High-End Movers and the Telling Sublease Trend
One of Chicago’s fastest-growing companies, Highdive, recently announced a significant expansion, moving into a 26,000-square-foot office in the iconic Merchandise Mart. While the move underscores growth in high-end office space in prime locations, the fact that this deal came as a sublease tells a deeper story about the state of Chicagoland’s office market.
Highdive’s Move: A Bright Spot Amid Market Uncertainty
Highdive, the creative agency behind several acclaimed Super Bowl ads, is doubling its office footprint. The company, which grew its workforce by 50% over the past two years to 122 employees, is leaving its 12,000-square-foot office at 320 W. Ohio St. for a larger space in the Merchandise Mart. CEO Megan Lally noted that the move was driven by Highdive’s need for a larger, amenity-rich space to support its hybrid work model and growing headcount.
The new office offers features like a semi-private rooftop terrace and a suite of modern amenities, making it an attractive option for encouraging in-person collaboration. Highdive’s decision to expand signals confidence in the future of office work, even as hybrid and remote models remain dominant.
The Sublease Factor: A Symptom of a Struggling Market
While Highdive’s move is good news for downtown landlords, the deal itself reflects the challenges facing Chicagoland’s office market. The space Highdive is subleasing was previously occupied by Seismic, a software company that closed its Chicago office earlier this year. Seismic itself had subleased the space from Motorola Mobility, highlighting a chain of tenants stepping away from long-term commitments.
This sublease trend is emblematic of a broader issue. Downtown Chicago’s office vacancy rate has reached record highs, driven by the pandemic’s remote work revolution. Despite a 15% drop in sublease listings this year, there is still 6.8 million square feet of sublease space available—more than double the pre-pandemic levels of 3.3 million square feet.
The Bigger Picture for Chicagoland Offices
Highdive’s story is part of a larger trend. Even as certain high-profile companies expand, the broader Chicagoland office market is struggling to recover. Rising vacancies have fueled a wave of foreclosures, distress, and consolidation among landlords, particularly in the urban core.
The Merchandise Mart itself has become a hotspot for subleases, with notable deals including GrubHub’s move into PayPal’s former space and Kin Insurance taking over offices from Avant. These transactions reflect the growing flexibility companies seek in their real estate strategies, prioritizing adaptability over long-term commitments.
What’s Next for Chicago’s Office Market?
As companies like Highdive demonstrate, there is still demand for office space, especially in buildings with strong amenities and central locations. However, the prevalence of subleases highlights the uncertainty many businesses feel about committing to traditional leases. The future of Chicago’s office market hinges on how landlords adapt to these trends, offering flexible terms and enhanced workspaces to meet evolving tenant needs.
For businesses and investors navigating these challenges, partnering with commercial real estate agents in Chicago who understand the complexities of the market is essential. Whether you’re seeking to lease, sublease, or invest, expert guidance can help you find value in an unpredictable landscape.
Nonetheless, Chicago remains a hub of opportunity, but the story behind the sublease market is a reminder of the ongoing transformation shaping the city’s commercial real estate market.
