Real estate executive Kyle Kamin is credited with orchestrating one of the largest corporate real estate transactions in Chicago’s history—the 2014 relocation of Motorola Mobility from Libertyville, IL, to the city’s fabled Merchandise Mart, a 1930 behemoth sited along the Chicago River. As a result of the transaction, Kamin, executive vice president of advisory and transaction services with the Chicago office of real estate firm CBRE Group Inc., facilitated the influx of more than 2,000 employees to Chicago, a high-water mark by any measure. Chicago Mayor Rahm Emanuel characterized the relocation as a “game changer” for the city’s River North neighborhood, home to Merchandise Mart and a nascent high-tech corridor
No stranger to trailblazing, Kamin subsequently arranged a deal to relocate Google’s Chicago headquarters to a renovated warehouse in Fulton Market, extending Chicago’s central business district to the West Loop and bringing $7 billion in investment to the area.
In 2016, Kamin represented Glassdoor in a transaction that further extended the boundaries of the West Loop. In anticipation of his participation in the BuiltWorlds event “Infrastructure of the 21st Century” on April 20, BuiltWorlds caught up with Kamin to discuss the current state of urban office environments and their underlying infrastructure.
What does 21st-century class-A office space look like, and what is required to support it?
Thanks to Wi-Fi networks, the most profound change we’ve seen is that employees are no longer tied to their desks but free to move around to perform tasks, circulating from room to room, situating themselves on a couch or what have you. In other words, employees can work from anywhere. However, if the space contains zones without continuous Wi-Fi, there’s a loss of productivity, so incorporation of a distributed antenna system (DAS) into the facility is a must. I know of companies that won’t even look at a building if it isn’t equipped with DAS, and those buildings quickly are becoming obsolete.
The technology isn’t difficult to adopt, but it can be costly and, of course, obviously entails discussions and negotiations with service providers.
How important is energy efficiency when prospective tenants evaluate spaces?
It’s very important, because its one of the few costs of occupancy you can control. It’s all about saving dollars at the end of the day.
Among other advantages, microgrids may result in smaller financial commitments for office building owners while isolating them from power outages or disturbances. Is the technology gaining traction?
I believe microgrids represent the future of real estate, but we just haven’t seen implementation of it here in Chicago. It’s the same with renewables, such as solar. Despite potential energy savings, downtown Chicago building owners haven’t made significant investments in those technologies, at least not at this point.
However, energy requirements among office tenants are changing, particularly in the area of cooling. It used to be that some tenants required server rooms of up to 3,000 square feet in size, which in turn necessitated significant cooling of those spaces. With so much data migrating to the cloud, we’ve seen a significant reduction in equipment size and the size of the rooms equipment occupies. In some cases, the rooms amount to closets, resulting in significantly lower cooling requirements.
We’ve seen several transit-oriented high-rises in the residential arena. Are office developers following suit?
No. Ridesharing has emerged as a huge disruptor in the way employees travel to and from work and, as a result, reduced the significance of an office’s proximity to public transportation or whether the building provides on-site parking. In Chicago, the intersection of the Loop’s Wacker Drive and Madison Avenue once marked the best location for office occupants, because of its close proximity to commuter rail lines. Currently, the city’s two hottest markets—River North and Fulton Market—couldn’t located be farther from a commuter line. The difference is that office sites used to be based on the commuting patterns of a company’s senior executives, who would travel to and from the suburbs by train. Today, attorneys for law firms I’ve represented will take Uber or Via to and from work. They’re no longer tied to train schedules, and the option is productive. They can talk on the phone.
Likewise, many Millennials who live in the city are foregoing the subway for ridesharing. For 40 percent more in price, they don’t have to walk to the El or subway, wait on a platform, stand in a subway or EL car for 20 minutes, then walk the rest of the way to work.
So what is the upshot?
In Chicago, businesses are branching out into neighborhoods. Some of the buildings in the West Loop command the highest rents in the city. We believe it’s the future of office real estate in the city.
Big Deals: Kyle Kamin, CBRE executive vice president of advisory and transaction services, has managed more than 35 million square feet of real estate transactions valued at more than $16 billion.
You can see Kyle Kamin speak at BuiltWorlds’ BuildIdeas! 21st Century Infrastructure event on Thursday, April 20th. Other speakers include: Rob Federighi- Managing Director at Edison Energy, Ken Greene- Senior Director at Comcast, and Matt Schaefer- Chief Operations Officer for ParqEx.