Wangxiang’s $50 Million Pru Plaza Improvements Land Tenants

A Chicago landlord’s $50 million investment at its East Loop complex has attracted two companies that are seeking a smaller, more modernized office space downtown.

Wanxiang America Real Estate, which owns the two-tower Prudential Plaza at 130 East Randolph Street, has secured a long-term lease with mental health services provider ComPsych and is in advanced talks with consulting firm Compass Lexecon, Crain’s reported.

ComPsych has committed to 50,000 square feet on the seventh floor of One Prudential Plaza, a sharp reduction from the 152,000 square feet it occupies at NBC Tower, through 2026.

Meanwhile, Compass Lexecon is negotiating a lease for over 31,000 square feet at the same property, downsizing from its 45,000-square-foot office at 332 South Michigan Avenue.

Prudential Plaza spans 2.3 million square feet across two towers: the 41-story Pru One and 64-story Pru Two.

Wanxiang, headed by Managing Director Larry Krueger, purchased the complex in 2018 for $680 million, about $295 per square foot.

Wanxiang’s upgrades to the complex include constructing a glass-enclosed walkway that connects the towers. The walkway is expected to be completed within the next two months.

The landlord’s $50 million investment is part of a deal with its lender. Last year, Wanxiang extended the maturity date of its $389 million mortgage on Prudential Plaza to 2027, with an option to extend through 2029.

The loan extension followed negotiations with lender CW Capital to adjust loan terms in response to rising interest rates and increased office vacancies caused by the pandemic. Downtown office vacancy rates reached 26.3 percent in the fourth quarter, up from 23.8 percent at the end of 2023 and more than double pre-pandemic levels.

Other recent leases at Prudential Plaza include engineering firm AECOM, which leased 23,000 square feet in Pru One, and architecture firm HOK, which secured 25,000 square feet in the same tower.

Shedding office space is a trend among businesses choosing to accommodate hybrid and remote work models or to make office life more appealing by leasing in buildings full of amenities.

Compass Lexecon’s exit from 332 South Michigan Avenue adds to the financial difficulties of its landlord, an entity tied to Ivor Braka. The 20-story building was part of a $33 million foreclosure last year that was filed due to the property’s declining cash flow and mounting debt obligations.

Similarly, NBC Tower, where ComPsych is exiting, is facing vacancies from other tenants, including NBC itself.

Wanxiang is working to backfill 114,000 square feet of space set to be vacated by real estate software firm Lessen, which is relocating its office elsewhere in the Loop.

— Andrew Terrell