Wanxiang America Real Estate Group’s decision to pour $50 million into its East Loop office tower is starting to bear fruit.
Architecture firm HOK has signed a 13-year, 25,500-square-foot lease at One Prudential Plaza, a 2.3 million-square-foot building that Wanxiang has owned since 2018, Crain’s reported.
HOK will relocate from 333 South Wabash Avenue early next year, when its 27,000-square-foot lease expires. Thus, the slight downsize won’t improve Chicago’s office vacancy, which topped 25 percent for the first time ever last quarter.
The lease bodes well for Chicago-based Wanxiang, which is in the early stages of its $50 million overhaul of the 42-story building, including upgrades to the lobbies, tenant amenity floor and rooftop deck. The renovations are part of a strategy to enhance the building’s appeal at a time of historically low demand for office space, driven by remote-work trends.
The capital infusion was part of a deal that gave Wanxiang more time to pay off its $389 million loan on the property, having extended the maturity date from August 2025 to 2027, with the option to extend it through 2029. The loan equates to $169 per square foot.
Costly office renovations have become increasingly common since the pandemic ignited the flight-to-quality trend, in which companies flock to updated, amenity-filled office properties to overcome the remote-work movement and lure employees back to the office.
Elsewhere in Chicago, Onni Group is starting to reap the benefits from its $140 million overhaul of the 31-story tower at 225 West Randolph Street. As of March, the landlord was on the verge of locking down a trio of leases, totaling nearly 140,000 square feet.
Wanxiang bought Pru Plaza, at 130 East Randolph Street, for $680 million, $296 per square foot, in 2018. The building is about 87 percent leased and generated $30.7 million in net cash flow last year, down from $40.2 million the year it acquired the property, the outlet reported.
Meanwhile, HOK’s departure from 333 South Wabash poses challenges for Shvo, which bought the 1.2 million-square-foot building, known as Big Red, for $376 million, $313 per square foot, in 2020. The tower is 91 percent leased, with Northern Trust as its largest tenant.
—Quinn Donoghue
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