23 Mar Wacker Drive tower lands real estate firm Heitman
The tallest new Chicago office tower in 30 years has plucked another tenant away from a competing building downtown.
Real estate investment firm Heitman has leased 60,000 square feet on two floors at 110 N. Wacker Drive, the 55-story skyscraper slated to open this fall.
Heitman will move its global headquarters to the 1.5 million-square-foot building in late 2022 from the tower one block north at 191 N. Wacker Drive. The firm leases a similar amount of space at that 37-story building through May 2023, according to real estate information company CoStar Group.
The deal brings the new tower to 75 percent leased ahead of its expected October debut, according to its developers, Chicago-based Riverside Investment & Development and Dallas-based Howard Hughes.
It also notches another leasing win amid the uncertainty created by the coronavirus pandemic. It’s unclear what the related widespread economic shutdown will mean for a downtown office market that, until recently, was riding high with companies hiring and leasing lots of space.
Heitman’s move is also the type that other downtown landlords worry about. With new office products recently coming online or in the works, including the Old Post Office, 110 N. Wacker, a 1.5 million-square-foot tower next to Union Station, Salesforce Tower at Wolf Point and a flurry of projects in the Fulton Market District, landlords are hoping they’ll draw tenants that are adding space or new to the market, not simply pulling companies away from other buildings.
So far, Riverside and Howard Hughes have done more of the latter. The tower’s anchor tenant, Bank of America, is consolidating its local offices into 530,000 square feet at the new tower, far less than its total space elsewhere. Several law firms are also moving to 110 N. Wacker from other buildings, including Jones Day, Morgan Lewis & Bockius, Perkins Coie and King & Spalding.
Riverside and Howard Hughes’ latest win in Heitman makes a victim of the 191 N. Wacker ownership, a venture of U.S. affiliates of Munich, Germany-based insurance company Allianz and Toronto-based Manulife Financial. The building is 95 percent leased, according to CoStar, but is set to lose its largest tenant, law firm Faegre Drinker, which will consolidate its Chicago offices at the office tower Riverside is developing next to Union Station.
“110 North Wacker Drive is well on its way to becoming the one-of-a kind destination that we have always envisioned,” Howard Hughes CEO Paul Layne said in a statement.
Heitman, which has more than $45 billion in assets under management, has a history with Riverside and its CEO John O’Donnell. Heitman was an equity partner in the development of 150 N. Riverside Plaza, another glassy office skyscraper Riverside opened in 2017.
The Heitman deal also comes as Howard Hughes looks to sell its stake in the $722 million 110 N. Wacker project. Amid an executive shakeup and shift in strategy, the publicly traded company said in October it is aiming to unload its stake in the property as well as other “non-core” assets totaling about $2 billion in value.