Parent of Illinois’ largest health insurer cuts a quarter of suburban office space

The parent company of Illinois’ largest health insurer Blue Cross Blue Shield is cutting down on its suburban Chicago office space as it, like other employers, accepts hybrid work schedules as the pandemic wanes.

Chicago-based Health Care Service Corp. is moving within suburban Downers Grove to more than 133,000 square feet at 3500 Lacey Road, slashing by nearly 25 percent its 177,000 square foot lease at 1020 31st Street that expires at the end of this year, Crain’s reported.

The reduction to its real estate commitment comes as offices in the suburbs faced record vacancies as of the end of 2021 at 26.9 percent, Jones Lang LaSalle found. A fresh record was set in each quarter last year, although the last quarter saw the least space shed.

The insurer’s parent “embraces a hybrid approach to remote work,” and has about 625 employees working on a hybrid remote and in-office schedule in Downers Grove, and another 400 working primarily remotely, a spokesman for the company told Crain’s. The new setup will have shared seating to “provide increased flexibility for collaboration among teams located in Downers Grove,” the spokesman told the outlet.

Its new lease at 3500 Lacey Road is a win for Denver-based KORE Investments, which bought the 13-story building, known as Esplanade II, for $128 million at $220 per square foot in 2019.

The deal backfills space KORE’s previous biggest tenant, McDonald’s vendor Havi Group, vacated last year when it executed an option to exit its 150,000 square feet on Lacey Road to move to about 100,000 square feet at 345 Morgan Street in Chicago’s hot Fulton Market District.

After losing Havi, the building was just 62 percent leased, Crain’s reported, citing Bloomberg data on the $86 million loan on the property, which was packaged into mortgage backed securities. With the Health Care Services lease, it’s back up to 95 percent leased.

Cushman & Wakefield represented both KORE and Health Care Services Corp. on the lease.

“We are seeing businesses welcome employees back to the office with a focus on providing high-quality dynamic workplaces that cannot be replicated at home,” Cushman leasing agent Dan Svachula said in a statement to Crain’s.

[Crain’s] – Sam Lounsberry

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