One of the largest tenants in the former John Hancock Center is leaving the Mag Mile for a bigger office farther south on Michigan Avenue, where it will become the biggest tenant in another prominent downtown office property.
SMS Assist, whose software is used by commercial and residential property owners to connect with maintenance and service vendors, has signed a lease for 114,000 square feet in the former Chicago Tribune headquarters at One Prudential Plaza, the company announced.
The four-floor office at 130 E. Randolph St. is larger than the roughly 100,000 square feet in SMS’ current office at 875 N. Michigan Ave., where it has grown dramatically since moving its headquarters there in 2011. SMS, whose investors include Pritzker Group Venture Capital, will move early next year to the new space and become the largest tenant in the entire two-building Prudential Plaza complex, now rebranded as One Two Pru.
The lease is a major new commitment to a downtown office at a time when many companies are rethinking their workspace needs. The rise of remote work during the COVID-19 pandemic has pushed many companies to downsize their office footprints, softening demand for offices in the central business district and driving up vacancy to a record high.
SMS, whose lease at 875 N. Michigan is due to expire in early 2022, is moving the other way in adding to its square footage, signaling its focus on in-person work for its 750 local employees long after the public health crisis subsides. A SMS spokesman said in an email that the additional space will accommodate the company’s growing local headcount, noting that it has about 100 available positions based in Chicago.
“It was important to find a collaborative, comfortable, and convenient space for our Chicago team members, and this office became available at the ideal time with very favorable market conditions. It’s a real win-win for us,” SMS Assist CEO Marc Shiffman said in a statement announcing the deal. “SMS Assist is proud of our Chicago roots, and we are committed to continuing our growth here in this state-of-the-art space.”
SMS expanded its local office presence in 2018 when it signed a sublease in Naperville with room for up to 400 employees. But the company shuttered that office when the sublease expired last year, consolidating its local workforce back into one location.
Owners of more than 200,000 properties nationwide use SMS’ platform to connect with a network of some 20,000 vendors across 55 trades, according to the company.
The office expansion is a great sign for downtown office landlords, many of whom are having to shell out extra concessions or provide more leasing flexibility to land tenants. At One Two Pru, the lease is a big victory for Chicago developer Sterling Bay, which bought the property for $680 million in 2018 after Tribune Publishing had signed a lease to become the property’s largest tenant.
That deal turned sour early this year when Tribune announced it would vacate its newsroom and offices in the building amid sweeping cost cuts. Sterling Bay sued Tribune in January, alleging the publisher owned $4.8 million in unpaid rent at the tower.
That complaint is pending in Cook County Circuit Court. A Sterling Bay spokeswoman declined to comment on the matter. A Tribune spokesman couldn’t be reached.
Sterling Bay CEO Andy Gloor said in the statement that One Two Pru remains a “sought-after destination for companies like SMS Assist that want to keep a strong presence in Chicago’s Central Business District.”
With the SMS Assist deal, the One Two Pru complex is now about 85% leased, according to Sterling Bay. Another recent addition to the tower is Crain’s Chicago Business parent company Crain Communications, which recently signed a sublease for nearly 25,000 square feet on One Prudential Plaza’s 32nd floor. Other major tenants in the building include prop trading firm Optiver, law firm Clark Hill and the headquarters of Wilson Sporting Goods.
Sterling Bay almost became SMS’ landlord in 2018 when it signed a contract to buy the roughly 900,000-square-foot office portion of what was then the John Hancock Center from Chicago-based real estate firm Hearn. The two sides later mutually agreed to terminate the deal.
Now Hearn faces a new leasing challenge with SMS’ pending departure from the 100-story skyscraper. The office portion of the tower is 90% leased today with SMS on the roster, according to real estate information company CoStar Group. The building still has its largest tenant, advertising agency FCB Chicago, signed to a lease through January 2029, according to CoStar.
Hearn CEO Steve Hearn declined to comment.
Savills Vice Chairman Robert Sevim represented SMS in negotiating the One Two Pru lease. Austin Lusson and Dave Gloor represented Sterling Bay.