CHICAGO—The owners of 300 S. Riverside Plaza have avoided the possibility of leaving several floors of the West Loop tower vacant after the lease for insurance holding company AIG expired in June 2014. The Telos Group, LLC, just completed a complex set of three-way negotiations between Third Millennium Group, LLC, members of the investor group that owns 300 S. Riverside, AIG and the Zurich American Insurance Company, which has agreed to lease two floors with a total of 107,000-square-feet, about half of AIG's current space. In order to accommodate Zurich's need, the downsizing AIG agreed to move to their new 75,000-square-foot home at 500 W. Madison this November, nearly seven months early.
“Anytime you do a three-party transaction it's very difficult,” says Matt Pistorio, senior vice president of Telos. Too many things remained out of Telos' control. “We couldn't control how fast [the parties] could get their construction done or even the schedule of their architects and how fast they could complete designs. That's why these three-party deals are very uncommon. It takes a great owner to have the patience to sit through all these negotiations and the tenants have to push all of their plans into hyperdrive to get ready.”
Todd Mintz and Andy Strand of the Chicago office of DTZ represented Zurich, while David Findling of Cushman and Wakefield represented AIG. Since it was founded in 2012, Telos Group's leasing portfolio has swelled to 11-million-square-feet of office space, with assignments including the Citadel Center at 131 S. Dearborn St. and the Civic Opera Building at 20 N. Wacker Dr.
The early relocation has helped the owners' bottom line and provided even more motivation to bring in extra amenities, Pistorio says. They will add a new fitness center of roughly 6,000-square-feet that tenants can use for free and a bar on the plaza where they can grab a beer with coworkers.
“A lot of the tenants in the market are looking to move into more open and collaborative spaces,” he says, which cuts individual work spaces and shrinks the office footprint. Pistorio estimates that most tenants in the market planning a move want to occupy 10% to 15% less space. “You need to give employees places to go since their personal space has gotten smaller.” These days, anyone who handles leasing needs to worry about more than simply attracting tenants to a particular building. “You have to help tenants attract and retain new employees.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
