One of Chicago’s biggest office tenants looks ready to exit much of its space in a West Loop building next year after listing about 130,000 square feet for sublease.
CME Group, the world’s largest derivatives exchange, has been marketing most of its space at 550 West Washington Boulevard at $32.50 per square foot, according to a Colliers listing. The lease term expires next year and a direct lease extension is available.
The listing is among record office supply in downtown Chicago’s secondary market, where 6.2 million square feet was available for sublease in the second quarter, the brokerage MBRE found. Companies with leases expiring soon have turned to subleases as a preference for remote work endures even with the virus receding.
Offering a sublease gives tenants a chance to cut their real estate costs as they prepare to rethink office needs, increasingly resulting in companies deciding to shrink their workplaces and make attending in person optional for at least a day or two per week.
CME’s cutback at Washington isn’t the company’s first recent move to unload real estate. In November, it sold a 300,000-square-foot building at 333 South LaSalle Street for $39.5 million to electric utility ComEd, which is turning what used to be the Chicago Board of Trade’s largest trading floor into a power substation.
The ComEd deal was a sale-leaseback: CME occupied the building this year ahead of moving into 145,000 square feet nearby at 141 West Jackson Boulevard, a two-building complex CME also formerly owned that it sold to a venture of GlenStar Properties and USAA Real Estate for $152 million in 2012. The Jackson property now hosts the exchange manager’s trading floor, as well as the Cboe’s.
With the reduction from its 245,000 square feet leased in 2006 at the 16-story, 372,000-square-foot Washington building, CME is unraveling a 2006 shift of much of its Chicago workforce from its longtime headquarters at 20 South Wacker Drive.
The Washington building was bought by MetLife Investment Management for $112 million in 2012. The CME lease there expanded the exchange’s Chicago offices from its Wacker location, a Tishman Speyer-owned complex called the CME Center. The property’s namesake tenant has increased its lease there to 575,000 square feet on a deal expiring in 2032 through several expansions since January 2018, when the company started adding to the 490,000 square feet it had at the time, SEC filings show.
The company decided several years ago to relocate most of its Chicago-based employees to its headquarters, and has trimmed its use of the Washington building as its Wacker space has been expanded and renovated in stages, a CME spokesperson said in an email.
If much of CME’s space in the MetLife building goes unclaimed on the secondary market ahead of its lease expiration next year, the landlord will be dealing with a building almost half vacant. It’s already facing a 13 percent direct vacancy rate, a figure that doesn’t reflect CME’s unused space on the secondary market, brokerage MBRE reported. CME’s sublease is the largest among Chicago’s 30 newest buildings of 300,000 square feet or more.
A MetLife spokesperson declined to comment on the cutback, and Tishman didn’t return requests for comment. Holly Duran, Jeff Mulder and Jeff Newcom of Colliers are marketing the sublease.
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Chicago commercial sublease availability grows to record high, report says