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American Landmark Properties, a local developer based in Skokie, Illinois, is auctioning off a vacant building in the Illinois Science & Technology Park. The developer spent $21 million renovating the building for life sciences research, but it remains empty. The auction, scheduled for October, may indicate a lack of investor interest in life sciences research facilities. The local life sciences property vacancy rate is 40%, much higher than the national average of 17%. This could be a setback for Chicago's efforts to retain pharmaceutical and biotech companies. [Extracted from the article]

Law firm Smith Gambrell & Russell (SGR) is relocating its Chicago office to a new tower on Wacker Drive, reducing its office space by half. The move reflects the broader trend of companies shedding office space due to the COVID-19 pandemic and the preference for more modern workspaces. SGR's new office will have state-of-the-art technology, amenities, and a central location. The move is a win for developer John Buck Co., which owns the new tower and has been attracting new tenants after losing two major ones. The current tower, owned by Zeller and Cindat, is facing increased vacancy and potential financial losses. SGR's lease at the new location is a long-term commitment, and the firm expects to move in by early 2026. [Extracted from the article]

ADP, a human resources services provider, is in advanced discussions to sublease around 150,000 square feet of office space from Zurich North America in Schaumburg, Illinois. If the deal is completed, ADP will relocate its suburban Chicago workforce to the property. This move comes as companies seek new and updated office spaces to encourage in-person collaboration among employees in the wake of the COVID-19 pandemic. The move would also benefit the village of Schaumburg, which has been in a legal battle with Zurich over property tax reimbursements. [Extracted from the article]

Core Spaces, a Chicago developer specializing in student housing and build-to-rent homes, is moving its headquarters to a larger office space near Goose Island. The company has signed a long-term lease for 36,000 square feet in a loft office building along the North Branch of the Chicago River. This expansion is notable as many companies are downsizing their workspace due to the remote work trend. Core Spaces' executives believe that the new office will help reinforce their company culture and accommodate their growing staff. The developer chose a neighborhood location over downtown to provide more space in a similar environment. The building has been renovated by R2 and Goldman Sachs, attracting quality tenants like Core Spaces. [Extracted from the article]

Chicago Development Partners is in talks to purchase the former Salesforce office property in River North and convert it into apartments. The majority of the 156,263-square-foot building has been vacant since last year when Salesforce moved to a new location. The sale price of around $17 million would be a significant discount from the property's pre-pandemic value. Converting the office space into apartments aligns with the city's push to repurpose vacant office space into residential uses. [Extracted from the article]

Law firm Barnes & Thornburg has expanded its office space in downtown Chicago after downsizing before the pandemic. The firm has signed a lease extension for 96,000 square feet at its office at 1 N. Wacker Drive, reclaiming a floor that was previously subleased to another law firm. Barnes & Thornburg has been growing faster than expected during the pandemic and needed more space to accommodate its growing attorney headcount. The expansion is seen as a win for the building's landlord, Irvine Company, after experiencing leasing losses in recent years. [Extracted from the article]

The Clark Adams Building in Chicago's Loop, which was slated to be converted into apartments as part of a city program to revitalize downtown, has been put up for sale. The building's office portion is being sold by Old National Bank, which took control of it earlier this year after winning a foreclosure judgment. The sale suggests that the plan to convert the property into 247 apartments has been derailed. The project was not among the four selected by Mayor Brandon Johnson to move forward, and complications with the lender have hindered the due diligence process for the developers. The asking price for the property is around $10 million. [Extracted from the article]

Health Care Service Corp. (HCSC), the parent company of Blue Cross & Blue Shield of Illinois, is offering nearly 230,000 square feet of office space for lease at its East Loop headquarters in Chicago. The available space spans eight floors in the 54-story tower and adds to the record amount of office space vacancies in the downtown area, which has surpassed 25% for the first time. HCSC has previously found tenants for some of its space in the tower, but the current market conditions make it challenging to attract new tenants. The building offers modern amenities and has no debt, but its location and competition from neighboring towers may pose difficulties. HCSC has multiple offices across the Chicago area and has seen its member base grow in recent years. The building at 300 E. Randolph St. was originally 30 stories and underwent a vertical expansion in 2007. Cushman & Wakefield is marketing the available space on behalf of HCSC. [Extracted from the article]

