New York investment firm Neuberger Berman is shedding space with a smaller lease in Chicago’s West Loop.
The company inked a deal for nearly 52,000 square feet at 191 North Wacker Drive, a 21 percent downsize from its 66,000-square-foot office at 190 South LaSalle Street, Crain’s reported.
Savills’ Robert Sevim negotiated the lease on behalf of Neuberger, while Transwestern’s Eric Myers, Katie Steele and Kathleen Bertrand represented the landlords — a joint venture of Toronto-based Manulife Financial and German firm Allianz.
The lease puts Neuberger on the top two floors of the 37-story tower. The property is 73 percent leased, according to CoStar Group.
The lease fills a vacancy left by Faegre Baker Daniels in 2022, a significant win for the property owners in a market struggling with record-high vacancies. The office vacancy rate in downtown Chicago was 25.8 percent in the third quarter, a significant increase from the 13.8 percent at the start of the pandemic.
Neuberger’s move leaves Beacon Capital Partners with the challenge of filling the vacated space at 190 South LaSalle Street. Although the lease runs through 2027, the space could be put up for sublease before then. The 803,500-square-foot property is 85 percent leased, slightly above the downtown average.
Beacon, like many Chicago office landlords, is grappling with the ongoing effects of remote work and rising interest rates. Despite setbacks, including foreclosure lawsuits and significant equity losses in other properties, the firm remains committed to Chicago. This is highlighted by the company’s 2023 acquisition of 333 West Wacker Drive and subsequent renovations.
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Due to shifting workplace dynamics, Chicago’s historic LaSalle Street has seen numerous tenants migrate to trendier parts of the central business district. Major firms such as Bank of America, BMO Harris Bank, and Chicago Title Insurance have led this exodus, seeking newer office buildings that cater to modern needs.
Meanwhile, city officials are investing heavily in LaSalle Street, allocating $250 million in subsidies to convert vacant offices into residential spaces.
— Andrew Terrell