Spanning 15 stories and approximately 87,873 square feet, 609 Randolph epitomizes the need for adaptability in contemporary downtown Chicago office development. This innovative boutique building situated in the vibrant West Loop neighborhood seamlessly blends historical charm with modern functionality.
“Companies have been drawn to this boutique new development due to its single-tenant floor plates, high-end hospitality driven amenity offering and convenient access to public transit and neighborhood amenities,” explained Aaron Schuster, First Vice President at CBRE. “Most of the tenants relocated from large skyscrapers as they desired a destination office that provides more identity and visibility.”
Already 85 percent leased, 609 Randolph is an example of a building that has succeeded in capturing the demand of tenants desiring to provide their employees with a unique and stimulating office environment as companies right-size and trade up in quality in a relocation, Schuster added.
As downtown Chicago’s office market experiences a period of transformation with the ongoing impact of remote work, shifting tenant preferences and economic fluctuations, one thing is certain: it remains a vibrant and resilient ecosystem, poised for a future defined by innovation and opportunity.
Lisa Davidson, Vice Chairman at Savills painted a picture of gradual progress amidst lingering uncertainties.
“Occupancy is slowly moving up, but we foresee no major changes in the near future,” she said. “There continues to be a bifurcated market where the West Loop sees most of the transaction and tour activity. Rates aren’t currently being lowered, but concessions continue to be at record highs.”
Schuster emphasized the market’s ongoing adjustment as companies navigate lease expirations and return-to-office strategies.
“Return-to-office levels and activity in the loop have steadily improved and those tenants who have determined their return-to-office policies are pursuing best-in-class space and making longer-term lease commitments,” Schuster said.
Davidson spotlighted the disparities between downtown and suburban markets, citing the influx of new developments in the central business district compared to the suburbs.
“Those buildings that are highly amenitized, in energetic blocks or neighborhoods, and offer attractive spaces with abundant light and air are being leased first,” Davidson said. “Also, many downtown buildings are featuring new spec suites, even for larger tenants, which can save on capital for the tenant as no major construction is needed and most are move-in ready. This concept is not as widespread in the suburbs.”
The increase in vacancy rates has been a focal point of discussion within the downtown office market. Schuster attributed this trend to tenants’ evolving workplace strategies.
“Tenants require less space as they implement more efficient workplace strategies,” he said. “The increase in vacancy rates is most attributable to tenants contracting their footprints either in-place or in a relocation, or alternatively going fully remote, without the net new tenancy to backfill these spaces.”
The phenomenon of tenant move-outs and downsizing has left its mark on downtown office buildings, prompting landlords to adapt and innovate.
“Amenities, amenities, amenities!” Davidson responded to a question about how landlords can attract and retain tenants. “But also the spec suites make it easy for the tenant who is looking to move in immediately and not have to make substantial changes to the space. This also allows the landlords to offer more flexible and shorter lease terms.”
Schuster highlighted the value of reinvesting in building infrastructure and amenities to create compelling environments for tenants. Both experts agree that landlords who prioritize tenant needs and provide innovative solutions will succeed in the competitive downtown market.
Looking ahead, both Davidson and Schuster expressed cautious optimism for the future of the downtown Chicago office market. They mentioned recent commitments by companies like Google and J.P. Morgan Chase as positive indicators of the city’s resilience. Additionally, they pointed to ongoing revitalization efforts, such as the LaSalle Street Reimagined Project, as promising signs for the continued growth and vitality of the Loop.
