Study: Demand lacking for new office tower

An Evanston skyline image from the presentation

A new report suggests efforts to land a big new "Class A" office building for Evanston face major hurdles.

The study, produced for Evanston Inventure by students in a class at Northwestern University's Kellogg School of Management, says Evanston doesn't look attractive to most companies looking for large blocks of space.

And, in turn, it's impossible for developers to get construction financing for big projects without having lease commitments from one or more large anchor tenants.

The report, presented at a meeting at the Civic Center Tuesday evening, notes that Evanston does have attractions for business owners who live on the North Shore and for young professionals living along the CTA Red Line on Chicago's north side.

Mayor Elizabeth Tisdahl, center, was among those attending the presentation.

But it looks inconvenient to businesses that make heavy use of Chicago's airports or want to draw workers from the western suburbs because of poor east-west road connections.

Chicago's West Loop, the study says, looks more convenient to businesses seeking an urban environment at a price competitive to Evanston because transit lines from all over the region converge there.

Businesses looking for a suburban location can find free employee parking and better freeway access in locations like Oakbrook, Rosemont, Schaumburg, Deerfield, Lake Forest and Skokie.

Finally, the study suggests the vast majority of businesses that have chosen to locate here are smaller ones that aren't big enough to anchor a large development -- so creating demand for a new large building from the existing business base is unlikely.

A member of the student research team answers a question from the audience. The project team consisted of Kevin Bell, Kevin Heckman, Marcio Silva and Ben Wilmoth.

Despite that, the study notes that occupancy rates for the nine Evanston buildings that brokerage firms include in the top-quality "Class A" ranks, remains high, at just under 90 percent.

The report looks at six possible development sites and suggests focusing initially on two that might work for smaller office buildings that wouldn't require large anchor tenants.

And it suggests stengthening the city's marketing efforts to attract businesses that fit the city's sweet spot of drawing employees from the North Shore and Chicago's north side as well as targeting industries that already have a substantial presence here.

Related documents

Kellogg-Evanston Commercial Real Estate Presentation

Kellogg-Evanston Commercial Real Estate Report

Video of the presentation

 

Comments

Evanston versus Cambridge & Ann Arbor

I read the power point presentation, which I thought was very thorough, and well thought out.  Good job, NU students!!
I was especially impressed with Cambridge, MA and Ann Arbor, MI with regards to their forward thinking attitude, strategic vision, and proactive posture for economic development,  etc. 
Unfortunately, our Evanston Leaders have none of these necessary attributes.  I know our current Mayor and several Alderman.  They are "hacks", and sadly, 'way over their heads' and 'out of their league' when it comes to vision, leadership, and a forward thinking approach to government.   Shame on all of us, we get what we elect.  With our continued increasing taxes together with our unfunded pension obligations, Evanston is on the decline.  Our Leaders are  truly pathetic and incompetent.

Do you suppose Ald Wynne

Do you suppose Ald Wynne heard any of this?  She's big on max development of sites in her ward, and the one at Main / Chicago, where she wants an office bldg and has committed city taxpayer money to the developer so that firm can learn how to market the bldg, may well be another of her city-planning debacles.  This would be just a few blocks north of the Chicago / South Blvd townhouse mess that represents her discerning eye.

While on the subject of towers

Does anyone recall that only four years ago, Evanston was plastered with "Say NO to the Tower" signs as debate raged about the tallest structure between downtown Chicago and downtown Milwaukee. It would seem that our Mayor, City Manager, alderpersons and citizens have watched as the project has slowly and steadily receded from our memories, or has it simply sunk into the ground and out of sight?
As many will recall, the City Council, over the objections of so many of their constituents, granted various zoning concessions and other approvals to facilitate the project without any financial penalties for failure to complete (or even begin) the project within a fixed time period and with no guarantee that the project might ever see the light of day.  Any threat for failing to proceed was waived so as "not to discourage the developers" and only moments (or days) after receiving their approvals,  the grateful developers asked and received an added time extension for their approvals and project start on the pretext that the economy was poor and they were unsure they could get their needed financing to build. Thus, they needed and received even more penalty-free time on our dime.
In the meantime, of course, tenants were pushed or cleared out so that an empty building would be waiting when the wrecking ball arrived. Businesses that stayed do so at the peril of not having a long-term lease, but as of now, still  without any idea as to when the hammer may fall.
Given that a condominium project is as feasible, we now see, as an office tower - witness, not only the NU office building study, but also the abandonment of two more condo buildings in lieu of building the new rental apartment project along Ridge, what are the odds that condos will ever be built on that Fountain Square site?
Of course, a half-empty building probably justifies a reduction in property tax assessments and so carrying the property is not a hefty price for a developer who has no pressure to move forward. But, ask yourself, how much sales tax and property tax revenue might have come in if our city fathers and mothers had set a deadline or, bowing to the wishes of the citizenry, had allowed a more reasonable party to come in and either build a more sensible project to either develop the site?

Ranting from a tower hater

Oh no, the same tired and inconsistent anti-tower arguments are being repeated.
"Tallest building downtown Chicago and downtown Milwaukee"
           So?   Where else but Evanston would you expect to find that?    Highwood?  Kenosha?
Businesses that stayed do so at the peril of not having a long-term lease, but as of now, still  without any idea as to when the hammer may fall.
      So?  There are plenty of open storefronts in downtown Evanston.  If Radio Shack or Williams Shoes want  to move, the former Borders on Maple might work, or the former Pomegranate, or former Omaggio, etc.
But, ask yourself, how much sales tax and property tax revenue might have come in if our city fathers and mothers had set a deadline or, bowing to the wishes of the citizenry, had allowed a more reasonable party to come in and either build a more sensible project to either develop the site?
      Another party to develop the site? 
First, you should remember that many of the tower-haters were opposed to ANY development on the 708 Church site.  They wanted to keep the "historic" 2-level building and shoe store and Radio Shack, and opposed any effort to tear it down.  Your argument above, about 'businesses not having a long term lease', would still apply if these non-existant reasonable developers showed up.    And second, how much sales tax and property tax revenue might have come in if the City would act quickly and approve development, instead of letting NIMBYs ruin everything and delay everything?

The Tower

The city was presented with the items you have delineated at the time of the effort, but ignored them. So much for their business savvy. Looked at your property tax bill lately.  Now it is D65's turn.

Thank you NU students for the study!

Wally and his crack economic development team have given away taxpayer money so a developer could do a marketing study for an office building on Chicago Ave. I can not remember how much, since they keep giving our money away at an alarm pace.  ( I believe it was $50,000 )   Alderman Wynne was practically jumping up and down telling the developers take the money several months ago at the ECD meeting! The developers were not even that interested since they had concerns.
These NU students who are no doubt brighter than anyone on staff, are suggesting there is no really market here, so why are they wasting our money?  Wally has again hired too many people to do to little.Now they have to justify their time, with creating more studies.
Maybe staff should go to NU each time they want to do a study, it would be interesting if they would even do any of the city studies because in most cases they are a joke.
I am waiting to see the Robert Crown study, hold on to you wallet, its likely we will be funding this at the tune of a million dollars a year for 20 years! ( if not more)

Getting in and out of Evanston

"But it looks inconvenient to businesses that make heavy use of Chicago's airports or want to draw workers from the western suburbs because of poor east-west road connections."
There is really the crux of the issue.  Just getting in and out  Evanston outside of the north-south transit, is fustrating at best.  Would this be something businesses want force on their visiting clients?