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Co-Working Footprint in Chicago Continues to Grow

CHICAGO—WeWork has just signed a significant lease expansion at its River North location, its largest facility in Chicago.

By Brian J. Rogal | brianjrogal | | Updated on August 03, 2016

 

chi-20_w_kinzie (3) 20 W. Kinzie was once home to Google, but We Work now anchors the property.
CHICAGO— WeWork has signed a lease expansion at Alter’s 20 W. Kinzie building in River North, just one year after taking over much of the space vacated by tech giant Google . An Alter spokesperson tells GlobeSt.com that the shared workspace provider will also occupy the entire 16 th floor, an extra 25,000 square feet, and now has a long-term lease at the property for a total of 129,000 square feet, making it the largest WeWork facility in Chicago. Although such co-working spaces currently constitute a small proportion of the metro area’s office market, landlords credit the facilities with bringing life and energy to their properties. And this quick expansion by New York-based WeWork, the anchor tenant of this top office property, illustrates that co-working providers have potential to play an even more important role in the market.         Newmark Grubb Knight Frank’s senior managing director Matthew Ward and senior associate Melissa Porcelli represented Alter in the lease negotiations.   “This transaction was part of a complex, phased, multiple-building occupancy,” says Ward. “Our NGKF team negotiated the 25,000-square-foot lease with WeWork at 111 W. Illinois St. in 2014, the firm’s second Chicago location, in order to establish a River North beachhead for the firm. That lease ultimately culminated in the flagship lease signed at 20 W. Kinzie several months later.” Alter hired NGKF to backfill Google’s vacancy, and the firm secured WeWork’s 104,800-square-foot lease months before Google’s departure, mitigating considerable risk for their client. Ward and Porcelli are the only Chicago brokerage team to have completed multiple transactions with WeWork in Chicago. The team expects the co-working footprint in Chicago to grow exponentially in the next few years. According to NGKF research, there is currently about 5.2 million square feet of shared office suites in Manhattan. By percentage of inventory, that share is 1.2% of that market and it will grow to 1.4% in the next two years. In comparison, the current footprint of Chicago’s current shared office suites footprint is 1.1%. “If we assume that Chicago will catch up with Manhattan in the next two years and also have a 1.4% shared space market share then we can expect to see another 518,000 square feet of leases from tenants like WeWork, MakeOffices and Level in the next two years,” says Ward.  

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