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Commercial
Chicago

Health care provider to lease 50K sf in Chicago’s Old Post Office

VillageMD plans offices and a clinic in same building with majority owner Walgreens

VillageMD CEO Tim Barry and 433 West Van Buren Street (VillageMD, Post 433)
VillageMD CEO Tim Barry and 433 West Van Buren Street (VillageMD, Post 433)

Chicago’s Old Post Office inched closer to being fully leased after health care provider VillageMD announced it would rent more than 50,000 square feet in the recently renovated property.

The deal is the latest of multiple big tenants landed by the property in the last few years since its $800 million transformation by New York developer 601W, completed in 2019, Crain’s reported.

The lease means VillageMD will be a co-tenant with Walgreens Boots Alliance, which in 2018 said it would occupy the Old Post Office property with a 200,000-square-foot lease in the 2.5 million-square-foot complex. The property’s other tenants include Uber, Ferrara Candy Co., HomeChef and the headquarters for the country’s biggest options exchange Cboe.

Walgreens in October said it would invest $5.2 billion in the health care provider, which doubled the drug store chain’s stake to 63 percent of VillageMD and will let it boost the number of clinics in Walgreens stores to 1,000 by 2027, according to Crain’s.

VillageMD’s lease at The National building on Clark Street runs through October 2027, Crain’s reported, citing CoStar Group.

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It plans to dedicate 48,000 square feet to offices and another 4,500 square feet on the first floor to retail, including a primary care clinic will help lift Chicago’s sagging downtown office market, which has seen vacancies soar with tenants reconsidering needs for physical space as lease expirations approach amid the rise of remote work setups in response to the pandemic.

While leasing activity picked up to end 2021, commercial landlords still aren’t in a strong position, with some owners of blocks of vacancy offering more flexible lease terms than before the health crisis, reduced rents and funding to build out their space in order to sign tenants, Crain’s reported.

Sublease listings are being made far more frequently than before the pandemic, giving potential tenants an alternative to renting directly from building owners. The amount of space listed on the secondary market is 83% higher than at the start of the public health crisis, Crain’s reported, citing CBRE.

Chicago-based Telos Group’s Jamey Dix, Matt Whipple and Daniel Heckman represented 601W during the VillageMD lease negotiations, Crain’s reported.

[Crain’s] — Sam Lounsberry

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ChicagoCommercial Real EstateOld Post Office