Developer Sterling Bay first turned heads in the area in 2012 when it converted a four-story concrete loft building at 400 S. Jefferson St. into Tyson Foods’ new headquarters. But since then, the blocks between the river’s South Branch and the Kennedy Expressway have largely missed out on the parade of suburban companies uprooting for the city.
A new 20-story office building at 625 W. Adams St. symbolized that struggle, as developers White Oak Realty Partners, CA Office and Vanderbilt Partners finished it early last year without a tenant lined up—even amid rampant demand for downtown office space. Finally, after Walgreens Boots Alliance helped validate the nearby Post Office’s long-awaited redevelopment with a 200,000-square-foot lease, the momentum began. The Adams Street developers reached a 300,000-square-foot deal with technology products company CDW to move its downtown office there from 120 S. Riverside Plaza a few blocks away; it has already started to backfill that space.
Another tenant-famished office building, at 550 W. Jackson Blvd., which 601W is updating with a $12.5 million renovation, has inked deals in recent months totaling more than 140,000 square feet with four companies, some of which are moving from coveted Wacker Drive addresses.
Southwest Loop landlords are gaining leverage, too. Asking rents at the Post Office today are $7 to $8 more expensive per square foot than they were when the building’s leasing team formally began marketing it in January 2018, tenant reps say.
Even for a behemoth like the Post Office that has a wide range of amenities built in, the surrounding projects have been a key recruitment tool, says Dan Heckman, leasing director at Telos Group, whose marketing presentation for the property highlights more than 430,000 square feet of retail, food and beverage space that will be up and running within two blocks of the behemoth in the next few years.
“I think it’s important to highlight that this is not just a one-off building in this area,” he says. “It shows you how important it is to have other people that are buying into this location as well.”