The American Bar Association and the law offices of Goldberg Kohn are each throwing big chunks of office space onto the downtown Chicago sublease market, extending the downsizing trend among tenants that has eaten into landlords’ revenues.
Each tenant is seeking new takers for about 75,000 square feet, with American Bar Association cutting back at 321 North Clark Street and Goldberg Kohn shedding space at 55 East Monroe Street.
The offerings amount to a little less than half of the size of the bar association’s lease at 321 North Clark, where it renewed a 161,000-square-foot deal in 2018, while Goldberg Kohn is seeking to offload the entire size of the office lease it renewed in 2021.
It’s unclear whether Goldberg Kohn and the American Bar Association are downsizing due to the stronger prevalence of remote work than they anticipated when they last signed on to keep their spaces. A representative of the American Bar Association declined to comment and Goldberg Kohn did not respond to requests for comment.
The combined 150,000 square feet of offices is entering the market at a time when vacancies remain high and other companies are struggling to find takers for their excess space.
The total square footage of available sublease space in Chicago has decreased for the past six quarters in a row, according to a new report from Transwestern. But that’s not necessarily because tenants are finding takers for their excess space.
The decline is primarily driven by tenants taking listings off the market before finding a subletter, Transwestern found. Most recently, Motorola Solutions took down a 50,000 square foot sublease listing for its space at 500 West Monroe without filling it.
In fact, American Bar Association in 2023 explored subleasing 40,000 square feet of its space, only to hold off on making a deal at that time. Its new offering shows it has returned with a bigger cutback in mind.
The listings also push against the notion that the legal profession is a reliable supplier of largescale office tenants, especially for buildings located near downtown courthouses. With cloud storage replacing or downsizing law libraries and legal records and pandemic-era hybrid work policies holding strong, some legal offices are joining the wave of office downsizings.
Since Fulton Market took off as a buzzy office district with smaller scale offices, two law firms have moved to the neighborhood. Greenberg Traurig relocated from the Loop to Fulton Market, although it maintained the same 90,000 square foot office footprint it had downtown. And global law firm Norton Rose Fulbright opened its first Chicago office in a small outpost at 1045 West Fulton Market Street.
Meanwhile at the Bar Associations’s building, 321 North Clark, a Hines-led entity is fighting to hold on to its existing tenants.
While the building is 85 percent leased now, its second-biggest tenant, CBRE — the world’s largest commercial real estate brokerage — is in talks to move out of its 61,400 square feet into the Irvine Company-owned skyscraper nearby at 300 North LaSalle Street.
Hines and its two partners, Diversified Real Estate Capital and American Realty Advisors, are trying to hash out a resolution with their German creditors and mezzanine lender Nuveen to a $250 million remaining balance in debt on the building.
Read more
Commercial
Chicago
Role reversal: Chicago tenant reps switch from searching for space to re-selling it
Chicago
American Bar Association renews large lease at 321 North Clark