35 West Wacker and Arthur Sadoun, CEO of Publicis Groupe (Google Maps, Getty)
Another Chicago office tenant is shrinking its downtown footprint, adding to the city’s record-high vacancy rate while taking a chunk of sublease space off the market.
Chicago Title Insurance is in advanced talks to sublease roughly 65,000 square feet from advertising and public relations giant Publicis Groupe at 35 West Wacker Drive, Crain’s reported. If the deal gets finalized, Chicago Title would relocate from its 106,000-square-foot space at the Feil Organization-owned 10 South LaSalle when its lease expires in March 2025.
The planned move to a smaller space aligns with the years-long trend of companies slashing their commercial real estate footprint in light of the remote-work movement, which drove up office vacancies above 25 percent for the first time ever last quarter in Chicago.
A handful of companies have opted for sublease space as part of the downsizing trend. Grubhub, for instance, is nearing a deal to sublease about 90,000 square feet from Paypal in the 4 million-square-foot Merchandise Mart building, with plans to move from the Burnham Center, at 111 West Washington Street, where it leases about 164,000 square feet.
The departure of Chicago Title would deal a blow to the Feil Organization, the New York-based investor that’s owned the 37-story LaSalle Street building since 2002.
The building is just under 70 percent leased, largely because one of its largest tenants, Northern Trust, vacated 100,000 square feet in the building at the end of 2021. Losing Chicago Title would drop its occupancy rate to less than 56 percent, augmenting the challenge of attracting new tenants amid weak office demand and rising interest rates.
Feil’s $105 million loan on the property, set to mature in early 2026, was transferred to special servicing in 2022, signaling financial distress. Although the building generated sufficient net operating income in 2022 to cover its debt service, maintaining control of the property without its anchor tenant could prove difficult.
For Publicis Groupe, subleasing space to Chicago Title would put a dent in the 350,000 square feet it’s been trying to unload on the secondhand market since early last year. The media conglomerate recently subleased 25,000 square feet to Groupon for its new headquarters.
—Quinn Donoghue
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