Law firm Taft Stettinius & Hollister increases East Loop office space – Crain’s Chicago Business

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Taft Stettinius & Hollister wants its attorneys and staff to spend more time in the office coming out of the COVID-19 pandemic, and it’s adding space in its longtime East Loop home to help lure them in.

The law firm this month said it signed a lease expansion at 111 E. Wacker Drive to grow its footprint in the building by about 40% to more than 105,000 square feet, making it the second-largest tenant in the 32-story building overlooking the Chicago River. Taft also extended its lease in the building by nine years to an expiration in mid-2034.

The deal stands out as an example of a downtown office tenant growing its footprint amid a public health crisis that has pushed many to shrink with the rise of remote work. Space shedding in the central business district has driven up the vacancy rate to a record-high 20%, according to brokerage CBRE, with major questions ahead about how many more companies will cut back on workspace as their current leases expire. But Taft’s new commitment illustrates that some downtown tenants see the need for just as much workspace, if not more, than pre-COVID.

Cid Froelich, chairman of Taft’s Chicago office, said the firm has done well financially during COVID with people working remotely, with revenue up and a lack of business travel keeping expenses way down. “Economically, it’s been wonderful,” he said, “but it’s better to be together.”

Growing headcount in Chicago drove Taft’s need for more space, Froelich said, as new attorneys joining from other firms—Taft now has more than 120 locally—left them with a space shortage on the 27th and 28th floors, where the firm and its predecessor have been for 15 years. In addition to planning renovations of those two floors, Taft will now occupy the entire 26th floor, where it plans to build out more offices and new conference and reception areas.

Froelich said the firm has encouraged its attorneys and staff to work from the office at least three days a week moving forward and that its leadership decided desk-sharing or “hoteling” weren’t conducive to legal work, creating the need for a larger footprint. Taft looked at other buildings in the area, but Froelich said Illinois Center owner AmTrust Realty was particularly flexible with the terms of its lease expansion and extension, and the firm is happy with the building’s recent $25 million renovation that included new outdoor space.

“It was not only the more appropriate place to stay, but the more economical one for our clients and for us,” he said.

Taft entered the Chicago market in January 2014 by merging with Shefsky & Froelich, which had 70 attorneys at the time.

The new deal is a win for AmTrust on the heels of a roughly 20,000-square-foot expansion the New York-based landlord recently completed with third-party logistics company Traffic Tech, which now leases around 57,000 square feet in the building. The property is now 75% leased, according to brokerage Madison Rose, which oversees leasing at the building. Robert Sevim in the Chicago office of Savills negotiated the lease for Taft.

Law firms overall have been a strong point for downtown office landlords during the pandemic, with a handful signing new leases this year and making new commitments to in-person work. The biggest came from Kirkland & Ellis, which inked a deal for more than 600,000 square feet at the future Salesforce Tower at Wolf Point. Fast-growing law firm Cooley signed a new lease last month for about 30,000 square feet at 110 N. Wacker Drive.

Jenner & Block is said to be in advanced talks to sign a new long-term lease for around 225,000 square feet at its current 353 N. Clark St. home, though that would be a major reduction from the 416,000 square feet it leases in the tower today.

Other companies have expanded their downtown office footprints. In one of the larger growth stories since the start of the public health crisis, Savills recently represented insurance brokerage RT Specialty when it more than doubled its office space to 83,000 square feet and relocated within the West Loop to 540 W. Madison St.

Such lease expansions are good news for landlords in a downtown office market still dealing with big space cutbacks and move-outs. Net absorption, which measures the change in the amount of leased and occupied space compared with the prior period, fell by around 400,000 square feet during the third quarter, according to data from CBRE. The absorption losses from the first nine months of 2021 wiped out all of the positive absorption from 2019 and 2020 combined, a sum that included 2019’s record-high 1.7 million square feet of net move-ins.