By: Danny Ecker 

A pair of downtown office users have inked deals for new workspace in the East Loop, signs of momentum for a part of the central business district that hasn’t been a magnet for office tenants in recent years.

20,000 square feet on the 15th floor in Aon Center at 200 E. Randolph St., where it will move from the roughly 28,000 square feet it occupies today at 111 E. Wacker Drive, according to a statement from SEIU and Telos Group, which oversees leasing at Aon Center.

The deals are a shot of life for office leasing in the East Loop, which has been a relatively sleepy submarket for office space in recent years while many tenants have flocked to newer buildings in the West Loop. East Loop buildings accounted for 12% of all direct office leases signed downtown in 2023, even with the 2022 share but down from 2021 and 2020 levels, according to an analysis by real estate services firm Transwestern.

SEIU’s move also lines up with the prevailing trend shaping the downtown office market, while Blue Ops’ deal bucks it.

The labor union is moving to fresh office space and shrinking its footprint, one of many downtown office users cutting back on workspace amid the rise of the COVID-19
pandemic-fueled remote work movement.

SEIU Local 1 President Genie Kastrup said in a statement that the union is “excited to continue to invest in downtown Chicago not only through our exceptional workforce
that services the skyline but also through this collaborative effort with the Aon Center to provide a high-quality commercial office space.”

The union has about 50,000 members throughout the Midwest, including janitors, security officers, airport workers, school service workers, food service workers, window washers and residential workers, according to the statement.

SEIU’s move, meanwhile, adds to a daunting leasing challenge ahead for New York based real estate firm AmTrust Realty, which owns the 32-story Illinois Center tower at
111 E. Wacker.

The pending loss comes a few months after the departure of the largest tenant in the 2.1 million-square-foot Illinois Center complex, the U.S. Department of Health & Human Services. A Fitch Ratings report last year on AmTrust’s $260 million mortgage projected that loss would leave the two-tower property at just 48% leased, far below
the average 75% average for downtown office buildings.

An AmTrust spokeswoman did not provide a comment.

Blue Ops’ lease on Michigan Avenue, meanwhile, will be celebrated by almost all office owners as an example that not all companies are trying to shed workspace.

“The Chicago office is growing because we have a heavy client base in Chicago and can also hire great talent,” Callahan said in the email.

The lease helps fill available space at the 22-story building at 200 S. Michigan Ave., which is owned by a venture of El Segundo, Calif.-based Stanton Road Capital. Stanton
Road bought a leasehold interest in the 371,566-square-foot property in 2019 for $33 million, according to Cook County property records.

The building was just under 80% leased at the time, but has since fallen below 67% leased, not including the Blue Ops lease, according to real estate information company CoStar Group. Such midtier, or Class B, office buildings downtown have missed out on most leasing activity over the past couple of years as tenants have sought newer and more-updated buildings that help compel employees to show up.

The Loop building that Blue Ops is vacating is owned by Toronto-based Slate Office REIT, which bought the 31-story building in 2018 for just under $86 million. A Slate
spokesman did not respond to a request for comment.

JLL tenant rep Jake Ehrenberg negotiated SEIU’s lease on behalf of the union. JLL’s Isabella Spinnell and Telos Group’s Jeff Dowdell and Jamey Dix represented 601W.
Winthrop Commercial broker Brian Nelson negotiated Blue Ops’ lease on behalf of the company, and JLL’s Craig Coupe and Ellen Trager represented Stanton Road Capital.

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