Chicago’s office market bleeding remains unclotted: another downtown office tenant is shrinking its lease in a move to an upgraded building.
Heartland Alliance, a Chicago nonprofit that combats poverty, signed a 21,000-square-foot lease in PGIM Real Estate’s 1.2 million-square-foot tower at 55 East Monroe Street, the Chicago Business Journal reported.
Heartland Alliance is moving from 208 South LaSalle Street, which is set to be converted into apartments by developer Mike Reschke, who recently paid a $23 million settlement to a lender who tried to take back a block of offices in the Loop building.
The nonprofit last leased about 37,000 square feet a decade ago at 208 South LaSalle. The deal also reflects the overall market, as many companies have undergone significant downsizing in recent months, contributing to another new record-high office vacancy rate in the first quarter of more than 22 percent.
Transwestern executive managing director Andrew Davidson, one of the brokers who advised Heartland on the deal, said the recent transaction encompassed all the latest trends in the market.
“You had [Heartland’s previous] building that when we started was in receivership that eventually went back to the original owner,” Davidson told the outlet, referencing Reschke’s dispute and eventual settlement with a lender. “Heartland could have stayed, but it was going to be more expensive than going to another building compared to having someone pick up their termination option and give them new space in a better building.”
The move also follows the pattern of companies favoring newly built or recently renovated buildings in an effort to lure employees back to the office rather than working from home.
PGIM, which bought the Monroe Street tower for over $370 million in 2014, renovated a number of office suites at the site in 2019. The building features amenities such as a 4,600-square-foot conference space, a fitness center and an expansive food court, according to the property’s website.
— Quinn Donoghue
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