Six months ago, freight tech firm Flexport signed a lease to occupy 40,000 square feet at Sterling Bay’s latest office building, 333. N. Green St. in Fulton Market.
But in today’s Covid-19 world, the San Francisco-based company has abandoned those plans and will look to sublease the space as it shifts to a part work-from-home model, Crain’s reported. Flexport has offices at 370 N. Carpenter St. as well as a WeWork location not far away, though it previously said it had outgrown both.
The company signed with Sterling Bay in December and expected to move 140 employees into the new 550,000-square-foot building. It never made the move to the 19-story complex, known as Gr33n, Crain’s reported.
“Like many companies, Flexport is reevaluating its real estate strategy as it explores a hybrid working model,” a Flexport spokeswoman told Crain’s in a statement. “We’ll be taking a closer look at the Chicago commercial real estate market over the next few months to determine the right office location and size for our team.”
Flexport’s lease, which runs through March 2027, hired CBRE to market the space for sublease, according to the report.
The decision abandon the move is a blow to Sterling Bay and Chicago’s CRE market, which had been touting the emergence of tech companies like Uber that have been taking big leases. Last year, Chicago saw more than 2 million square feet of new office space absorbed into the Downtown market, about 50 percent higher than the year before. With the new office space and an increasing number of firms moving to the city from the suburbs, residential developers began building pricier projects in Chicago, able to attract young upwardly-mobile workers.
Sterling Bay’s Gr33n building, which it will make its new headquarters, includes 35,000 square feet of retail. The developer inked leases for the under-construction building with advertising agency WPP, co-working firm Convene and global accounting giant Ernst & Young. Early last month, Convene said it would reduce its own office capacity by 50 percent companywide to allow workers to maintain social distancing.
The coronavirus, which upended the local economy, has also cast doubt on the long-term need for that kind of massive office space in an increasingly work-from-home world.
Founded seven years ago, Flexport received a $1 billion investment from Softbank in early 2019. [Crain’s] — Alexi Friedman