Suburban office vacancies in the third quarter of this year reportedly reached 29.7 percent, a record high for the 11th consecutive quarter. Yet, there are bright spots in the suburban office landscape: Naperville’s 31-acre CityGate Centre has been on an upward trajectory since the third quarter of last year.
Today, its 211,193 square-foot Class A office building at 2135 CityGate Ln. is nearly 90 percent leased. Three businesses—M/I Homes, Simpson Technologies and Koru Group—established headquarters at the multi-use development at I-88 and Rte. 59 since Q4 last year, with M/I Homes being the largest office-only lease in Naperville during 2022.
“What we’re hearing from our commercial tenants—new and long-standing—is that they want a workplace their employees want to go to,” said Calamos Real Estate LLC Vice President and Managing Broker Chris Landis. “They are choosing CityGate Centre because of its impressive amenities and because they want their headquarters locations to align with their sustainability goals.”
Likewise, CityGate Centre’s retail property is more than 86 percent leased with a new pharmacy slated to open at year end, and its newly built luxury residential building—the 285-unit Domain CityGate that opened last October—is more 97 percent leased.
The drivers of success
What’s behind this performance? Calamos Real Estate SVP Ken Witkowski acknowledges real estate tenets—location and amenities—but says what sets CityGate Centre apart from other area developments is the care provided by the nimble, multifunctional group of real estate professionals that form his team.
Regional access, at the crossroads of the I-88 Tech Corridor and the 71-mile Route 59 thoroughfare that runs from Antioch to Shorewood, contributes to the success of CityGate Centre. Add in its sustainability focus, its proactive property management that includes an on-site engineering team, and its amenities such as a host of dining options, abundant parking and Hotel Arista, the only Forbes recommended Illinois hotel outside of Chicago city limits, and the agents of success are clear.
Safety is also a priority. CityGate Centre has a 24-7 on site security team, several AEDs throughout each of its buildings and Global Plasma Solutions™ indoor air quality ionization system was installed in its office buildings in early 2020.
“No doubt location matters,” Witkowski said. “But having high standards and doing the work to exceed them; investing in maintenance, in infrastructure and in people—that’s what sets you apart.”
Flexibility sustains growth
For the most part, the remaining space at the primary multi-tenant office building is composed of pockets of square footage and Landis responded with the introduction of CityGate Flex, individual, furnished offices with flexible lease terms ideal for entrepreneurs and small businesses. To further manage the demand at CityGate Centre, Calamos Real Estate set its sights on its first tenant: Sister company Calamos Investments. The global firm occupies a nearly 155,000 square-foot single-tenant headquarters building opened in 2005 that anchors the development.
In 2021 while a lot of companies were reducing office space, Calamos Investments expanded its Chicagoland footprint by more than 20 percent, leasing nearly 32,000 square feet at Chicago’s Fulton Market to support organizational growth and the needs of the firm’s city-based clients and associates, while maintaining its suburban headquarters.
“Change, no matter how positive, is disrupting so we saw an opportunity to capitalize on that that disruption,” said Landis. “Focusing on design efficiencies at the Naperville headquarters during the investment company’s expansion was a timely opportunity to reallocate how space is used and by whom.”
Conversion from single to multi-tenant is not new—or even rare—but doing so when that headquarters tenant is in growth mode is exceptional. By recasting parts of the Calamos Investments building as multi-occupant building, Landis was able to broker a recent agreement for 5,600+ square feet that will be occupied by Southfield, MI-based Legend Health. And he’s listed another 16,000 square feet composed of suites ranging from 1,147 square feet to 6,676 square feet.
Ongoing growth: Diversity is key
As vacancy rates drive conversion of established office buildings to residential and industrial space. Witkowski sees the path forward for firms such as Calamos Real Estate is in third-party services.
“Our construction management lead has worked on a number of high-profile projects,” he said. “It’s a great opportunity to put her expertise to work as owners look at new uses for underperforming spaces.
“It’s critical—particularly for boutique firms who can rise or fall with one segment—to diversify their service portfolio and be less vulnerable to fluctuations in any one piece of the commercial sector,” he added.
Calamos Real Estate recently expanded its third-party property management roster to include multifamily, servicing a handful of Chicago properties. It also has longstanding relationships managing special-use properties—a school, an aircraft hangar and a museum—with needs unique to their segments.
And of course, there’s brokerage. The firm represents owners and tenants.
“Calamos Real Estate came to exist as a firm initially to manage CityGate Centre for Mr. Calamos,” said Witkowski. “We have very high services standards for any properties or projects we manage because we’ve walked in their shoes as owners.”
CityGate Centre also welcomes new development. It has three available in-fill lots ranging from about 2 acres to 4 acres, including one along the high-traffic Rte. 59 corridor, plus 27 acres to the north of CityGate Centre.
“Nobody’s building more office now, but we’re seeing interest for other uses,” Landis said.
Learn more about the firm’s services and available properties at for sale, lease or development at www.calamosrealestate.com.
A version of this article appeared in the Nov/Dec issue of Illinois Real Estate Journal