Principal Asset Management Nears Chicago Full-Building Lease

One of Illinois’ largest public pension funds is going against the grain of office market trends with a significant headquarters expansion in Oak Brook.

The Illinois Municipal Retirement Fund is in the final stages of lease negotiations for the entire 80,000-square-foot building at 800 Commerce Drive, Crain’s reported, citing a fund spokesperson. The move would shift IMRF’s main office from its 60,000-square-foot space at 2211 York Road, where its lease is expiring at year’s end.

The landlord is a venture led by Principal Asset Management, and the property is debt free, an appealing trait as rising interest rates challenge landlords reliant on financing.

More than 4.7 million square feet of suburban Chicago office space has been vacated since 2020, and the market has a record-high vacancy rate of 32 percent, per JLL. As remote work reshapes demand, office buildings near retail and transit, like 800 Commerce, have shown greater resilience.

The two-story building was most recently occupied by Kellogg, which exited amid a local office shake-up.

IMRF’s exit leaves a void at 2211 York, part of the Drake Oak Brook Plaza, owned by a venture of former Coca-Cola bottling executive Marvin Herb. Herb bought the property from IMRF in 2006 and has invested in upgrades and refinancing in recent years. The 252,000-square-foot, two-building complex is currently 90 percent leased; the IMRF lease represents about 24 percent of the complex’s square footage.

IMRF hasn’t disclosed its reasons for the expansion. The $54 billion fund provides retirement benefits to more than 154,000 recipients across Illinois, with a nation-leading funded status of 96.6 percent.

—Rachel Stone