UBS renews for almost 400,000 at 1 N. Wacker
UBS Tower. Photo from CoStar Group Inc.
(Crain's) — UBS A.G. signed a renewal 1 N. Wacker Drive that cuts its space by two floors to just under 393,000 square feet.
Meanwhile, a Northwestern Mutual office is expanding in the building by about a fourth, to just over 50,000 square feet in the 1.34-million-square-foot skyscraper.
UBS signed a 10-year deal that begins in 2012, when its current lease expires, says Tom D'Arcy, senior vice-president in the Chicago office of Hines Interests L.P., which manages the 50-story UBS Tower for a Hines fund that bought it in early 2008.
The deal, likely to be one of the largest downtown transactions of the year, is a sign that the effects on the downtown office market of the late 2008 credit crisis have eased. Like U.S. banks that got help from the federal government, Switzerland provided a rescue package for UBS.
Such government help has allowed banks and other companies "to stabilize their operations and continue to make commitments" on real estate and operations, says Melissa Copley, president of Chicago tenant rep firm Copley Advisors LLC, who wasn't involved in either lease deal.
Last month the Zurich, Switzerland-based company reported a profit of $1.1 billion in the fourth quarter after four straight quarters of losses. However, clients withdrew $52.4 billion from the firm, which was twice as much as expected and "massively disappointing," analysts at investment bank Zuercher Kantonalbank said, according to an Associated Press story. UBS says it is taking steps to slow the withdrawals.
Under the new lease at 1 N. Wacker, UBS will occupy the 25th through 35th floors and the 37th and 38th floors, says Mr. D'Arcy, who declines to disclose financial terms. The firm is giving back one floor this summer and another when the renewal starts, he says.
UBS currently leases about 452,000 square feet at 1 N. Wacker. UBS' renewal "provides flexibility over time to reduce our space to about" 350,000 square feet, a New York-based spokesman for UBS says in an e-mail. The company remains the largest tenant in the 1.34 million-square-foot building.
Jack Keenan of Jones Lang LaSalle Inc., which represented UBS, declined to specify lease terms.
Related story: UBS to stay at namesake Wacker tower
UBS also is exiting about 56,000 square feet at 181 W. Madison St. and moving those operations to UBS Tower. The investment bank exercised an option to terminate its lease at 181 W. Madison, according to the UBS spokesman. The space is being marketed as available Jan. 1, according to a spokesman for the building owner, the asset management unit of General Electric Co.
Meanwhile, an office of Milwaukee-based Northwestern Mutual, called the McTigue Financial Group, signed a direct lease for the full 46th and 47th floors, totaling 50,342 square feet, says Cal Wessman, an executive vice-president with CB Richard Ellis who represents the firm.
Northwestern currently has just under 39,000 square feet — all of the 46th floor and parts of 41st and 47th, Mr. Wessman says. Most of that space is subleased from hedge fund Citadel Investment Group LLC, which never moved into the building. The direct deal begins when the sublease ends in 2012, Mr. Wessman says.
He declines to disclose terms of the lease but, says Northwestern Mutual got a "significant" allowance to build out its space.
The lease is for 15 years, says Mr. D'Arcy, who declines to disclose financial terms.
Two law firms that sublease from Citadel also signed deals recently to stay at 1 N. Wacker, which is 98% leased.
