A financial firm is doubling the size of its West Loop office footprint in a departure from the common pandemic-era move to downsize and a deal that shows getting subleases off the market benefits building owners, as well.
Twin Brook Capital leased an additional 29,000 square feet on the 35th floor of 111 South Wacker Drive, Crain’s reported. The new space will add to the firm’s 36th-floor space of roughly the same size within the building.
The deal makes Twin Brook one of the largest tenants in the 51-story building, which is anchored by Deloitte.
It also took some space off the record amount of sublease inventory in downtown Chicago which has exceeded 6 million square feet in recent months, according to brokerages, while also notching a win for the Germany-based owner of the 1.2 million-square-foot building, Union Investment.
While Twin Brook assumed the lease of Axis Capital that was looking to shed the space, it also extended the term of the lease in a direct deal with the landlord.
Jeff Skender and Ari Klein of Cushman & Wakefield negotiated the lease on behalf of Twin Brook, while Jamey Dix and Steve Golz of Chicago leasing agency Telos Group represented Union.
The move to expand office space rather than downsize stands out amid a post-pandemic world where many companies offer fully remote or hybrid work environments. Most moves have involved downsizing, and the downtown office vacancy rate recently creeped back up to a record high of more than 20 percent, brokerages reported. Union’s building, though, is outperforming the broader market as it’s 94 percent leased, while the downtown office average sits at 79 percent.
Office leasing brokers representing landlords have said it’s critical for their businesses to get sublease offerings absorbed and removed from the market so tenants have fewer alternatives to striking direct deals with building owners.
So far, though, the flow of spaces hitting the secondhand market hasn’t slowed much, if at all. In October, staffing company TrueBlue listed just under 83,000 square feet in the renovated Old Post Office building at 433 West Van Buren Street, and ActiveCampaign in September listed its entire 100,000-square-foot office for sublease in the Loop at 1 North Dearborn Street.
The city’s total leasing dropped to its lowest level in more than a year last quarter, with transactions totaling 1.8 million square feet, according to Savills.
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