Chicago-based real estate firm Hearn is looking for medical providers to move into the former John Hancock Center, now formally known as 875 North Michigan Avenue.
Hearn is marketing 130,000 square feet in the lower part of the city’s most recognizable skyscraper as the “Mag Mile Medical Pavilion,” according to Crain’s. Medical tenants could grow to occupy half or more of the 900,000-square-feet of the building’s office space in the coming years. Health care advisory team Cushman & Wakefield will lead the leasing effort.
“This isn’t ‘Gee whiz, we’re going to throw a few trial balloons and see if we attract any attention.’ We’re committed to doing this, and there are significant dollars being spent now and in the future to make this happen,” said Stephen G. Hearn, founder of Hearn. “We think it will be a race for tenants to get a spot here.”
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Hearn will invest tens of millions of dollars renovating the space for its new wave of prospective tenants as the pandemic drags on and traditional office tenants question their need for space. While one of the 100-story tower’s largest tenants, SMS Assist, announced last fall it would leave the building, healthcare systems like Northwestern Memorial HealthCare and the Ann & Robert H. Lurie Children’s Hospital of Chicago have been expanding their Streeterville footprints. The office portion of 875 North Michigan Ave. is 30 percent empty, 12 percent higher than the average submarket average, according to CBRE data cited by Crain’s.
“You can say what you want about the demand for traditional office in this neck of the woods, but no one will argue over the demand for medical in this neighborhood,” Hearn told Crain’s. “The future of health care and the need for health care facilities, both in hospitals and outside hospital facilities, is unquestionable.”
Hearn said the 13 million square feet of health care real estate in Streeterville isn’t enough for the neighborhood’s demand. He said a projection from health care consulting firm Advisory Board reports demand for services including orthopedics, physical therapy and pain management within five miles of Streeterville will jump by 25 percent over the next five years, Crain’s reported.
Hearn is also separately offering naming rights to the tower which could incentivize a larger system to move in. That could attract a tenant like Rush Health or NorthShore University HealthSystem, according to Peter Westmeyer, founder of Remedy Medical Properties, the largest owner of health care properties in the country.
“There’s definitely a turf war in Chicago,” he told Crain’s. “And it wouldn’t surprise me if somebody else wanted to jump in there and compete for the more urban downtown market.”
[Crain’s] — Harrison Connery