A 31-acre office campus in Lincolnshire, Illinois, currently occupied by insurance giant Aon, is being marketed for sale by San Diego-based Realty Income. The property, known as 4 Overlook Point, is part of the Lincolnshire Corporate Center and is due to become available at the end of this year when Aon's lease expires. The sale of this and other suburban office complexes in the Chicago area will shape the post-pandemic character of the region, as companies have shed millions of square feet of office space since 2020. The village of Lincolnshire is finalizing a new comprehensive plan that envisions a mix of uses for the property, such as housing, restaurants, and entertainment. The sale price will depend on the buyer's redevelopment plans, but it is expected to be significantly less than the $148 million paid for the property in 2012. [Extracted from the article]

Cook County Assessor Fritz Kaegi has released data on downtown office building values, which has received criticism from landlords. The assessments show that recent valuations in the West Loop area have dropped by an average of just under 16% compared to Kaegi's previous estimates in 2021. The data reflects the impact of rising interest rates and weak demand for downtown office and retail space on property values. Landlords argue that the value of their properties has fallen by more than Kaegi suggests. The assessments play a crucial role in determining property tax bills for owners. [Extracted from the article]

The City of Chicago Office of Inspector General, which investigates misconduct in Chicago government, is expanding its office space and moving to LaSalle Street. The office has signed a lease for nearly 50,000 square feet on the 12th floor of an office building at 231 S. LaSalle St. The move comes after the office increased its headcount and needed more space for its staff. The lease is seen as a positive development for downtown office landlords, who have been struggling with high vacancy rates due to the remote work movement during the pandemic. The move also aligns with the city's efforts to revitalize LaSalle Street. [Extracted from the article]

The One O'Hare office building near O'Hare International Airport is being put up for sale by a joint venture of MDC Realty Advisors and Nicola Wealth Management. The 12-story building, which was purchased for $83 million over eight years ago, is almost entirely leased and is expected to sell for around $70 million. Despite the challenging office market, the building's long-term tenants and recent investments in amenities may help maintain its value. The sale includes a five-story parking garage with over 1,000 spaces. [Extracted from the article]

Equinox, a high-end fitness chain, is in advanced talks to lease over 40,000 square feet in a new office building under construction in Chicago's Fulton Market District. The lease would bring a luxury gym to the area, which is experiencing an influx of new residents due to the construction of high-rise apartments. Equinox's potential lease at this location would be a departure from their previous plans to open a gym in a different development in the neighborhood. Equinox has raised $1.8 billion in new capital to support their expansion efforts. [Extracted from the article]

Two anchor tenants in downtown Chicago are looking to sublease a combined 150,000 square feet of office space, indicating that the trend of shedding office space is continuing to affect landlords. Advertising giant WPP is seeking a taker for 80,000 square feet at 333 N. Green St., while Charles Schwab is looking to sublease 67,000 square feet at 150 S. Wacker Drive. The sublease market has seen a plateau in recent months, with some companies occupying available space and others taking listings off the market. However, the new offerings from WPP and Charles Schwab highlight the uncertainty surrounding office demand in a market where vacancy rates have recently reached a record high. [Extracted from the article]

