Chicago Tribune - April 2000 DOWNTOWN HOUSING BOOM BLOCKING INFLUX OF HIGH-TECH FIRMS--- J. Linn Allen
The downtown residential boom is seen as a spur to business growth, with high-tech firms especially wanting to open up offices close
to where their young employees live. But ironically, the same boom is making it harder for the high-tech firms to find office space,
according to a broker who has been specializing in small spaces for the past decade. Steve Goldstein, founder and president of
Chicago's Metro Concepts, is concentrating his
efforts on the dot-com market these days and has discovered a squeeze is on for the space in the desirable loft districts of River North and River West because many of the lofts are now homes. "A couple of years ago, a broker thought in terms of [inexpensive] space in loft-style buildings. That's all gone," Goldstein said. The result is that some firms are looking outside the central area. In one case, a small operation of R. R. Donnelley & Sons that works on promotional products is looking for office space in the artsy near-northwest neighborhoods of Wicker Park and Bucktown. "It's convenient for the people who work there and is more in line with their personalities," Goldstein said. In another case, an Internet start-up firm in River North, Legacy.com Inc. (a venture supported by Tribune Co. that provides a Web site for detailed obituary information) went looking for space in Evanston. Part of the reason is that principals of the firm lived on the North Shore, and they also wanted to recruit Northwestern University students, Goldstein said. Goldstein's business is benefiting not only from the dot-coms but also because of the fluid nature of business activity these days, said Goldstein, who runs a one-man operation. "I see a lot of people working in big companies who have a sideline going, and then the sideline becomes more and more their main business. Sooner or later they come to me and ask how much space might be," Goldstein observed. "Then some companies I work with are kids right out of college, running an office out of a back room, and they want to expand from four guys to 40 in 30 to 60 days. "They don't have the gray hairs, so they need to partner with other people, and they can offer the more established business people in their midcareers an opportunity to jump ship and get in on the ground floor of something big," he said. Sometimes that dynamic makes his job challenging. He was helping one Internet start-up focusing on on-line job searches look for 2,000 square feet of space, and by the time they got to looking at specific buildings, their space needs had more than tripled, he said. Lease periods can also be a problem. Start-ups that could be dead or worth gazillions in a year don't want a 5-year or even a 3-year lease. So the deals frequently come with "kickout" options so companies can buy their way out of the lease, he said. In such cases, landlords have to contrive creative deals with stringent guarantees about payments, she said. Goldstein said his deals are under the radar of the major real estate firms. He does 50 deals a year, with each one averaging about 2,500 square feet, whereas most brokers do a dozen or two. Lately, he said, he's been advertising his services in the May Report, a local Web-based fount of high-tech biz gossip. Sounds like he's carving a niche.