Holliday Fenoglio Fowler, L.P. ( HFF ) is an Illinois licensed real estate broker.
HFF is pleased to present an investment opportunity in 680 North Lake Shore Drive (the Property ), an iconic Class A Office Building located in Chicago s North Michigan Avenue / Streeterville submarket. The mixed-use Property, developed in 1926, was the largest building in the world when built totaling over 1.95 million square feet. From 1979 to 1984, the building was completely redeveloped creating luxury condominiums along with office and retail components. 2 The 16-story property (with 29-story tower) is vertically subdivided into commercial lots as well as private residential and garage lots. This investment opportunity relates to the 493,064 rentable square foot commercial component which includes approximately 426,713 square feet of office/medical space, 66,351 square feet of retail/clinical space on the ground floor and 331 public garage parking spaces. 680 North Lake Shore Drive is owned by affiliates of Golub & Company ( Golub ) who have held ownership of the property since 1988. KEY PROPERTY STATISTICS Address: 680 North Lake Shore Drive City, State: Chicago, IL Year Built/Renovated: 1923-1926/1984 Rentable Area: 493,064 Tenancy: Ann & Robert H. Lurie Children's Hospital (95,523 sf) Northwestern Medical Faculty Foundation (64,005 sf) NorthShore University HealthSystem (36,023 sf) Northwestern University Feinberg School of Medicine (34,482 sf) Number of Stories: 16 Occupancy: 87.7% Leased/Pending: 90.0% WALT: 7.3 years Primary Tenant Set WALT: 9.0 years Average Floor Plate: 47,000 sf Developer: Henry Raeder Walk Score: 95/100 Transit Score: 90/100 Parking: 331 spaces
The Property is 87.7% occupied with a superb mix of high credit medical institutions, medical practice groups, and retail tenants. Approximately 66.3% of occupied square footage is leased to prominent credit grade medical institutions including Northwestern University (Fitch: AAA), Ann & Robert H. Lurie Children s Hospital (Fitch: AA-), Northwestern Memorial HealthCare (Moody s: Aa2), and NorthShore University HealthSystem (Moody s: Aa2) as well as retail tenants Walgreens (Baa2) and Fifth Third Bancorp (Baa1). Approximately 99.0% of occupied office square footage and 89.4% of overall building occupied square footage (including ground floor retail space) at the Property is leased to tenants operating in the medical / healthcare sector. Approximately 31.8% of rentable area is clinical space with tenants that provide an array of services including women s health, orthopedics, ENT, and general medicine. The balance of the office space is utilized for research functions, management offices, and back office services related to these medical operations. Positioned at the epicenter of the Northwestern Medical Campus ( NMC ), 680 North Lake Shore Drive is the preeminent medical office location for independent practices and affiliates of the surrounding medical and educational public institutions which include Northwestern Memorial Hospital, Northwestern University, Rehabilitation Institute of Chicago, Ann & Robert H. Lurie Children s Hospital, and Prentice Women s Hospital. Supported by a proven owner/operator with over 55 years of experience and highly durable cash flow stream, the Property is positioned to capture additional upside as the prominence and scale of the NMC continues its rapid expansion. 3 493,064 SF RENTABLE AREA 493,064 SF RENTABLE AREA 432,522 SF OCCUPIED AREA 87.7% 2.3% 10.0% Occupied Leased/Pending Vacant 31.8% 58.5% 9.7% Clinical Office Retail (Non-Clinical) 89.4% 9.5% 1.1% Medical-Related Use Retail (Non-Medical) General Office
Long-Term Medical, Credit Grade Cash Flow The unique position of 680 North Lake Shore Drive at the epicenter of one of the nation s largest and most renowned medical centers draws numerous tenants from prominent surrounding institutions. The six largest tenants at the Property (excluding Treasure Island, a gourmet grocery store in the Chicago area) are all renowned medical institutions boasting investment grade credit ratings and collectively account for 54.2% of the Property s rentable square footage (61.8% of occupied square footage). Additionally, the weighted average lease term of 9.0 years for the primary tenant set detailed below ensures an investor will enjoy stable cash flow for years to come. TENANT DEPARTMENT/FUNCTIONS SUMMARY OF PRIMARY TENANTS CREDIT RATING* SF % CURRENT RENT/SF EXPIRES WALT Ann & Robert H. Lurie Children's Hospital** Financial, Legal, and Foundation Operations Fitch AA- 95,523 19.4% $18.25 N 12/27 11.3 yrs Northwestern Medical Group Northwestern Medical Faculty Foundation Moody's Aa2 64,005 13.0% $32.18 G 09/24 8.0 yrs 4 NorthShore University HealthSystem NorthShore Orthopaedic Institute Moody's Aa2 36,023 7.3% $36.70 G 11/20 4.2 yrs Northwestern University Feinberg School of Medicine Department of Preventative Medicine Fitch AAA 34,482 7.0% $22.25 N 04/25 8.6 yrs Treasure Island Grocery Store N/A 21,293 4.3% $15.50 N 06/28 11.8 yrs Northwestern University Feinberg School of Medicine Prosthetics-Orthotics Center Fitch AAA 19,923 4.0% $21.50 N 08/30 13.9 yrs Northwestern Medical Group Various Physician Offices Moody's Aa2 17,248 3.5% $20.50 N 02/19 2.4 yrs Total/Average 288,497 58.5% 9.0 yrs * Represents credit rating of division/units Parent institution ** Lurie Children's recently executed a lease for an additional 10,027 SF call center expansion space at the Property
