Zurich North America is cutting its workspace in half at its headquarters in Schaumburg, adding to the mountain of available office space in the Chicago area.
The insurance company, headed by Kristof Terryn, hired JLL leasing brokers Rick Benoy and Jeffrey Miller to market roughly 360,000 square feet for sublease in Zurich’s 783,800-square-foot facility at 1299 Zurich Way, northwest of Chicago, the Daily Herald reported.
Zurich will remain the anchor tenant at its namesake building, but the downsize is a significant blow to an office sector that’s still reeling from the pandemic-fueled remote work movement and other market challenges, such as climbing interest rates. The office vacancy rate soared to a record high of 29 percent last quarter, and the numbers could get even worse depending on Zurich’s ability to find tenants.
Atlanta-based real estate investor Stonemont Financial is the property’s landlord. A draw for potential tenants is the building’s top-tier space, which is more likely to lure employees back to the office. The shift to a multi-tenant property will have a greater economic impact on the region, “drawing additional businesses and more jobs,” according to Zurich’s Clare Fitzgerald.
“With this decision, other businesses will be able to share in the building’s innovative design and functionality,” she told the outlet.
Zurich has been in a legal dispute with the village of Schaumburg since the pandemic. Village officials expected Zurich to have its employees on site five days a week as part of a development agreement set to reimburse Zurich up to $100 million in property taxes over 23 years for building the gleaming $325 million headquarters, according to Schaumburg’s economic development office.
Because so many more Zurich employees are working at home these days rather than attending the office park and spending cash on meals and errands at nearby retailers, the village sought to renegotiate the agreement in 2020, and then refused to make any reimbursements to Zurich in 2021. Zurich filed a lawsuit against the village last year over the pullback.
Motorola got into a similar disagreement with Schaumburg over property tax incentives for its campus within the village, and the lawsuits are still playing out, with the potential to reshape how economic development agreements are framed in the age of remote and hybrid work arrangements.
— Quinn Donoghue
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