Loop landlord nabs logistics firm boosting office space

Logistics firms are proving to be a staple for central Loop landlords reshuffling their tenant rosters amid record low demand for office space in downtown Chicago, as another is increasing its footprint in a relocation set to boost a German player’s cash flow.

Total Quality Logistics inked a five-year lease for 36,300 square feet in the 20-story National tower at 125 South Clark Street, Crain’s reported. The logistics firm will move from its 31,000-square-foot space at 328 South Jefferson Street in the West Loop. 

CBRE brokers Jon Milonas and James Otto represented TQL in lease negotiations, while Transwestern’s Eric Myers, Kathleen Bertrand and John Nelson represented the landlord, a venture of German real estate investor Commerz Real AG.

The TQL lease is a rare example of a company upping its footprint amid historically low office occupancy in the city. Most companies these days are scaling back their operations drastically, oftentimes reducing their workspace by more than half. The remote-work movement continues to linger, driving up vacancies and distress across the city.

For Commerz Real AG, the TQL lease couldn’t have come at a better time. The building’s occupancy plummeted when co-working space provider WeWork ditched its 112,000-square-foot space several months ago. Commerz has filed an eviction lawsuit against WeWork, seeking unpaid rent and formal possession of its space.

Earlier this year, Brookfield scored a 31,000-square-foot lease with logistics firm Spot at its Marshall Field building in the Loop.

Commerz bought the landmark Clark Street building for nearly $197 million in 2018 when it was 88 percent leased. The National is now 69 percent leased, down from the city average of 73 percent, itself an all-time low.

While the property is still struggling compared to pre-pandemic levels, its financial situation is one that most office landlords in Chicago would kill to have: no debt. As a wave of distress ripples through the city, many landlords are having to hand the keys back to their lenders, sell their holdings at a steep loss or face foreclosure litigation. Thus, Commerz is in a fortuitous spot compared to others.

Plus, Commerz acquired the property after the previous owner, a venture led by Blue Star Properties, performed a series of renovations to make it one of the most competitive office buildings in the city.

Blue Star also owns the 10-story building on Jefferson that TQL is vacating. Its occupancy rate is 76 percent, but that number is likely to plunge since TQL is the largest tenant at the site.

— Quinn Donoghue 

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