14 737 N. Michigan 13 211 E. Chicago Ann & Robert H. Lurie Children s Hospital of Chicago Prentice Women s Hospital 8 Northwestern University Feinberg School of Medicine Pritzker School of Law Kellogg School of Management LAKE MICHIGAN SUPERIOR STREET OUTER LAKE SHORE DRIVE 150 E. Huron Parking A Huron Superior Olson Pavilion Robert H. Lurie Medical Research Center Simpson Querrey Biomedical Research Center (2018) Rehabilitation Institute of Chicago (old) Abbott Hall INNER LAKE SHORE DRIVE HURON STREET MICHIGAN AVENUE Arkes Family Pavilion Northwestern Memorial Hospital Galter Pavilion Feinberg Pavilion Future Northewestern Hospital Site 645 N. Michigan SAINT CLAIR STREET 259 E. Erie Parking B FAIRBANKS COURT Parking C Erie Ontario ERIE STREET Parking D Erie Ontario Rehabilitation Institute of Chicago (2016) McCLURG COURT Onterie Center 446 E. Ontario Epicenter of Renowned Northwestern Medical Campus 680 North Lake Shore is ideally positioned at the epicenter of one of the nation s largest and most renowned medical centers Northwestern Memorial Hospital ("NMH"). Situated between Lake Michigan and the Magnificent Mile, the Northwestern Medical Campus represents the main economic driver in the mixed-use Streeterville neighborhood of downtown Chicago. Acclaimed medical campus institutions surrounding 680 North Lake Shore Drive, many of which also occupy space at the Property, include: 5 Northwestern Memorial Hospital: #1 ranked hospital in Illinois Ann & Robert H. Lurie Children's Hospital: #11 ranked Children s hospital in the country Northwestern University Feinberg School of Medicine: #17 ranked research-oriented medical school in the country Rehabilitation Institute of Chicago: #1 ranked provider of comprehensive physical medicine and rehabilitation care in the country Prentice Women s Hospital: 1.0 million square foot facility built in 2007 providing women s care as part of NMH The diminishing supply of office space due to multi-family and retail expansion in the submarket coupled with swift growth in the healthcare sector makes 680 North Lake Shore Drive a strong candidate for rapidly expanding healthcare tenants in need of office or clinical space around the Northwestern Medical Campus. The Property is positioned as the desired address for affiliated clinical practices and essential back office operations for these prominent neighboring institutions.
Upside from Medical Campus Momentum Since 1997, one of the largest expansions of medical care and research facilities in the U.S. took place with the dramatic expansion of the Northwestern Medical Campus. The expansion featured three new major hospital buildings with over 4 million square feet, and a major research building. The expansion continues to generate significant business for nearby hotels, restaurants and retail stores. 6 Momentum continues to build with two significant projects currently underway in the medical campus. The Rehabilitation Institute of Chicago will soon be opening a new 1.2 million square foot, $550 million state-of-the-art facility directly across the street from 680 North Lake Shore Drive. Additionally, Northwestern Memorial HealthCare recently broke ground on the new Simpson Querrey Biomedical Research Center. The first phase of this project will feature a 600,000 square foot, $295 million facility to be completed in 2018. The lot directly west of 680 North Lake Shore Drive is owned by Northwestern Memorial HealthCare for future hospital development. Few remaining vacant parcels in the Streeterville and North Michigan Avenue submarket coupled with the expanding prominence of the Northwestern Medical Campus will result in swelling demand. 680 North Lake Shore Drive is ideally positioned to capture future tenants seeking to locate and expand in this dynamic medical hub. Moreover, this transaction provides an investor the opportunity to convert additional general office space to clinical uses over time as leases expire to capture additional rent premiums.
Storied / Iconic Chicago Office Building 680 North Lake Shore Drive in Chicago is an elegant 16-story (with a 29-story tower) art-deco-style building nestled in the crescent of modern skyscrapers that border the outer harbor of Lake Michigan. Constructed in 1926, it was the largest building in the world when it was completed. Its lovely structure is still visible from many parts of the city, especially in the evening when it s brightly illuminated blue pyramid stands as a beacon to a bygone era in the city s architectural past. Originally designed by noted Chicago architect Henry Raeder, it was known as the American Furniture Mart. Reaching a height of 474 feet, 680 North Lake Shore Drive occupies the entire block between Lake Shore Drive and McClurg Court. For over two decades, Playboy Enterprises maintained their corporate headquarters on the top floors of the Property, which are now occupied by the administrative headquarters of Ann & Robert H. Lurie Children's Hospital. Today, 680 North Lake Shore Drive is a Class A building that retains its prominence in the evolving Chicago cityscape. Known as a city within a city for its comprehensive mixed-use nature and unparalleled amenities, the Property provides investors a timeless and unique asset that cannot be replicated. 7 Long-Term Sponsorship / Management Golub has owned the Property since 1988 and has made great efforts to keep the property wellmaintained and managed by a local owner/operator. Based in Chicago, Golub is a full-service real estate firm with expertise in acquisition, development, investment financing, leasing, asset and property management that has been in business for more than 55 years. The firm has owned, leased or managed more than 40 million square feet of commercial, residential and mixed-use properties, valued in excess of $7 billion. The firm is recognized as an industry leader with an effective, hands-on approach that has been cultivated from seasoned professionals with more than 200 years of collective real estate experience.
