JMB Realty Tenant Extends Lease, Sheds Space in Chicago Tower

JMB Realty secured a long-term lease extension from its largest tenant in a Near North Side skyscraper, although it is a downsizing move that will create a void in the building.

Asset management firm GCM Grosvenor will occupy 72,700 square feet in the 66-story tower at 900 North Michigan Avenue in an 11-year lease that runs through 2037, CoStar reported. GCM is shaving a little over 40,000 square feet off its footprint.

Under the new lease terms, GCM will receive a tenant improvement allowance exceeding $8 million, a termination option for the entire space effective September 2032 and one year of rent abatement. In addition, the firm paid a termination fee of just over $331,000 to remove a portion of its previous space.

Such downsizings have been at the root of soaring office vacancies in Chicago since the pandemic sparked the remote-work movements. The city’s vacancy rate topped 25 percent for the first time ever in the first quarter, up from 13.8 percent when the pandemic began, according to JLL.

Thus, simply retaining an anchor tenant could be considered a win for JMB Realty given the broader challenges facing the office sector, such as high interest rates and tight lending standards, making it tough for landlords to refinance their assets.

Several other companies this year have signed lease extensions while shrinking their Chicago footprints. NBC, for example, shed about 50 percent of its space in its namesake tower at 455 North Riverside Plaza Drive in April. It also struck a deal with landlord Metropolis Investment Holdings that will keep the broadcasting company in the building through 2040

GCM, which went public in 2020, manages $79 billion in assets across various sectors, including real estate, infrastructure, private equity and credit. The firm is led by CEO Michael Sacks, a prominent Chicago businessman and ally of former Mayor Rahm Emanuel.

—Quinn Donoghue