The suburban office market in Chicago is experiencing a significant decrease in demand, leading to a record-high vacancy rate. The share of available office space in the suburbs has risen to 30.8%, up from 30.2% at the end of 2023. This trend is a result of companies downsizing their office footprints and opting for remote work. As a result, tenants have more negotiating power, but landlords are struggling with maturing debt and distressed buildings. The current environment is challenging for both parties, with landlords unable to finalize deals and tenants seeking cash commitments for workspace upgrades. The tight capital situation and complex approval processes are further complicating the situation. The high vacancy rate is also attributed to significant space cutbacks by companies such as Alight and CF Industries. Net absorption, a key demand metric, experienced the biggest drop-off since the second quarter of 2021. However, there is hope for the market as more tenants are entering the market, potentially filling the space left behind by others. Additionally, the return of employees to offices may reduce the need for drastic downsizing. The demolition or repurposing of office buildings and the development of data centers could also help reduce the vacancy rate. However, the appetite for such transformations may be weakening due to limitations on electrical power and slowing industrial redevelopment. [Extracted from the article]

Chicago developer R2 has abandoned plans to build a dining and entertainment complex on a former Goose Island boat yard. The property has been sold to a local real estate investor, BA Investment Advisors, which purchased a portion of the site for nearly $5.8 million. The sale marks the end of a project that aimed to transform Goose Island into a mixed-use enclave. R2 CEO Matt Garrison stated that the developer plans to convert another property into an "urban flex" building with industrial, warehouse, and office space. [Extracted from the article]

The Chicago School is in the process of purchasing the former Tyson Foods office building in the West Loop to consolidate its downtown campus and establish a new college of osteopathic medicine. The nonprofit university plans to move its office and classroom spaces from its current locations to the 233,000-square-foot building. The purchase is expected to involve a significant investment of "tens of millions" of dollars for buying and renovating the property. This move by The Chicago School is seen as a positive development for Chicago's central business district and downtown office landlords, as it will reduce office vacancy and contribute to the revitalization of the urban core. [Extracted from the article]

Law firm Crowell & Moring is relocating its Chicago office from NBC Tower in Streeterville to a skyscraper at 300 N. LaSalle St. The firm will be downsizing its workspace by about one-third, moving from 75,000 square feet to 50,000 square feet. This move reflects the trend of tenants shrinking and upgrading their downtown office spaces since the COVID-19 pandemic. Many companies, including law firms, have been reducing their office sizes and moving to newer and more updated buildings in desirable locations. The move to 300 N. LaSalle St. aligns with the building owner's renovations to create a state-of-the-art space. The move is seen as a win for The Irvine Company, the building's owner, as they have been trying to fill vacant space in the tower. The current building, NBC Tower, is also financially stable and has made investments to attract new tenants. [Extracted from the article]

Allstate, the insurance giant, has put a Wacker Drive office building up for sale just two years after purchasing it with plans to potentially move its headquarters there. The 10-story building, located at 29 N. Wacker Drive, was bought for $29.7 million in 2022, but it is expected to sell for just over $10 million due to interest rate hikes and the remote work movement. Allstate had intended to occupy the building but has not done so, and it is currently leased to small tenants. The company has not provided a reason for seeking a buyer for the property. [Extracted from the article]

Chicago real estate firm R2 has purchased a 41-story office building on Michigan Avenue for about half the price it sold for in 2017. The discounted price reflects the impact of remote work, higher interest rates, and a high vacancy rate on downtown office property values. R2 obtained financing for the purchase from MetLife Investment Management, the previous lender for the building. R2 plans to make significant improvements to the building and attract new tenants. The building was 68% leased at the time of sale, with both leasing wins and losses. R2 has been involved in other downtown projects since the start of the COVID-19 pandemic. [Extracted from the article]

Chicago developer Mitch Goltz has proposed a $90 million plan to convert a vacant office complex near Old Orchard mall into 245 apartments. The plan, which still needs approval from the village's board of trustees, would involve converting the majority of the two seven-story buildings into apartments and adding an outdoor amenity deck on the roof of a parking garage. The project aims to address the flailing office market and strong demand for apartments. If successful, it would be a rare example of an office building being converted into apartments. [Extracted from the article]

