T
he owner of a prominent office tower in Chicago is close to finalizing two significant lease agreements totaling over half a million square feet. These agreements could potentially revitalize the building's occupancy rate, which has been struggling at around 62 percent due to recent departures of law firms Jones Day and Morgan Lewis & Bockius. The building's largest tenant, Capital One, has committed to renewing its lease, while engineering firm Sargent & Lundy is in advanced negotiations for a lease of approximately 380,000 square feet. If finalized, this would represent a significant expansion for Sargent & Lundy, which currently occupies around 280,000 square feet at its long-time home at 55 East Monroe Street.
The building's owner, the State Teachers Retirement System of Ohio (STRS Ohio), has been working hard to reposition the property. Last year, they paid off their $150 million mortgage and began making improvements to the building, including plans for an amenity floor. These efforts have been crucial given the challenges faced by office landlords in recent years, as downtown rates have climbed to record highs in 13 out of the past 15 quarters, according to CBRE.
The leases are part of a larger trend of increased office leasing activity near the James R. Thompson Center, which is being redeveloped by Google. This has led to increased real estate activity in the surrounding area as firms seek to position themselves near Google's Midwest headquarters. Transwestern represented STRS Ohio in negotiations with Capital One, while Savills' Joe Learner and Robert Sevim are representing Sargent & Lundy. Leasing efforts at the building are being managed by CBRE's Mike Kazmierczak, Kelsey Scheive, and Aaron Schuster.
These developments come at a critical time for the building's owner, who purchased the 959,000-square-foot tower in 2008. Despite the challenges, these leases could mark a significant turning point for the building's occupancy rate and its position as a major player in Chicago's downtown office market.
