Former Sears Tower stands tall in Chicago, after its rescue.
The sudden assumption in commercial real estate after the twin towers of the World Trade Center were demolished on 9/11 was that in a new era ruled by fears of urban terrorism iconic skyscrapers would suddenly fall out of fashion. Business at the nation's highest building, the 110-story Sears Tower in Chicago, plummeted as tenants retreated to lower office space elsewhere.
Fully nine years have passed. Domestic terrorism doesn't breed the same urgent fears and the Sears, renamed the Willis Tower, is making an impressive comeback. When U.S. Equities Realty took over from CB Richard Ellis as the building's manager in 2008, the complex's 3.4 million sq. ft. in offices were limping along with a 22% vacancy, with most of its ground-floor retail, including a boarded-up Bonwit Teller store, empty and dark.
Today the vacancy has been slashed to 10%, far better than the surrounding office market average of 16%, and negotiations with prospective tenants suggest the building can get to 7% or less vacancy next year. “This is a pretty amazing turnaround considering that most brokers three years ago refused to even show their office clients space here,” says Robert Wislow, chairman and CEO of U.S. Equities.
How did Wislow and his leasing group bring the Willis, owned by a private partnership, back? One thing the firm didn't do was panic and cut rates. In fact, leases became more expensive, with asking rates rising from $14 to $18 per sq. ft. net under the CBRE regime to $17 to $21 a foot now. Taxes and expenses add another $17 per sq. ft.
Like a lot of super-tall buildings, by 2007 the Willis had taken on an institutional war zone look, with sterile security greeting visitors in the lobby. U.S. Equities set about humanizing the entries, moving scanning machines behind columns, ordering “friendly training” for once-morose guards, and adding flowers, trees and other greenery. The lobby hosted a rotating art exhibit, while the top-floor sky deck was recast with a glass ledge jutting into space and offering jaw-dropping views. Visitors could look straight down 1,300 ft. through the glass floor to the canyons of Chicago's Loop — inspiring nationwide headlines for its daring concept.
Management installed the highest “green” roof in the world, 96 floors up, and hosted a farmer's market in the plaza. Reduced-flow water fixtures cut water consumption by 10.5 million gallons annually — equal to 156,000 bathtubs. A tenant program offered loaner bikes, helmets and showers.
Tenants signed on. The Willis Group, a London-based insurance firm, took 140,000 sq. ft. and put its name on the structure. United Airlines, recently merged with Continental, this fall took 650,000 sq. ft. and began moving 1,000 people from the suburbs to a nine-floor block. “When you're relocating an organization as big as ours, size is important. The Willis Tower certainly has size,” says Kate Gebo, United vice president.
The tallest building in the world at 1,451 feet when it opened in 1973, the Willis is now merely No. 8, far behind the 2,717 ft. Burj Khalifa in Dubai. It's still highest in the U.S., until the 1,776 ft. One World Trade Center opens.
“Nobody cares if the Willis isn't the tallest building anymore,” says Howard Ecker, a Loop tenant representative for four decades who is steering clients to the Willis of late. “It's still a great building physically. It's got unusual features, like underfloor duct systems, that you don't see in newer buildings these days. People just want to be there now.”
In Progress: Renovation of Ontario Mills
DEVELOPER: The Mills, a Simon Company
LOCATION: Ontario, Calif.
BUZZ: As part of a multimillion-dollar renovation at Ontario Mills, California's largest outlet and value retail shopping destination, some key tenants are expanding. Forever 21 will expand from 13,000 sq. ft. to 54,000 sq. ft., while Burlington Coat Factory will grow from 80,000 sq. ft. to 112,000 sq. ft. Sports Authority will occupy more than 50,000 sq. ft. The city of Ontario is investing $4.5 million in the project.
SIZE: 1.5 million sq. ft.
PROJECTED COMPLETION: Summer 2011