Trump Disposing Chicago SEC Lease With Brookfield at a Penalty

Federal cost-cutting plans could leave the Securities and Exchange Commission without a regional office in Chicago and taxpayers with a hefty lease termination bill.

The SEC informed staff Monday that the General Services Administration intends to close its Chicago, Los Angeles and Philadelphia offices because of cost cutting by the Trump administration and Elon Musk, Reuters first reported.

The regulatory agency is looking to close its 14th-floor office at 175 West Jackson Boulevard, but terminating its lease in the 22-story building could lead to significant financial penalties, according to an email from the GSA. The exact size of the SEC’s lease is not available but a typical floorplate in the building is just over 66,000 square feet, according to Telos Group.

The GSA says its plans to vacate the Chicago and Philadelphia offices by August, while the Los Angeles office is set to close by September. If new office space is not secured, employees will transition to full-time remote work.

The SEC, which paid more than $30 million in rent for GSA-owned space last year, has worked to reduce office costs and has saved about $8.5 million annually since 2011. The lease terminations are not connected to staff reductions, though the SEC is offering eligible employees a $50,000 incentive to resign.

The 1.4 million square-foot property is owned by Brookfield Asset Management, a Toronto-based investment firm with over $850 billion in assets under management. The company purchased the building in 2018 for $306 million, acquiring it from a venture that included Extell Development. The deal worked out to $218 per square foot.

The building was only 67 percent leased at the time of the purchase. Brookfield has since invested $24 million in renovations.

Brookfield acquired the building by taking on a $259 million loan, which later increased to $280 million. As occupancy dropped to 62 percent in 2021 and downtown vacancy rates climbed, the company struggled to keep up with debt payments.

Financial strain ultimately led to a loan default, prompting U.S. Bank to file a foreclosure lawsuit in September 2022, the largest involving a downtown Chicago office property since the pandemic. A court-appointed receiver hired JLL to market the property in 2023, which sat 59 percent leased with $9 million in net cash flow.

Brookfield’s recent leases in the building include Enova International, which downsized from 178,000 square feet to 135,000 square feet in 2023, and Loadsmart, which leased 34,070 square feet in 2021.

Other Loop office buildings 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.

— Andrew Terrell