Stroll through the flex space provider Industrious’ 50,000-square-foot suite on the 44th floor of Chicago’s tallest building and you’ll see a thriving environment, mostly.
Little to no space is available from the coworking company in Willis Tower other than small spots in the core of the suite that lack windows with the skyline views available elsewhere in the floorplan.
Even discounts between 5 and 10 percent on these windowless offices in the former Sears Tower have been unable to draw takers, while 90 percent of the rest of the space is spoken for.
In fact, Industrious’ Evan Fain said that demand in the premium spots is higher than ever.
It’s the same story at the company’s New York portfolio. Its 80,000 square feet of flex offices at Vornado Realty Trust’s Penn 1 at 250 West 34th Street is completely full a year sooner than Industrious predicted after it entered the property. It’s also priced 50 percent higher than the company’s city average.
The firm’s second-most expensive New York location at 31 Hudson Yards is also nearly full.
“It’s supporting this notion that anything that’s not worth (commuting for) is going to have a really rough time in the future,” Fain said.
Demand within the coworking niche consolidating into the highest quality properties and the best spaces within those buildings mirrors how traditional leases of raw space to larger tenants is also further concentrating in the newest buildings. Amenity-rich Class A and trophy properties account for 90 percent of Chicago leases in the second quarter, according to JLL.
Older properties, such as Willis Tower, completed in the 1970s as the world’s tallest skyscraper at the time, have forced owners to invest. Blackstone, for example, just completed a $500 million upgrade on the 110-story Chicago icon, a renovation that took five years and installed new stores and restaurants open to the public, and 125,000 square feet of tenant-exclusive amenities.
Other deals in Willis Tower also point to its appeal. IMC is expanding by 50 percent to 150,000 square feet and Abbot Labs’ has leased for 100,000 square feet in the building.
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