The Alter Group has acquired a corner site at Grand Avenue and LaSalle Street on the Near North Side and hopes to begin construction of a single-tenant office building there this year.
The Wilmette-based development firm recently acquired the 20,000-square-foot parcel on the southeast corner of the intersection.
The seller was a group of private investors, according to M.D. Maremont Co., Chicago, the real estate brokerage in the transaction. Maremont and Alter declined to disclose the price.
Alter is seeking a corporate client for whom it would construct a 6- or 7-story office building with up to 140,000 square feet, said Stephen Tinsley, senior vice president of the developer. The building, which would replace a mostly vacant, two-story commercial structure, would take 8 to 10 months to construct.
A client would lease or buy the property from Alter under a ”build to suit” arrangement that enabled Alter to construct approximately 4 million square feet of suburban office and industrial properties by the last 15 years. Alter is trying to bring the build-to-suit idea downtown, having acquired four parcels totaling 75,000 square feet in the last four years in the so-called ”River North” area, north of the Chicago River and west of Michigan Avenue.
Prospective clients include corporations seeking new headquarters; law firms; advertising agencies; and commercial banks, which could relocate clerical-intensive ”back office” operations from the Loop to cheaper space north of the river, he said.
A business can cut its overhead significantly by occupying an entire small office building because it uses space more efficiently, Tinsley said. Unlike conventional multitenant buildings, a single-tenant structure doesn`t have to sacrifice 15 percent of its space to lobbies and common hallways.
Additionally, Tinsley said, all of the developer`s budget ”goes directly to the bottom line, without the need to factor in the cost of brochures, advertising and two to three years of construction interest.”
A small, single-occupant structure costs less to heat, cool and maintain than a large building, Tinsley said. A company also has greater control over security and is guaranteed that its name will be displayed prominently on the front of the building.
Small-scale development is economically feasible because River North land costs are still relatively affordable, Tinsley said.
”Land prices north of the river range from $80 to $250 a square foot, depending on how close you are to Michigan Avenue,” Tinsley said. South of the river, prices range from ”roughly $500 a foot for a good downtown site to $1,000 a foot on LaSalle Street.”
