Co-working giant Industrious is opening its second location on LaSalle Street, betting on demand for flexible workspace in a building one block south of Google’s future Loop home.
The New York-based company confirmed it has inked a deal to occupy nearly 31,000 square feet on two floors at 33 N. LaSalle St., a 38-story building owned by Chicago developer John Buck. Industrious will move into co-working space previously operated by CommonGrounds Workplace, which built out the shared offices in the months leading up to the COVID-19 pandemic and ultimately vacated the location in 2023.
The deal is a bright spot for a Loop office market flush with older, outmoded buildings that have fallen out of favor in recent years among companies trying to encourage in-person work. The central Loop submarket has lost close to 3 million square feet of tenants since 2020, according to data from brokerage CBRE, leading the broader trend of space-shedding among companies embracing new work patterns.
Industrious, which already operates a location at 231 S. LaSalle St. that opened in 2019, is wagering better days ahead for Chicago’s urban core and demand for shared workspace that can be leased by month.
“With its historic art deco details and thoughtfully updated amenities, 33 N. LaSalle captures the spirit of working in the heart of Chicago,” an Industrious spokeswoman said in a statement. “For our members who choose to work at Industrious, it offers them easy access to rapid transit, restaurants, and shops — everything that brings daily life into their workday.”
The new location is slated to open in late January and will add to the six co-working spaces Industrious operates today in Chicago, according to the company. Industrious also has a location in Evanston.
One big tailwind behind the company’s LaSalle Street investment is that Google is poised to move its Midwest headquarters to the redeveloped James R. Thompson Center just a block away from 33 N. LaSalle. That pending move stands to be an inflection point in downtown’s recovery from the public health crisis, reaffirming the Loop as the gravitational center of downtown business and likely creating a magnet for companies and retailers eager to sidle up to the tech giant.
The expected Google lift is partly why John Buck and its lender at 33 N. LaSalle restructured terms of a $58.4 million mortgage backed by the building earlier this year to give the developer time to breathe new life into the property. The loan from German lender Aareal Capital had matured in June 2023, according to Cook County property records. But the modification extended the deadline to pay it off, reduced the outstanding principal and freed up more than $24 million for investment in new leasing efforts, Buck officials said earlier this year.
Buck Vice President Caroline Buck McLinden declined to share terms of Industrious’ deal at the 403,000-square-foot building, where it is now the largest tenant. Industrious typically signs management agreements that differ from traditional leases with landlords, many of whom are wary of the risk that comes from having a co-working tenant with short-term commitment users. Profits under a management agreement are normally shared by the building owner and co-working operator.
“We’re incredibly excited to see this historic space come alive with a best-in-class shared space operator,” John Buck Vice President Caroline Buck McLinden said in a statement on the new Industrious deal. “This is a major step forward not only for the energy of the building, but for LaSalle Street as a whole.”
Industrious will have exterior signage on the building, according to Chicago-based Madison Rose, which oversees office leasing at the property.
The 96-year-old tower is close to 60% leased today, according to Madison Rose. That’s up from about 40% when Buck and Aareal announced the loan restructuring, but still down from 75% in 2022 when Buck hired brokers to try to sell the building ahead of the loan maturity.
The property was about 60% leased in 2014 when a Buck venture purchased it out of distress for $32.8 million.
CBRE Executive Vice President Mark Cassata negotiated the 33 N. LaSalle lease agreement on behalf of Industrious. Madison Rose’s Adam Pines and Jack Kennedy represented John Buck.