Morningstar signs lease renewal after considering Loop move

The renewal came despite Morningstar nearly reaching a deal earlier this year to move its offices one block to 24 E. Washington St., the redeveloped upper floors above the flagship Macy’s State Street store. Inking that lease as remote work drives office vacancy to an all-time high would have landed a mammoth win for Toronto developer Brookfield Properties, which has turned space in the iconic building into office space. modern.

Morningstar has been one of the city’s biggest and best-known tenants looking for a new office amid the COVID-19 pandemic, making its decision on where to go – and the space it needs – watched closely by downtown office owners struggling with sluggish demand.

It’s unclear what prompted Morningstar to stay put, but a company spokeswoman said in a statement the decision came after “a rigorous, data-driven evaluation of our options moving forward.” .

“After a very thorough and thoughtful evaluation of our options in Chicago, we have decided to remain at 22 W Washington for an additional five years, Renée Morin, Morningstar’s head of global facilities and business continuity, said in the statement. . “Our investment in design here has generated a positive experience for our employees and customers.”

Still, the relatively short-term lease renewal signals the reluctance of many large companies to make a long-term commitment to the workspace in the wake of the pandemic. Although the effects of the public health crisis have eased considerably, questions remain about how often employees will use the workspace in the future.

Many downtown businesses signed leases to move to newer or more recently updated buildings during the pandemic to take advantage of market weakness and help compel workers to show up. But an economic downturn this year and soaring construction costs could also deter tenants from building a new office from scratch.

Morningstar’s recommitment to the Block 37 building it has called home since 2008 is working well for Newark, NJ-based PGIM Real Estate, which owns the office building. PGIM was even preparing for Morningstar’s potential departure earlier this year, marketing the company’s space as available to new users after its lease expires at the end of 2023.

Losing a tenant who leases more than half of the 472,000 square foot building could have been a devastating blow for PGIM, which paid $182 million for the building in 2011. It would also have been the first major test of ownership of 16 floors. never had to backfill a large office block.

“We view this (renewal) as a very, very positive sign for a corporate office to recommit to not just staying in Chicago, but maintaining a very large footprint,” said Michael Lirtzman, director of Colliers International. , which oversees leasing in the building. “This is a very positive sign for the future of office space in Chicago.”

Morningstar has grown its workforce significantly since it first moved into 22 W. Washington, though much of its expansion under CEO Kunal Kapoor — who took over from founder Joe Mansueto in the role in 2017 – was made in other markets through business acquisitions. A company spokeswoman said Morningstar has more than 1,600 permanent full-time employees in its Chicago office.

For Brookfield, the lawsuit continues to lease its 650,000 square foot office block in the historic Marshall Field building. After paying more than $30 million for floors 8 through 14 of the full-block property, the developer set out to transform the space’s massive floor plates into workspace. But the project was completed just as the pandemic took hold, making it difficult to find tenants.

Tenants who have moved into or signed leases in the building so far include consumer information firm Numerator, online ticket marketplace headquarters Vivid Seats and candy maker Ferrero, which is set to open a new 45,000 square foot confectionery research center on the eighth and ninth floors. New York-based Industrious also operates a coworking space in the building.

Office space at 24 E. Washington is about 45% leased, according to CoStar. A spokeswoman for the building declined to comment.

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