CCAC Hears from Sterling Bay

CCAC would like to thank Board Member, Bob Chodos, Vice Chairman, Newmark Knight Frank, for moderating an exclusive conversation with Andy Gloor, Managing Principal, Sterling Bay. The CCAC membership visited the Sterling Bay office in Fulton Market on July 10th as a part of its monthly luncheon series.

Chodos provided a brief background on Gloor and Sterling Bay mentioning that the company is a fully-integrated owner/operator real estate development business, which has grown to 200 people over the past 15 years. Sterling Bay’s most notable projects include McDonald’s Corporation’s Global Headquarters, Google’s Midwest Headquarters, redevelopment of 111 N. Canal (which houses Gogo, Twitter and Uber), C.H. Robinson, and the Hillshire Brand headquarters. Sterling Bay has acquired 55 properties, totaling $3.6 billion in value, including the recent purchase of Prudential Plaza 1 and 2, and 600 West Chicago, which rounds out downtown Chicago, Fulton Market, and the next emerging market of Chicago, which is everything on the river north of Chicago Avenue.

Chodos and Gloor began an exclusive conversation where they discussed, where it all started, the Google Effect, the emergence of Fulton Market, McDonald’s Global Headquarters, Green Street Corridor, and what’s next as it pertains to Lincoln Yards.

Before Chodos and Gloor provided in-depth comments on the development projects, Chodos made mention of the landmark 200 ft. flagpole located at 1100 W. Grand. Sterling Bay self-funded and built the flagpole which will recognize The 100 Club, an organization that provides for the families of fallen first responders in Cook and Lake Counties. Sterling Bay also funded the 3200 sq. ft. American flag and the 1,800 sq. ft. City of Chicago flag. At the end of the year, CCAC member Skidmore, Owings & Merrill will assist Sterling Bay with the creation of a memorial that will display the names of the fallen heroes.

Landmark 200 ft. Flagpole built by Sterling Bay

(L:R) Kelly O'Brien, Executive Director, CCAC; Greg Hummel, Partner, Bryan Cave Leighton Paisner; Andy Gloor, Managing Principal, Sterling Bay; and Bob Chodos, Vice Chairman, Newmark Knight Frank.

Bob Chodos, Vice Chairman, Newmark Knight Frank, and Andy Gloor, Managing Principal, Sterling Bay addressing the July 10th CCAC luncheon audience. 

When asked about the process of negotiating with the various corporate technology and internet industries, Gloor stated, “We’ve been fortunate enough to capitalize on the ‘suburban to urban’ trend. The first deal, the most difficult deal, was when Sara Lee moved to downtown Chicago. We like to keep these relationships and direct contact is something that’s very important that other places don’t do.” 

Hillshire Brands left their Downers Grove location and moved to 400 South Jefferson. Sterling Bay completed $62 million dollars’ worth of work in 11 months. “This was the first example of a ‘build-to-suit’ for the corporate tenant. A lot of those advantages are that you can change your brand, have your own identity, own lobby, and own security. For this particular company, moving them from the suburbs, with the culture change, it worked well. Hillshire Brands went from a traditional suburban build out with over 300 offices, to having only 15-20 private offices,” Gloor stated. He continued, “This deal, more than a lot of deals kind of set the brush fire for suburban companies having a hard time trying to attract talent, who want to move downtown, and who want to be in authentic spaces. This helps accelerate that.” 

Both Chodos and Gloor shared that previously, Google’s Midwest Headquarters’ building was “like a block of ice and thawing it out was no easy task.” The building, a former cold-storage warehouse, contained stalagmites of ice covering the entire building from floor to ceiling. Gloor also mentioned, “We liked this building because it contained a large floorplan and we were able to convince the City to change the zoning to allow for this use.” Chodos congratulated Gloor on using real estate as an environment to change the way that businesses operate. “You’ve been a real leader in Chicago and the amenities that need to be associated with this asset including hotels, restaurants, athletic facilities, parking and these are the reasons why you’re building today,” Chodos expressed.

The building where Sterling Bay is headquartered sat dormant for roughly 15 years. Gloor and his team studied the concrete and the structural integrity of the building. It was important for the neighborhood that Sterling Bay was able to build in the West Loop because everyone was huddled on Green Street. From the City standpoint, the goal is to cultivate the neighborhood a little west of Ogden, which is why the zoning change is important.