Groupon, the online-deal company, has signed a deal for a new main office in the Loop, moving from its current headquarters at 600 W. Chicago Ave. to a smaller space at 35 W. Wacker Drive. The company is subleasing about 25,000 square feet on the 25th floor of the office tower from media conglomerate Publicis Groupe. The move comes as Groupon nears the end of its lease at its current location and follows cost-cutting measures, including layoffs, due to the impact of the COVID-19 pandemic. The sublease helps alleviate some office space availability in downtown Chicago, but the city's office market continues to face challenges with high vacancy rates. [Extracted from the article]

Co-working provider IWG is planning to open 17 new locations in the Chicago area next year, primarily in the suburbs. This expansion is part of IWG's strategy to capitalize on the demand for shared office space in the wake of the COVID-19 pandemic. IWG operates several co-working brands, including Regus, Spaces, HQ, and Signature. The company believes that the remote work movement has weakened demand for traditional office space, making short-term, flexible leases more attractive. IWG's expansion in the suburbs is a unique approach, as co-working has been slower to catch on in these areas compared to downtown. The company is betting that its shared-office brands will be more appealing than other traditional suburban workspace options. IWG plans to open new locations in Westmont, Frankfort, Arlington Heights, Downers Grove, Elgin, Libertyville, Lisle, Lombard, Naperville, Oakbrook Terrace, St. Charles, and Vernon Hills. These locations will be structured as partnership agreements with landlords, where IWG manages the flexible office space and shares revenue with the landlord. [Extracted from the article]

Chicago developer Mike Reschke is in talks to purchase the historic Jewelers Building at 35 E. Wacker Drive and convert part of it into a hotel. The 40-story tower is currently facing a foreclosure lawsuit filed by John Hancock Life Insurance. Reschke's firm, Prime Group, is considering the hotel conversion due to the decreased demand for office space in the city and the recovering downtown hospitality market. The purchase price is estimated to be between $35 million and $40 million. The building, completed in 1926, is a Chicago landmark and has a prominent cupola on the 40th floor that was once a speakeasy run by Al Capone. [Extracted from the article]

WeWork, the embattled co-working company, has filed for Chapter 11 bankruptcy and owes nearly $11.9 million to the Alter Group of Wilmette, making them one of WeWork's largest creditors. WeWork plans to walk away from nearly 70 leases in North America as part of its reorganization strategy. The Alter Group's claim is related to the termination fee for the office space at 20 W. Kinzie St., which WeWork occupied until earlier this year. WeWork fell behind on its termination fee payments, leading to a lawsuit filed by the Alter Group. The bankruptcy filing also revealed that WeWork plans to reject its lease at 125 S. Clark St. in the Loop. WeWork has been closing underperforming locations in Chicago over the past few years, but still has eight active downtown locations. [Extracted from the article]

The owner of Old Orchard mall has lined up two more deals to fill space in the Lord & Taylor department store that closed five years ago at the Skokie property, another step in its plan to breathe new life into the shopping center following the COVID-19 pandemic. Arhaus signed on for 24,000 square feet, while Zara will relocate into a 40,000-square-foot store, a move and expansion from the roughly 23,000-square-foot space it occupies at the mall today. [Extracted from the article]

The third quarter also brought a sale of a suburban office building, a rare deal amid rampant distress and higher interest rates keeping many investors on the sidelines. More companies trying to get rid of workspace over the past three months pushed the suburban office vacancy rate to a record high for the 11th consecutive quarter. [Extracted from the article]

Landlord trouble An Invenergy spokesman said in a statement that the company has added more than 1,300 employees globally over the past five years, and that the company today operates more than 200 clean energy projects across four continents. One of the largest independent clean energy producers in the world is adding about 84,000 square feet to its Wacker Drive headquarters, a rare massive expansion of workspace and a deal that could tee up the creation of a new clean energy innovation hub in downtown Chicago. [Extracted from the article]

