Insurance brokerage doubles West Loop office space – Crain’s Chicago Business

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Less than three months after its parent company went public, Pat Ryan’s wholesale insurance business is more than doubling its downtown office space to make room for a run of recent hires and plans for more.

In one of the larger expansions of downtown office space since the start of the COVID-19 pandemic, insurance brokerage RT Specialty has leased 83,228 square feet at 540 W. Madison St., according to a statement from the Chicago office of Savills, which negotiated the deal on behalf of the company. The space on the eighth and ninth floors of the 31-story building is more than twice the size of the roughly 38,000 square feet the company has occupied for the past four years down the street at 500 W. Monroe St.

RT’s recent headcount growth is unclear, and a spokeswoman for the company couldn’t be reached. But Savills said the firm has recently grown to 275 employees—up from 146 when it last expanded its Chicago office in 2017—and the company plans to continue to grow its local workforce. The new office will provide space to house more than 400 workers, according to the brokerage.

The expansion signals a big commitment to in-person office work while many companies rethink their workspace needs during the public health crisis, often shedding space to adapt to the rise of remote work. Space cutbacks and a lack of new move-ins have steadily pushed up the downtown office vacancy rate to a record high 20% at the end of last month, according to data from brokerage CBRE.

That has pushed landlords to offer generous packages of concessions like free rent and cash for office buildouts, as well as flexibility built into leases to account for post-COVID uncertainty. RT acknowledged the importance of having employees work together in person and took advantage of that leverage with its new deal, said Savills Vice Chairman Robert Sevim.

“It’s a commitment to ensure that the role of the office is to amplify the power of in-person working. Their business has succeeded in so many ways from their work in person over the years,” Sevim said. “They are designing a space where people will want to come to work because it’s going to be a compelling environment.”

RT’s deal is a win for Boca Raton, Fla.-based Third Millennium Group, which has owned the nearly 1.2 million-square-foot building at 540 W. Madison since 2012. Including RT, the building is now 90% leased, according to Telos Group, which oversees leasing at the property.

RT is leaving behind a Monroe Street building that is 96% leased, according to real estate information company CoStar Group. The brokerage first subleased space in the building close to a decade ago and later leased directly from the building in a deal that runs through May 2026, according to CoStar data. Sevim said RT will have some of that lease term remaining in the building, but did not provide details.

The 44-story building is owned by San Francisco-based Spear Street Capital, which bought it for $412 million in 2019.

RT is a division of Ryan Specialty Group, the specialty insurance company that Aon founder Pat Ryan formed in 2010. RSG raised more than $1.3 billion in its initial public offering in July, when it began trading on the New York Stock Exchange for just under $24 per share. The company’s stock price closed yesterday at just more than $37.

RSG is one of the largest single tenants at Two Prudential Plaza in the East Loop.

Sevim and Adam Southard of Savills represented RT Specialty in the lease. Telos brokers Jamey Dix and Colton Riemenschneider represented Third Millennium Group.

A previous version of this story inaccurately stated that Bank of America recently vacated space at 540 W. Madison. The company remains the building’s largest tenant, with more than 400,000 square feet, according to Telos Group.