Sunday Feb 05, 2023

Caterpillar lists Deerfield HQ for sublease – Crain’s Chicago Business


The listing comes two months after the construction equipment giant announced its executive suite would decamp from Deerfield for Irving, Texas, and that its local employees would make the move in phases. The company said in June that relocation would begin this year.

The space gives companies in the market for workspace another option, padding the available office space in the suburbs, which is already at a record high. More than two years of companies shrinking their office footprints amid the rise of remote work has fueled a run of sublease offerings, pushed up the suburban office vacancy rate and given companies plenty of leverage as they’ve sought new leases.

Caterpillar’s space—which was previously Beam Suntory’s headquarters before Caterpillar moved there from Peoria in 2018—is among the largest sublease offerings in the suburbs. To the west in Rolling Meadows, Capital One has been marketing its entire 164,709-square-foot office at 3800 Golf Road to sublease users since late 2020.

There are now 3.6 million square feet of offices available for sublease throughout the Chicago suburbs, up from about 1.4 million square feet at the beginning of 2020, according to data from Jones Lang LaSalle.

The amount of available space has caused headaches for landlords, but recent leasing activity has picked up, including for move-in-ready sublease spaces. TreeHouse Foods recently found a taker for 43,000 square feet it had been marketing for sublease at the Commerce Plaza office complex in Oak Brook, and medical technology company Endotronix last quarter signed a new 80,000-square-foot lease at the former Tellabs headquarters in Naperville—more than double its current footprint.

Net absorption in the suburbs, which measures the change in the amount of leased and occupied space compared with the prior period, rose during the second quarter by more than 100,000 square feet, according to JLL. That stopped a streak of nine consecutive quarters in which net absorption was negative, a period during which the suburbs collectively lost a whopping 2.7 million square feet of office tenants.

Caterpillar’s relocation announcement came just eight months after New York-based real estate investor Opal Holdings paid more than $178 million for the leasehold interest in the Corporate 500 office complex, where Caterpillar is the largest tenant. That was one of the priciest suburban Chicago office property sales over the past two decades.

A Caterpillar spokesman did not respond to a request for comment on the sublease offering. Caterpillar said in June that Illinois would continue to be home to the largest concentration of the company’s workforce, with around 17,000 employees statewide, including 12,000 near Peoria.

Cushman & Wakefield brokers Steve Holmberg and Ned Franke are marketing Caterpillar’s Deerfield office for sublease.


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