Chodos asked about the process of selecting various old buildings and creating the new frame to make the buildings brand new.  After crediting the success of finding these buildings to his team, Gloor shared “There’s a physical amenity arms race going on in the office space. Everyone is trying to attract the same talent to work for their company. Having the rooftops and health clubs are really important and this is an example of that. But now we’re evolving into a services arms race. It started off as a physical arms race and now its shifted to the services arms race. What services can you provide? Can you walk my dog and get my dry cleaning?” Chodos stated. This space is an example of what the future of office space and workplace environments is now and going to be more of in the future.

Sterling Bay purchased the old Harpo Studios building, which spanned a full city block on Randolph. The building was completed in 18 months, with 740,000 sq. ft. top down construction and houses 3,000 employees. Gloor mentions the McDonald’s building is the nicest office he’s ever seen. “It’s better for recruitment, better for retention and good for the neighborhood.”

The first building is 333 North Green. Sterling Bay has secured WPP, which is the world’s largest advertising company. Sterling Bay will also construct 330 N. Green next door.

Lincoln Yards has been the most anticipated project of the year. Building on the land formerly occupied by Finkl Steel, the initial phase of Lincoln Yards will contain approximately 12 million sq. ft. of mixed-use space, 6 million sq. ft. of commercial office space, 4,000 – 5,000 new residences, hundreds of new hotel rooms, a state-of-the-art Metra Station, 100+ new shops and retailers, 13+ acres of public open space, and provide 23,000  jobs. Sterling Bay owns about 80 acres of land between Bucktown and Lincoln Park. The Lincoln Yards project will also include an agreement with Live Nation to build roughly 5 or 6 concert venues/comedy clubs. A sports and entertainment district specifically focusing on soccer will also be built. Lastly, the Lincoln Yards site is rumored to be the location for Amazon’s second headquarters. Gloor stated Sterling Bay’s first priority is to improve the train station. “The plan is to move the station south, connect it to the 606 and add water taxis. The estimated cost of the entire Lincoln Yards project is a $5+ billion, maybe a little more. But this will make a huge improvement to this area.”

When asked how Sterling Bay will continue to make plans, move forward and develop on the Lincoln Yards site knowing it is rumored to be of the proposed Amazon sites, Gloor simply expressed, “We bought this land before we even heard about Amazon. They are looking for 8 million sq. ft. and we have 20 million sq. ft”. Gloor continued, “We feel like Lincoln Yards is the best site, not only for Chicago, but it’s a unique site on a national level. But a lot of the conversation is geared around public incentive, for example, how much is the City giving Amazon, and what are the tax breaks. That’s out of our control.” 

Concluding the conversation, Chodos expressed that Chicago is lucky to have Sterling Bay. “This company has a strong capability of project management, finance, legal, vision, leasing, and all the building blocks that it takes to actually put something together that will be generational.”

 July 10th CCAC Luncheon audience at Sterling Bay

CCAC does not host a luncheon for the month of August.

Tuesday, September 11, 2018 at Skidmore, Owings & Merrill

2018 Sprint: The Chicago River

The CCAC Young Leaders 2018 Sprint will focus on creating a vision for the development of multiple sites along the Chicago River.  The teams will be directed to integrate ideas inspired by equity, resiliency, and connectivity. In addition, each team will address job creation, real estate investment, transit connectivity, land use and open space planning, housing, and environmental improvement. 

5:00 pm- Introduction, Opening Panel, Stakeholder Dinner

9:00 am: Stakeholder Interviews

12:00 pm: Team Break Out

7:00 pm: Working Dinner

9:00 am: Bagels & Coffee; Team Work Session

4:00 pm: Final Presentations

5:00 pm: Reception

CCAC member, Perkins+Will, has agreed to host the sprint at its office in the Wrigley Building.   

Participants will get the opportunity to network with one another, utilize their professional expertise, hear from Chicago officials/leaders who are making a difference in the housing, community development and transit communities, and create a meaningful planning and design solution to address the City’s most pressing problems.

Sponsorship Opportunities are available. Please e-mail Executive Director,  Kelly O'Brien, kobrien@ccac.org.

Register today to participate in the sprint! For more information and to register, please e-mail Shalora Jasper, sjasper@ccac.org.

SAVE THE DATE

The sister organization to CCAC, the Alliance for Regional Development, will host the 6th Annual Summit on Regional Competitiveness with and at the Federal Reserve Bank of Chicago on  Monday, October 29, 2018.

This is an invitation-only event. For information on how to be added to the guest list and if you would like others in your network to be invited, please contact Shalora Jasper at sjasper@alliancerd.org.

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