McKinsey Eyes Salesforce Tower Sublease

Consulting giant McKinsey & Company is in advanced negotiations to sublease three floors at Chicago’s Salesforce Tower, a move that illustrates a widening chasm in the city’s commercial real estate market.

New York-based McKinsey is looking to take roughly 72,000 square feet from the namesake tech tenant at the 60-story trophy tower along the Chicago River at 333 West Wolf Point Plaza, according to Crain’s as well as an earlier CoStar report. If finalized, the deal would remove the last major block of 125,000 square feet total that Salesforce made available in 2023, following recent subleases by commercial property brokerage Newmark and Chicago-based private equity firm Wind Point Partners.

McKinsey’s current lease of about 106,000 square feet in the Blue Cross Blue Shield Tower at 300 East Randolph Street is set to expire in late 2027, meaning the firm is prepared to cut its office space by about a third like many other Chicago office tenants that have significantly reduced their real estate.

The impending deal highlights a defining trend in today’s office sector: an aggressive “flight to quality.” Blue-chip tenants are eagerly scooping up premium space in brand-new, highly amenitized towers, according to Crain’s, even as the broader office market grapples with historically low demand and record-high vacancy rates.

For landlords of Class B and C buildings, the situation has become increasingly dire. Older-generation properties are struggling to attract or retain tenants, with many assets selling for mere fractions of their pre-pandemic values. To successfully lure employees back to the workplace, corporate tenants are prioritizing top-tier environments over sheer square footage.

The resulting contrast in valuations is staggering. While older buildings languish and face distress, the intense demand for trophy assets has kept their financial footing solid. The developers of Salesforce Tower — a joint venture including Hines and the famous Kennedy political family’s investment arm — last year secured a $610 million refinancing loan, as previously reported by The Real Deal, establishing a robust long-term valuation of $888 million for the 1.2 million-square-foot skyscraper completed in 2023.

Brokers Brad Serot, Paul Reaumond and Mark Cassata of CBRE handled marketing the space for sublease on behalf of Salesforce, while McKinsey was represented in negotiations by JLL’s Bill Rogers and Patrick Schenk.

— Sam Lounsberry