s tough to beat. 

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“We love Chicago, and like a lot of markets we love, it’s still all about understanding submarkets and micro-markets,” says Ken Robertson. “We never bargain hunt at the expense of location, so making sure we are in a market we believe in and a submarket we love — that’s the bullseye for us. Within downtown Chicago, River North is a very special type of location with unique warmth and attractiveness. Tree-lined streets, a neighborhood feel, vintage architecture, a rich mixture of amenities and living options all contribute to its long-term intrinsic value.” 

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When it comes to choosing locations, the KBS strategy is surprisingly simple. 

“Focus on places high-growth companies want to be in most,” Ken says. “Company location is usually part of a broader team-building strategy and creating a culture that fuels their specific business. So wherever we find these super-attractive environments — in big cities, smaller ones, urban or suburban — these will be the places we get excited about investing in for the future. As far as specific location qualities, it’s all about lifestyle, which usually means a mixture of things that are important to today’s workforce. Outdoor activities, many food choices, public transportation, nearby housing, walkability, an authentic vibe, even a sense of history if you can find it — these things are usually very high on the wish list.”  

In addition to Chicago, properties within the KBS Growth & Income REIT portfolio are located in Irvine, CA, Houston, TX and Portland, OR, with more to come.