As Chicago office market heats up, more seeking shared, non-traditional office space

amata 1

An example of the shared office space offered by Amata in Chicago’s Loop.

by Dan Rafter

It’s expensive to lease office space in Chicago’s Loop. Small business owners who want a presence in the heart of downtown Chicago might find even the oldest office spaces here priced far outside their budgets.

And what about those entrepreneurs running home-based businesses? They might be outgrowing their home offices but still find office space in downtown Chicago too pricey.

That’s where shared office space and virtual offices come in. Providing these spaces has proven to be a successful business model for Chicago’s Amata Office Centers.

The company offers six office locations — including a new location that Amata opened in May of this year on the 24th floor of 150 S. Wacker Drive — in Chicago’s Loop business district. Ron Bockstahler, chief executive officer of Amata, said that he’s not surprised at his company’s growing business: The demand for non-traditional office space is only growing, he said.

Companies that fought their way through the days of the Great Recession are now ready to expand again. Because of this, they are buying new office space in prime downtown locations. This leaves less space for companies that are growing but aren’t yet ready to make the big financial commitment that owners require for office space in the Loop.

A growing number of small businesses, then, are seeking the less-expensive shared and virtual office spaces that Amata offers.

“During the last three years, business has steadily been growing,” Bockstahler said. “The office market in Chicago is not quite back to where it was in 2007. Back then it was gangbusters. But it has steadily picked up, and I only see demand for office space in the city increasing.”

amata 2Amata’s six shared-office spaces in downtown Chicago offer modern amenities, but they come at lower prices. Amata offers move-in ready office facilities on specific floors of the six locations they offer. At 150 N. Michigan Ave., for instance, Amata offers move-in ready office space on the entire eighth floor. At 150 S. Wacker Ave., Amata’s offices occupy the entire 24th floor.

Companies that want these office spaces rent them out, with flexible lease terms. Some might share the space with other companies, using the offices on pre-defined days. Others might sign more exclusive rental agreements that give them sole access to an office space.

This arrangement comes with benefits. First, it doesn’t require businesses to come up with the larger amounts of cash necessary to rent office space in prime downtown Chicago locations. Secondly, it gives them a high-profile address, something that boosts their professionalism.

Amata offers furnished private offices with 100 to 225 square feet of space and private collaborative suites that offer up to 600 square feet. Clients can request a wide range of amenities with their shared office space, including wireless, whiteboards, high-speed fiber networks and high-definition video units.

Other businesses might want a virtual office that comes with staffers that answer phone calls, a premium city address and a minimum of 12 hours of reserved office and conference time each month. By renting a virtual office through a company like Amata, business owners don’t have to spend the money needed to lease a physical office in the heart of Chicago.

Proof of the demand for this non-traditional office space can be found in Amata’s newest location, 150 S. Wacker in the West Loop. This location opened May 1, but is already more than 70 percent leased.

Who’s leasing Amata’s shared office spaces? Attorneys account for much of Amata’s business, Bockstahler said. He estimated that about 35 percent of Amata’s clients in Chicago are attorneys.

“For young attorneys who want to hang out their shingles, this is a way to do that,” Bockstahler said. “Other attorneys start off with virtual office addresses. It’s a way for them to get started without needing a huge cash flow.”

Amata has also nabbed clients located far from Chicago. A company from Dubai in the United Arab Emirates is now renting shared office space through Amata.

“It’s an easy way for them to set up space in a prime location that looks really nice without them having to invest a lot of money,” Bockstahler said. “The company’s officials don’t know if their business here is going to last. So they signed a one-year agreement. This way, they’re not on the hook for as large of an investment.”

Amata is unusual in that it also offers full office-brokerage services, specializing in locating office spaces of 10,000 square feet or less. This gives Bockstahler a good overview of the city’s office market.

And he’s found that the office market in Chicago’s CBD is slowly but steadily heating up.

“The economy is picking up and people are willing to sign longer leases,” Bockstahler said. “They are willing to take on more risk than even last year. Clients are surprised. They’re ready to move and they see that the prime office space they wanted is gone. They are in a bit of shock that this is happening again in the Chicago office market.”

Advertisements
This entry was posted in Chicago Commercial Real Estate, Illinois, Illinois real estate, office and tagged , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s