When insurance brokerage Aon Corporation moved its global corporate headquarters from Chicago to London in 2012, it was seen as a “symbolic blow” to the city’s office market.
But Aon would keep its American headquarters at 200 East Randolph Street, and retain naming rights for the 83-story office tower known as the Aon Center. The building, Chicago’s third tallest, is also the headquarters for major companies like commercial brokerage JLL, public relations firm Edelman, and food conglomerate Kraft Heinz.
New York-based 601W Companies bought the tower from Piedmont Office Realty Trust for $713 million in 2015, and received approval for an $185 million overhaul of the property in 2018 — including plans for a “thrill ride” on the observation deck that will dangle passengers over the edge of the roof in a glass-bottomed enclosure.
Months before the Chicago Plan Commission approved that renovation, 601W secured a $678 million refinancing of the property, of which $400 million was securitized in a single-asset CMBS transaction named JPMCC 2018-AON. Documents associated with that deal provide an inside look at the tower’s finances.
As of May 2018, the 1.75 million-square-foot property was 88 percent leased to 52 tenants, with five of the top 10 using the building as either their global or American headquarters.
Aon is still the top tenant with 15 percent of rentable space, while big four accounting firm KPMG is the second with more than 300,000 square feet. KPMG first moved to the Aon Center in 2009, and has since expanded its lease several times — most recently adding a floor for a big data-centric “Ignition Center” in 2019. The fifth-largest tenant, Edelman, was reported last year to be in talks to leave Aon Center for Sterling Bay’s 111 North Canal Street, but that deal did not close.
On average, tenants at the Aon Center pay base rent in the low $20s per square foot. The priciest major lease at the building is for insurance company Kemper Corporation, which moved its headquarters to the property in 2018 and pays about $25 per square foot.
Occupancy at the tower has risen above 90 percent since the refinancing, as insurance company Health Care Services Corporation inked a 65,000-square-foot lease across two floors in early 2019.
601W, led by Michael Silberberg and Mark Karasick, is also the owner of the Old Post Office building which opened its doors to tenants last fall, following two decades out of service and an $800 million overhaul.
The company recently pulled off the biggest single-asset acquisition since the pandemic began, paying $952.5 million for SL Green’s 410 Tenth Avenue, an Amazon-anchored office building in Manhattan’s Hudson Yards neighborhood. The hefty price tag was widely viewed as a positive signal for New York’s investment sales market, which has had a dearth of deals in recent months.