Irvine's Chicago offices 87% leased on premium-space demand

Downtown Chicago has an office recovery, but it is a narrow one. Irvine Company says its Chicago portfolio is 87% leased, according to Connect CRE. The renters are financial services and legal services firms. For a sector that has been written off for two years, that is fresh evidence of life.

Irvine's national office portfolio stands at 91% leased. That follows a fiscal year with 11 million square feet of leasing activity. New leases accounted for 4.4 million square feet. Renewals covered the rest, 6.7 million. Since the pandemic, most landlords have had to rely on renewals; Irvine is still writing new leases at that scale.

Irvine is putting money behind the demand it sees. This summer it finished a full floor of flex suites at 300 North LaSalle, move-in-ready workspaces from 4,500 to 10,000 square feet tied to the building's enterprise amenities. Roger DeWames, president of Irvine Company Office Properties, told Connect CRE that the leasing reflects companies actively seeking high-quality environments that bring teams together, and continued demand for the value and scale Irvine offers. Pre-built suites remove construction risk from the tenant's decision.

Chicago has become the symbol of the split between modern and aging office stock. Landlords with capital to pre-build suites and maintain amenities are capturing the expansion demand that exists. Those without that capacity keep turning to conversions — Pivot's plan to turn Nashville's Fifth Third Center into a hotel and timeshares, covered here earlier this week, is the latest example. For investors underwriting office purchases and loans, lease-up at this scale in a soft market supports the values of buildings that can carry the capital expenditure. Most buildings can't. The recovery has an address; it just isn't on every block.