On Heels of Sears Tower Deal, Chicago Leases Continue
- Mar 20, 2009
A week after Chicago’s most famous office property got a new tenant and a new name, the city’s office market continues to make headlines this week, as Tishman Speyer inks a pair of tenants to large leases totaling more than 240,000 square feet. Despite the spate of leases, though, uncertainty pervades in the market. In the first Tishman lease, Hinshaw & Culbertson L.L.P. extended its lease for 153,000 square feet at 222 North LaSalle St. through May 2018. The firm has been headquartered at the property since 1987. Meanwhile, FTI Consulting Inc. signed a lease for approximately 91,200 square feet of office space located at Franklin Center in Downtown Chicago, a two-building complex comprised of the AT&T Corporate Center at 227 West Monroe St. and 222 West Adams St. 222 North LaSalle (pictured) is currently 87 percent leased. Tishman Speyer Office Fund, which holds a 45.9 percent interest in Franklin Center, signed the FTI lease to begin in July 2010 for the entire ninth floor in both 227 West Monroe and 222 West Adams, and a portion of the 10th floor at 227 W Monroe through June 2025. The lease also provides FTI with a precommencement option to expand into the balance of the 10th floor space at 227 W. Monroe on the same terms as the original lease if notice to expand is delivered before March 30th. During the lease term, FTI has three further expansion options for space at Franklin Center. The addition of FTI to Franklin Center allows Tishman Speyer Office Fund to reduce its exposure to the exit of AT&T from the building, according to a prepared statement from the company. The Tishman leases are far from the only major deals in the Chicago market as of late. On March 12, CPN reported that the iconic Sears Tower will be changing its name to the Willis Tower after global insurance broker Willis Group Holdings inked a lease in the world-famous high-rise. Willis plans to consolidate five area offices and move nearly 500 associates into the tower occupying more than 140,000 square feet on multiple floors. In addition to the Willis lease, International Marketmakers Combination expanded to an additional 34,000 square feet and also signed an 11-year lease renewal at the tower, according to a CoStar Group report. The trading company, also known as IMC Chicago, will occupy a total of 56,300 square feet on the entire 43rd floor, the report stated. IMC Chicago has expanded several times since moving into the building in January 2007. It currently occupies 18,390 square feet on the 46th floor. This recent deal is a major lift to the Sears Tower since the biggest tenant, Ernst & Young, decided to move out of the building to a new location. According to published reports, vacancy in the Sears Tower is about 18 percent. The total CBD office vacancy rate for Chicago is about 13.1 percent, according to Grubb & Ellis Co.’s Chicago office market report for the fourth quarter of 2008. Despite the recent leases, Chicago’s office market is experiencing pains from the global economic malaise. Many companies of all sizes are terminating their leases or downsizing, and the planned new Hines development in the West Loop is in jeopardy due to credit issues. On Jan. 22, CPN reported that a deal inked by Franklin Street Properties Corp. on Oct. 31 for the $130 million purchase of Chicago’s 16-story Congress Center fell through. According to an SEC filing, Franklin Street elected to terminate the agreement on Jan. 13.