Two more companies are bucking trends and choosing to grow their office spaces in downtown Chicago rather than reduce them or walk away from them altogether.
Fintech firm Enfusion and coworking provider TeamWorking both announced lease expansions this week. TeamWorking is an offshoot of startup venture capital firm TechNexus Venture Collaborative.
TeamWorking will nearly double its space from 55,000 square feet to 100,000 square feet in The Civic Opera Building, while Enfusion will expand its presence at The National on South Clark Street from just under 13,000 square feet to 28,000 square feet.
The deals come on the heels of for-profit education firm Adtalem adding on about 30,000 square feet to its office space in a move to the Willis Tower, and climate technology investment firm Energize Capital to more than 11,000 square feet at 1 South Wacker.
New York-based landlord 601W, which owns both the Civic Opera House — where it’s fighting a foreclosure — as well as 1 South Wacker is a winner with the lease expansions, as is The National’s landlord, CommerzReal.
Both buildings, located at 20 North Wacker Drive and 123 South Clark, respectively, have architectural significance to the city. The National, which is 20-stories and 582,000-square-feet, was designed by famed architect Daniel Burnham and opened in 1907. The 45-story Civic Opera Building opened in 1929 and was designed by the same architectural team behind several other Chicago icons including The Merchandise Mart.
The Opera House’s historic relevance, however, has so far not been enough to stave off the waves of distress hitting Chicago’s office market in the wake of the pandemic.
Early in 2024, a private appraisal of the Civic Opera Building came in at $119 million, according to Morningstar Credit. That was down more than $100 million in value from 2015, when 601W purchased the building. At the time, it appraised at $220 million.
The building has been caught up in legal drama since the onset of the pandemic, as well.
601W is fighting a foreclosure lawsuit against the building filed by special servicer, Rialto Capital. The loan fell into default after tenants stopped paying rent or moved following the start of the pandemic in 2020. A balance of more than $195 million in debt and interest has accumulated on the property’s $164 million loan taken out in 2015.
But 601W claims it was proactive and reached out to Rialto, the special servicer of the loan, originated by Wells Fargo and sold off as securities, to try to work out a settlement that would avoid a foreclosure action.
However, the landlord alleged in a June legal filing that Rialto wasn’t receptive to 601W’s proposed solutions, negotiated “in bad faith,” and made repeated “unreasonable refusals” that could have resolved the debt trouble.
Meanwhile, The National, which CommerzReal bought in 2018 for $196 million and owns debt-free, seems to be faring better than the Opera House.
Landlord representative Transwestern announced that in addition to the Enfusion lease expansion, the brokerage team has secured 91,000 square feet in leases so far this year.
Since the pandemic up-ended the office market, debt-free buildings have given some landlords an edge, particularly when it comes to investing in capital improvements.
Landlord representative Eric Myers said The National’s first-floor food hall has been a major selling point for new tenants. Myers worked with Kathleen Bertrand and John Nelson on behalf of CommerzReal to secure Enfusion’s expanded lease.
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“Part of the success is that the food hall is thriving and doing better than ever,” Myer said. “It creates good energy for that part of the Loop.”
The foodhall, formerly known as Revival Food Hall, nearly closed in June but instead rebranded under new management. It is now called Sterling Food Hall and is headed by management company STHRN.