Wabtec downsize compounds Spear Street leasing woes
Rail equipment company is second firm to downsize or leave West Loop building lease in recent days
Westinghouse Air Brake Technologies Corporation downsized its Chicago office footprint by about 44 percent, compounding leasing woes for landlord Spear Street Capital at its West Loop office property.
The rail and industrial equipment company inked a new 10-year lease for almost 27,000 square feet at 500 West Monroe Street, having previously taken up about 48,000 square feet in the same building. The announcement came the same week the owner of BMO Tower announced that investment firm Antares Capital would move to the 320 South Canal Street property, leaving behind its 70,000-square-foot space in Spear Street’s 967,000-square-foot Monroe Street building.
While the Antares move is an expansion, Wabtec, which is headquartered in Pittsburgh, isn’t alone among companies “right-sizing” their office footprints amid remote work trends. Commercial real estate cutbacks are putting pressure on owners of even highly amenitized office buildings. Chicago’s central business district landlords are contending with a record-high vacancy rate of 22.4 percent, according to the latest data from CBRE.
“Our business model is shifting to incorporate more industrial and less office, so the new space is still a very significant amount of office space for our operations,” Wabtec said in a statement.
San Francisco-based Spear Street did not respond to a request for comment. In an announcement from Avison Young, which represented the firm in the lease negotiations along with JLL, Spear Street president Rajiv Patel touted recent major capital improvements to the Class A high-rise, including a lobby and entrance overhaul.
“We have enjoyed having Wabtec in the building for years and this long-term lease is proof that our investment back into the building is meaningful to our tenants,” Patel said in a statement.
Spear Street and a Swiss partner that it owns a suburban Chicago office building with are also facing a foreclosure lawsuit. The complaint is over an alleged debt of $30 million to Ares Management that was borrowed against the Atrium property at 3800 Golf Road in Rolling Meadows. It remains pending in federal court.
Avison Young’s Danny Nikitas and Melissa Hemberger and JLL’s Brad Despot and Kerry Middleton represented Spear Street in the Wabtec leasing negotiations. JLL’s Alexa Jennings and Amy Craig and Stream Realty Partners’ Phil Geiger represented Wabtec.