City Agency Signs Full-Floor Lease in Highly Vacant Chicago Loop

Beacon Capital Partners has secured a sizable lease from a city agency, chipping away the mountain of empty office space in downtown Chicago.

The Office of Inspector General, which is responsible for rooting out misconduct in city hall, leased nearly 50,000 square feet on the 12th floor of the 23-story building at 231 South LaSalle Street, Crain’s reported. Boston-based Beacon has owned the roughly 1 million-square-foot building since buying it for $162 million in 2017, and it has invested heavily in upgrades since then.

The inspector general’s office will relocate in the coming months from its longtime home at 740 North Sedgwick Street, where it occupies a significantly less space, although it’s unclear how much.

The lease bucks the years-long trend of Chicago office users shrinking their footprints in light of the remote-work movement. Such downsizings have contributed to record-high office vacancies in 12 of the last 14 quarters, exceeding 25 percent for the first time last quarter.

The agency attributed its decision to its growing workforce; it hired almost 40 people last year to bring its headcount to 126, while highlighting the importance of in-person collaboration.

“We’re trying to align the way we do our work with the kind of work we do — it’s very hard to conduct oversight from our living rooms,” Inspector General Deborah Witzburg told the outlet.

The LaSalle Street location was chosen for its proximity to City Hall and other major city departments, providing accessibility for staff while allowing necessary separation. Plus, the move aligns with the city’s efforts to revitalize LaSalle Street, with substantial taxpayer subsidies earmarked for redevelopment projects in the area.

Since acquiring the property in 2017, Beacon has added a rooftop deck and lobby restaurant, along with a renovated tenant lounge and fitness center.

The building is 64 percent leased, with most of the void stemming from Northern Trust, which vacated more than 200,000 square feet in the building. One of its largest tenants, tech company Relativity, renewed its lease in the building last year, but trimmed its occupancy from 180,000 square feet to 100,000 square feet.

—Quinn Donoghue