IMC expands its footprint in Willis Tower as West Loop properties see increased leasing activity

The downtown economy remains mired in uncertainty, with many buildings still largely empty two years after COVID-19 shuttered the office market, but a few bright spots have appeared.

“It’s not all bad news,” said Nikki Kern, executive vice president of The Telos Group, a commercial real estate firm.

Kern just inked a new deal at Willis Tower, bringing the 110-story building to 85% leased. IMC, a tech-focused global trading firm, agreed to renew its lease for two floors and add a third, expanding to 160,000 square feet, a 50% jump.

“It’s a great win for Willis Tower to have a tenant of this quality take a whole new floor of the building, where we’ve created a great medley of amenities,” Kern said.

The new deal fits a pattern seen throughout 2021 and 2022. Tenants avoided signing new deals in the Central Loop, especially for older properties that don’t provide fancy amenities. But companies seem eager to lease space in Class-A properties, either in refurbished buildings such as Willis Tower, or in new skyscrapers along the Chicago River in the West Loop, such as Salesforce Tower Chicago or BMO Tower. Many new projects are also dotting Fulton Market.

EQ Office, a firm wholly owned by Blackstone, just completed a $500 million makeover of Willis Tower, adding a five-level retail, restaurant and entertainment complex called Catalog, rooftop terraces where sunseekers tap on their laptops, refurbished lobbies, and whole floors dedicated to fitness centers, bars, cafes, conference spaces, lounges and private clubs.

“Companies are trying to get their employees back to the office, so many feel it’s time for an upgrade, and that means providing environments where people want to come into work,” Kern said. “They’re used to being at home, where they can walk the dog, or head out to a coffee shop. But you can do those things at Willis Tower. It creates the feeling of being outside the office, but you can do it all while at work.”

After 10 straight quarters of losing leased space, the longest stretch ever, vacancy in the Central Loop hit 22.3% in the first quarter, up from 16.6% one year earlier, according to commercial real estate firm Colliers International.

“Given that trend, vacancy will likely remain high as financial institutions which once defined the area, flock to new developments in other submarkets, leaving behind space in generally older, less desirable building stock,” Colliers reported.

Bank of America helped lead the way in 2020 by exchanging 800,000 square feet in its longtime home at 135 S. LaSalle St. in the Central Loop for about 500,000 square feet in 110 N. Wacker Drive, a new West Loop building also known as Bank of America Tower.

Willis Tower hasn’t been immune to shifts in the marketplace. United Airlines, the building’s largest tenant, announced early last year it would give up three of its 17 floors after posting more than $7 billion in losses for 2020.

But more companies are out touring offices in both the West Loop and Fulton Market, a sign that more leases are on the way, according to Colliers.

A healthy run of prospective tenants recently toured some of the remaining space in Willis Tower, Kern said.

“We have some new deals cooking.”