Musk, Trump ditching two Chicago government office buildings

The Trump administration plans to sell or vacate a significant portion of its office space in Chicago, including major buildings in the Loop.

The Chicago office properties on the government’s chopping block include the 1.2 million-square-foot John Kluczynski building at 230 South Dearborn Street, and the 828,000-square-foot Ralph Metcalfe building at 77 West Jackson Boulevard, which house multiple federal agencies, Crain’s reported. The government owns both buildings but has not provided a timeline on the potential sale.

The 45-story Kluczynski building houses the Internal Revenue Service, the General Services Administration and the Department of Labor, while the 28-story Metcalfe building is home to the Environmental Protection Agency, the Department of Housing and Urban Development and the Commodities Future Trading Commission.

President Donald Trump and billionaire Elon Musk are downsizing the federal government, via layoffs, shut-downs and chopping real estate holdings, which they say will reduce waste, fraud and abuse.

The General Services Administration has reportedly received directives to reduce the federal government’s office space in Chicago by 50 percent.

The real estate shakeup is expected to significantly impact Chicago’s office market, which is already struggling with the rise of remote work and lower demand for office space. The vacancy rate was 26.3 percent in the fourth quarter.

The Kluczynski building is likely to struggle to attract office tenants due to its age and location in an area that has seen growing conversions from office to retail.

Metcalfe, completed in 1991, had a recent energy-efficiency upgrade, but it could also face challenges given its specialized purpose, including plans to house the Railroad Retirement Board.

In addition to the Kluczynski and Metcalfe buildings, the federal government has also been scaling back its office space in other cities, with reports suggesting similar plans for Detroit and New York.

— Andrew Terrell