Cisco said it will relocate its Midwest hub to the Old Post Office in downtown Chicago from the suburbs, a win for building owner 601W Companies after another tenant, Uber, cut back on its planned commitment.
The IT giant said it will take on 135,000 square feet at the site at 433 W. Van Buren, which is lining up tenants as it completes its $800 million redevelopment, Crain’s reported. In the process, Cisco, which has been working on this move for two years, is abandoning about 82,000 square feet in Rosemont Corporate Center near O’Hare International Airport.
Cisco said it’s moving to the nine-story, 2.3 million square foot behemoth straddling Ida B. Wells Drive to create a “collaboration experience center space where teams can come together under a hybrid work model.”
The owner, 601W, has inked leases with a number of high-profile tenants including Walgreens, PepsiCo, Ferrara Candy, the Chicago Board of Options Exchange and the Federal Home Loan Bank of Chicago.
Uber was set to take 461,000 square feet, making it the largest tenant, but has put about 151,000 square feet, or nearly one-third of what it signed up for, up for sublease.
The redevelopment of the 1921 post office, built to handle catalog mail-delivery of Sears, Roebuck & Co. and Montgomery Ward stores, has transformed that southwestern edge of the Loop that sat vacant for two decades. It officially opened its doors in late 2019 and opened its $19 million, 3.5-acre rooftop last fall to few takers.
Cisco has been shuffling employees around the city and Rosemont for two years before deciding to commit to the Old Post Office.
Meanwhile, the Rosemont Business Center at 9501 Technology Blvd., nearly vacant, has landed a new owner in Denver-based KORE Investments, according to Crain’s.
“While many investors are shying away from the Chicago suburbs, we are bullish on Chicago as a whole and believe that the suburbs, and specifically the O’Hare submarket, are well-positioned for a comeback in select buildings,” Kelli Lind, KORE’s vice president of asset management, said in a statement. The building “fits with our belief that tenants will be migrating to quality assets in the suburbs post-COVID.”
It could be a tough sell. The suburban office market continues to break vacancy records this year, hitting 26.1 percent at the end of June, according to JLL, which has been tracking it for 20 years.
Though there has been some leasing activity from new players such as Costco and Ajinomoto Foods, it hasn’t been nearly enough to outweigh the losses, JLL said.
[Crain’s] — Jennifer Waters