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Commercial
Chicago

Grubhub takes 90K sf sublease at Vornado’s Merchandise Mart 

Online food-delivery company shrinking footprint by 45% in move from Burnham Center

Vornado Scores 90K Sublease From Grubhub at Merchandise Mart
Vornado's Steven Roth and Grubhub's Howard Migdal with Merchandise Mart (Getty, Grubhub, Google Maps)

Vornado Realty Trust snagged another tenant for its landmark office building, but the move still adds to the mountain of empty office space in downtown Chicago.

Grubhub is nearing a deal to sublease about 90,000 square feet from Paypal in the 4 million-square-foot Merchandise Mart building, along the Chicago river, Crain’s reported.  

The online food-ordering and delivery company is shrinking its downtown footprint by 45 percent in a move from the Burnham Center, at 111 West Washington Street, where it leases about 164,000 square feet.

The decrease prolongs a troubling trend in Chicago. Such moves, triggered by the pandemic-fueled remote-work era, have driven up the city’s office vacancy rate to record highs in 11 of the last 13 quarters. 

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The sublease aligns with Grubhub’s strategic efforts to control costs and regain market share in the face of stiff competition from rivals like DoorDash and Uber Eats. Last summer, the company laid off 400 employees, or about 15 percent of its workforce. This restructuring aimed to position Grubhub for long-term success following its acquisition by Amsterdam-based rival Just Eat Takeaway in 2021.

Grubhub’s relocation is also a win for Vornado, especially since it’s spending $40 million on updates and renovations of the building’s first two floors. A number of office landlords across the city are taking on similar renovations to lure workers back to the office. 

Golub, meanwhile, the owner of the Burnham Center, has a big void to fill in light of Grubhub’s imminent departure. Its lease accounts for 28 percent of the 584,000-square-foot building. The Burnham Center was already just 65 percent leased as of last summer, the outlet reported. That’s down considerably from the city average of about 76 percent.

—Quinn Donoghue 

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GrubhubVornado Realty Trust
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LeaseRelocation