CTA Buys Into Fifield's $76M Build-To-Suit

CHICAGO-The Chicago Transit Authority is on the move from leased space at Merchandise Mart and Apparel Center at 350 N. Orleans to a build-to-suit project at 555 W. Lake St., which Fifield Cos. is developing at a total cost of $94.6 million. However, the move is expected to save the bus, subway and elevated rail provider $7.7 million a year.

Cost of the 400,000-sf building, scheduled to be completed in 2004, is estimated at $75.9 million. However, another $18.7 million is expected to be spent on furnishings, relocation and other soft costs.

Mesirow Stein Real Estate, Transwestern Commercial Services and OWP/P Architects pared a list of 70 potential lease, acquisition and build-to-suit proposals down to 14 finalists this summer before the CTA board opted to go with Fifield’s West Loop project, to be built at the Green Line’s Clinton Street stop. Besides a minimum of 300,000 sf, a location near a CTA bus and rail routes were given top priority.

“Ownership makes the most sense financially,” says CTA president Frank Kruesi in a statement. “By eliminating our lease payment from the operating budget, those funds can be used to support service for our customers. It is the same basic principle as home ownership. In the long run, it is cheaper to buy than to rent.”

However, the lease-own decision comes at the expense of Paramus, NJ-based Vornado Realty Trust, which had a lease through November 2007. However, the CTA is exercising early-out clause this month, allowing them to vacate the 3.4-million-sf Merchandise Mart–occupancy has slipped by more than 5 percentage points there this year–and 1.15-million-sf 350 N. Orleans St. by November 2004.

The CTA has been a Merchandise Mart tenant since 1947, when the property was owned by the Kennedy family.

The build-to-suit also consolidates space, as the CTA also owns a building at 120 N. Racine.