Rare Diversified Medical Office Investment Opportunity 680 North Lake Shore Drive is a stabilized mixed-use asset with a diverse income stream. While 89.4% of existing tenants have a medical / healthcare affiliation, the Property has a healthy mix of clinical and general office space uses, as well as significant parking revenue stream. The ground floor is predominantly comprised of retail tenants catering to both office workers and residents of the condo portion of the Property and surrounding Streeterville neighborhood. Clinical office space is located throughout the ground floor and office portions of the building providing an array of services including women s health, orthopedics, ENT, and general medicine. The remaining space serves as general office space utilized by tenants affiliated with nearby medical institutions that utilize the building for research functions, management offices, and back office services related to these medical operations. 331 parking spaces are located on floors 2-5 serving tenants, customers, and the surrounding market. 8 Large tenant spaces occupied by credit grade medical institutions, a retail floor with captive customer base, and a mixture of smaller clinical office and physician practices provides a highly diversified income stream. 680 North Lake Shore Drive presents an investor a rare opportunity to gain exposure to a diverse medical tenant base supported by the momentum of both the Northwestern Medical Campus and overall healthcare sector. TENANT MIX SUMMARY RETAIL OFFICE CLINICAL TOTAL # of Tenants 10 14 26 50 Average SF 4,689 17,425 5,449 8,650 Total SF 47,945 288,204 156,915 493,064 % of NRA 9.7% 58.5% 31.8% 100.0% Occupied SF 46,893 243,943 141,686 432,522 Occupancy % 97.8% 84.6% 90.3% 87.7% * Property includes 331 public parking spaces
Premier Live / Work / Play Neighborhood The Property is located in the Streeterville neighborhood of the North Michigan Avenue submarket in Chicago s CBD. With today s increasing focus on a work/life balance and integration, office tenants are drawn to the submarket for its highly desirable mix of area amenities. 9 680 North Lake Shore Drive is blocks from Chicago s world-class shopping district, the Magnificent Mile, and its accompanying array of premier hotels and restaurants, all within walking distance. Additionally, the submarket s close proximity to high-end and prestigious residential neighborhoods home to many of Chicago s top executives and decision-makers is a driver of office space demand. Substantial Discount to Replacement Cost 680 North Lake Shore Drive represents a unique opportunity to acquire a high-quality property at a 50% discount to replacement costs. Reproduction costs of such a superior- located asset would cost in excess of $440 per rentable square foot to recreate today. The soaring cost of construction creates an arbitrage opportunity between the escalated replacements and the Property s residual value.
Investment Contacts JEFFREY M. BRAMSON Senior Managing Director/Managing Broker 312.528.3687 jbramson@hfflp.com JAIME M. FINK Senior Managing Director 312.528.3683 jfink@hfflp.com MARK B. KATZ Managing Director 312.980.3604 mkatz@hfflp.com RYAN T. SOULS Analyst 312.300.7292 rsouls@hfflp.com Medical Contacts MICHAEL BENNETT Managing Director 312.528.3694 mbennett@hfflp.com PHIL MAHLER Managing Director 312.300.7319 pmahler@hfflp.com Debt Contact STEPHEN R. SKOK Managing Director 312.528.3681 sskok@hfflp.com HFF CHICAGO 181 West Madison Suite 3900 Chicago, IL 60602 Telephone: 312.528.3650 Fax: 312.528.3651 Atlanta Austin Boston Carolinas CHICAGO Denver Dallas Florham Park (NJ) Houston Indianapolis Los Angeles Miami New York Orange County (CA) Orlando Philadelphia Pittsburgh Portland (OR) San Diego San Francisco Tampa Washington, DC 2016 HFF (Holliday Fenoglio Fowler, L.P.) and HFFS (HFF Securities L.P.) are owned by HFF, Inc. (NYSE: HF). HFF operates out of 22 offices nationwide and is a leading provider of commercial real estate and capital markets services to the U.S. commercial real estate industry. HFF together with its affiliate HFFS offer clients a fully integrated national capital markets platform including debt placement, investment sales, equity placement, advisory services, loan sales and commercial loan servicing. For more information please visit hfflp.com or follow HFF on Twitter at twitter.com/hff. HFF has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been obtained from sources other than HFF and we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a buyer. Buyers should conduct their own independent investigation and rely on those results. The information contained herein is subject to change.