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US Xpress, Andy Farbman think small for post-pandemic Chicago offices
Developers are adjusting to market changes after the pandemic
When it comes to post-pandemic offices, Sterling Bay isn’t the only one thinking small.
U.S. Xpress Supply, the trucking and logistics firm, leased 40,000 square feet across two-and-a-half floors earlier this year, moving from a seven-story building with 15,000 feet per floor in River North. Real estate investor Andy Farbman bought a 25-story vintage office building for $16.4 million, hoping to lease to tenants seeking to reduce office space, Crain’s reported.
Sterling Bay filed an application earlier this month asking to downsize floors at 360 North Green Street in Fulton Market by 40 percent. The shift to a 25,000-foot building from a previously approved 40,000-foot one aims to draw professional services and law firms that want to avoid large office footprints, Russ Cora who oversees Chicago leasing for Sterling Bay, told Crain’s Chicago Business.
About 75 percent of all new, renewed and expanded leases in the central business district were signed by firms looking for less than 10,0000 square feet, according to data from Cushman & Wakefield. It’s a turnabout from pre-Covid, when buildings were larger and companies opted for larger, open floor plates, eyeing the success of the redeveloped Old Post Office and the Merchandise Mart. Related Midwest had proposed floor plans as large as 85,000 square feet for The 78 megaproject at the South Loop.
Render of The 78 (Related Midwest)
One downside: Landlords are less willing to shrink floor plans because re-leasing smaller spaces may prove more difficult. That may change as they warm up to smaller tenants.
Madison Rose Founder Matt Pistrio, whose firm oversees leasing at a new building with 14,650-foot floors at Fulton Market, said tenants were more interested in smaller offices.
“There’s something to be said for tenants to be able to control their own floor and control their own identity on the floor,” Pistorio told Crain’s.