T
he John Buck Company has secured a long-term lease agreement with Smith, Gambrell & Russell for 57,000 square feet on the 30th and 31st floors of their 155 North Wacker Drive office tower. This move is part of a broader trend of tenant downsizing in response to the financial challenges posed by the pandemic and interest rate hikes from the Federal Reserve. Smith Gambrell's current landlord, a joint venture between Zeller Realty and Cindat Capital Management, is struggling to sell their building due to a significant drop in value since purchasing it for $302 million in 2014 and investing $38 million in renovations.

    The law firm's departure is expected to exacerbate the financial pain for the building's owners, who are currently seeking to sell the property. Offers for the building have ranged from $100 million to $120 million, significantly below the debt tied to the property. The building's 2018 refinance included a $215 million senior loan from a consortium of banks led by Morgan Stanley, as well as $80 million in mezzanine debt.

    The move to 155 North Wacker is part of a broader trend of tenants seeking newer buildings with updated amenities to attract employees to come into the office more often. While the Chicago office market is near record-high vacancy rates of 25 percent, 155 North Wacker is slightly above this mark, with recent leases set to boost its occupancy to nearly 90 percent.

    Buck and their lender Morgan Stanley have also offered larger-than-usual concessions to prospective tenants, adding to the allure of 155 North Wacker. Some deals have allowed tenants to receive upwards of $300 per square foot from landlords to build out their spaces.

    Smith Gambrell's Chicago office opened in 2022 after merging with Figliulo & Silverman and expanding significantly through a combination with Freeborn & Peters LLP last year. Freeborn & Peters had been occupying the building since 1992.

    The transaction was facilitated by Meredith O'Connor and Matt Carolan of JLL on behalf of the law firm, while Bill Rolander of Newmark represented the ownership of 155 North Wacker. Recently, the landlord replaced Newmark's leasing and property management team with a team from Stream Realty's Chicago office.