Health insurance giant adds to glut of downtown sublease space

Sublease offerings continue to plague Chicago’s office sector, as the parent company of Blue Cross Blue Shield of Illinois just offered up a massive chunk of space in its namesake East Loop tower.

Health Care Service Corporation has hired Cushman & Wakefield brokers to find a taker for nearly 230,000 square feet across eight floors in the 54-story building at 300 East Randolph Street, Crain’s reported. 

The offering is another blow to Chicago’s office market, where vacancies topped 25 percent for the first time ever last quarter. Subleases specifically have posed major challenges since the pandemic triggered the remote-work era, with companies looking to shrink their footprints. 

Tech companies Salesforce and Meta, for instance, put a combined 240,000 square feet onto Chicago’s sublease market last year. In April, advertising giant WPP and financial services firm Charles Schwab announced plans to shed 80,000 square feet and 135,000 square feet of office space, respectively.

Health Care Service Corporation’s decision to market the space aligns with its strategy to optimize resources and adapt to evolving business needs. The offering includes contiguous blocks of 97,800 and 65,506 square feet.

Despite tough market conditions, Health Care Service Corporation is playing up the tower’s modern amenities, a sought-after trait for employers wanting to lure employees to the office. A notable advantage for Health Care Service Corporation is that it owns the building outright, free of debt, unlike many landlords burdened by maturing loans. The property’s financial stability provides tenants with greater flexibility in leasing negotiations.

However, the tower’s location, distant from commuter train lines, may pose challenges in attracting tenants. Furthermore, it faces competition from nearby buildings like Aon Center and Prudential Plaza, whose owners are also working hard to attract tenants to stay on top of their own financial obligations.

Health Care Service Corporation maintains seven offices across the Chicago area, including its Randolph Street headquarters. The company’s flagship insurance plan, Blue Cross Blue Shield of Illinois, continues to expand, serving approximately 9 million members out of Health Care Service Corporation’s total 17.7 million enrollees across five states, the outlet reported. 

The 300 East Randolph building, built in 1997, underwent a significant expansion from 2007 to 2010, when Health Care Service Corporation added 24 stories to the building.

—Quinn Donoghue 

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