CNA slashing office space in John Buck’s Loop tower
Insurer offering nearly 50K sf across two floors for sublease
Another Loop landlord is dealing with a major tenant slashing office space, prolonging a trend that has wreaked havoc on Chicago’s office sector since the pandemic triggered the remote-work era.
CNA Financial is offering nearly 50,000 square feet across two floors for sublease in developer John Buck Company’s 35-story tower at 151 North Franklin Street, Crain’s reported. JLL brokers Scott Merz and Belle Spinell are marketing the space.
The offering represents about 17 percent of CNA’s footprint in the 807,000-square-foot building, which has served as the company’s headquarters since it was developed in 2018. CNA’s downsizing effort spells trouble for John Buck, as tech giant Meta put 115,000 square feet in the building up for sublease earlier this year, accounting for 44 percent of that tenant’s lease.
Despite a few inklings of a potential recovery for the Windy City office market, including some companies encouraging workers to return to the office, its amount of empty space continues to mount. Chicago’s office vacancy rate climbed to a record high of 23.7 percent in the third quarter, up from 22.6 percent at the midyear point. About 7.9 million square feet of downtown space is available for sublease, a notable jump from 6.7 million square feet a year ago.
There is a silver lining for John Buck, though. The 151 North Franklin building is newly developed and features top-tier office space and various amenities, such as a restaurant, cafe, fitness center and a rooftop lounge. Companies have been gravitating toward these types of properties in a post-pandemic landscape, as they offer a better chance of luring employees back to the office.
The vacancy rate for Class A office buildings, like 151 North Franklin, is at 19.2 percent, compared to almost 28 percent for Class B buildings, the outlet reported, citing data from CBRE.
While John Buck faces challenges at the Franklin Street tower, the developer is on the verge of tallying a win at 155 North Wacker Drive, where PNC Financial Services is nearing a deal to lease 80,000 square feet.
Plus, the Franklin Street tenants marketing sublease deals to other potential occupants are still on the hook to make rent payments to Buck’s firm and are seeking to reduce those costs by bringing in another tenant. But the sublease offerings make it look unlikely the landlord will land the renewals with those tenants that it was probably aiming for.
— Quinn Donoghue