AmTrust Realty, a New York real estate firm, plans to invest $50 million in renovations for its downtown Chicago office buildings at 1 E. Wacker Drive and 33 N. Dearborn St. The firm believes that these properties can withstand the challenges faced by landlords in the current remote work environment. The renovations will include upgrades to the buildings' lobbies, amenities, entrances, corridors, restrooms, and tenant lounges. AmTrust's investment is based on the success of Class A buildings in attracting tenants, as companies seek office spaces that encourage employees to work in-person. The firm's commitment to its properties sets it apart from other landlords who are struggling or halting spending on their buildings. AmTrust has also hired Stream Realty Partners to oversee leasing for its entire downtown Chicago office portfolio. The firm is planning further renovations for its other properties and is working on a project to convert a vacant office tower into a mixed-use building with apartments. [Extracted from the article]

Tech company Relativity has recommitted to its LaSalle Street headquarters with a long-term lease, but is shedding almost half of its office space there as it embraces the remote work movement. Boston-based landlord Beacon Capital Partners, which bought the building in 2017 for $162 million, has since added a restaurant in the lobby, renovated the tenant lounge and fitness center and added a new rooftop deck. Many tenants have left the outmoded buildings on the corridor for newer and more updated buildings elsewhere downtown. [Extracted from the article]

A few months after its largest tenant walked out, the owner of a landmark Loop office building has landed a deal with a new company that bucks a pair of trends in the battered downtown office market. The logistics firm is the largest tenant in the building, which is 76% leased, according to real estate information company CoStar Group. [Extracted from the article]

The developer paid $34 million this year for a full-block development site at 420 N. May St., where it has proposed a 52-story apartment tower that would be the tallest building in the trendy former meatpacking corridor. The developer of the city's tallest apartment building has put a vacant lot next to it up for sale, an offering that could tee up the development of another residential tower rising just as high, and with as many as 621 units at the southwest corner of Grant Park. Less than two blocks north of Crescent Heights' site, a 73-story, 738-unit apartment tower under construction at 1000 S. Michigan Ave. is expected to get its first tenants next year. [Extracted from the article]

JLL brokers Mike Curran and Annie Nicolau are marketing the JLL space for sublease. Jones Lang LaSalle makes money off of helping other companies lease office space. [Extracted from the article]

Zurich North America is trying to unload almost half its Schaumburg headquarters on the sublease market, a mammoth addition of available office space to a suburban landscape already awash in vacancy. Schaumburg Director of Economic Development Matt Frank declined to comment on the lawsuit but said the village is happy Zurich is hunting for users that could bring more employees there on a daily basis. [Extracted from the article]

Coming soon to a suburb near you: the battle over converting empty office parks to warehouses. Cole also projects the redevelopment will be a financial win for taxpayers because the demolition of a 485,000-square-foot office building on the Brennan site will tighten the local office market. [Extracted from the article]

The developer that proposed turning Baxter International's Deerfield headquarters campus into an industrial park has withdrawn its petition for the project, likely killing an effort that drew a wave of opposition from nearby residents. And a property tax projection prepared by another consultant and included in Bridge's application estimated the Deerfield property's annual tax bill would likely increase to nearly $3.2 million in 2027 from around $584,000 in 2021 if Bridge's project is completed. [Extracted from the article]

Feldco is doubling the size of its office near O'Hare International Airport and moving it to Rosemont, bucking the trend of companies cutting back on space with the rise of remote work. The windows, siding, doors and roofing company has leased around 36,000 square feet at 6300 N. River Road in Rosemont and has relocated its headquarters to the seven-story building, Feldco CEO Doug Cook said. [Extracted from the article]

After rolling out its vision late last year to add apartments to Westfield Old Orchard mall, the shopping center's owner is now touting a new piece to its plan: medical office space. The mall owner is betting major health systems - which are pushing more services to and investing in outpatient facilities - will crave space that comes with the existing amenities and population density that Old Orchard already provides. [Extracted from the article]

The decimated property values reflect the long-standing headaches for owners of outmoded office buildings in the suburbs, pain that was intensified by the COVID-19 pandemic. The owner of an empty office building in Lincolnshire has put it up for auction, adding to a series of outdated suburban office properties in line to be sold off the discount rack as remote work continues to beat down demand for workspace. [Extracted from the article]

But as the battered office sector adjusts to post-COVID realities, Jeff Bernstein and Larry Elbaum are betting that suburban buildings packed with small, local firms have more upside. December surveys of office tenants nationwide by JLL found that companies with 150 employees or less are seeing significant use of their offices 3.1 days per week, whereas companies with more than 500 employees average 2.2 days per week. [Extracted from the article]

A joint venture of Chicago-based Glenstar and Los Angeles-based private-equity firm Oaktree Capital Management last month transferred the 44-story office building at 141 W. Jackson Blvd. to an Apollo-led venture that provided the senior loan tied to the property, according to Cook County property records. New York investment giant Apollo Global Management has taken control of the Board of Trade Building in the Loop and hired a Chicago developer to try to inject new life into the distressed landmark tower. [Extracted from the article]

Related Midwest has cast aside its plan for a big apartment and hotel complex in the Fulton Market District in favor of a more audacious post-pandemic gamble: building a new office tower. That backdrop makes a new office tower proposal look risky, especially when Related already had the city's sign-off on a predominantly residential building at a time when demand for downtown apartments is soaring. [Extracted from the article]

A mobile app company that gives shoppers incentives for taking photos of their receipts is expanding its Chicago office and moving to a newly built West Loop building as it bulks up its local headcount. The lease with Fetch - recently rebranded from Fetch Rewards - is a key win for New York-based Vista Property Group, which developed the 100,000-square-foot building on speculation, or without any tenants signed. [Extracted from the article]

The foreign investor that bought part of a vintage Loop office building in June has now acquired the rest of it, which it plans to turn into roughly 100 apartments as demand for downtown residential units soars. R2 had marketed the roughly 80,000-square-foot block of space on floors eight through 14 in the building as an apartment conversion opportunity amid weak demand for downtown offices and record-high downtown apartment rents. [Extracted from the article]

The investment research firm recently signed a five-year renewal of its lease for roughly 263,000 square feet at 22 W. Washington St., a Morningstar spokeswoman confirmed. After mulling a relocation of its longtime headquarters to the Marshall Field building in the Loop, Morningstar has bought a few more years at its current home to think it over. [Extracted from the article]

Shapack's original zoning applications aimed to transform a property along Grand Avenue between Desplaines Street and Union Avenue with a 1,110-unit apartment building rising 600 feet and a 141-room hotel. A prolific developer's plans to build a slew of housing units and a hotel near the planned Chicago casino have been approved by the City Council. [Extracted from the article]

Chicago developer John Murphy could provide the next local test case for office skyscrapers. While companies have proven during the pandemic that they will flock to new or renovated offices, "it's going to be tough" to finance classic large-scale office towers downtown, says John O'Donnell, whose Riverside Investment & Development completed skyscrapers at 150 N. Riverside Plaza, 110 N. Wacker Drive and 320 S. Canal St. since 2017. [Extracted from the article]

A joint venture of Chicago-based Riverside Investment & Development and Houston-based Howard Hughes had previously lined up a deal with a luxury co-working provider to occupy the 53rd and 54th floor in the tower, but that agreement fell apart, sources said. A private-equity firm that backs companies in the health care sector has leased the top floor of the newest skyscraper on Wacker Drive, a deal that shows the premium companies will pay for high-end workspace and the growing rent disparity between the highest- and lowest-quality office buildings downtown. [Extracted from the article]

The Samsung venture took out the Union Bank loan to finance its $314 million acquisition of the BMO buildings in 2015, according to Cook County property records. The Chicago developer that is revamping the James R. Thompson Center in the Loop is closing in on a deal to acquire a massive distressed property a few blocks away, a purchase that would raise its already big bet on LaSalle Street's future. [Extracted from the article]