It’s welcome news for downtown office landlords grappling with near-record-high vacancy and more companies cutting back on space rather than expanding, given the rise of remote work during the COVID-19 pandemic. Inspire11 is also committing to the Loop, which has endured the lion’s share of the losses, with more than 1.3 million square feet of net tenant move-outs over the past two years, according to data from CBRE.
Mehmeti said his five-year-old firm needed more office space to accommodate a workforce that has grown by 50% during the public health crisis to 300 people, with more clients hiring the firm to help them adjust to changing consumer behaviors during the pandemic. Roughly 200 of its employees are based in Chicago today, and Mehmeti expects to add between 150 and 200 more workers locally by the end of 2022.
Yet the firm is also like many others that are embracing remote work and trying to find the right office footprint to meet its needs. While 23,000 square feet is especially small for a firm that could soon have a local headcount close to 400, Mehmeti said he anticipates many of his employees will work remotely roughly half of the week and on-site with clients one day a week. That may lead to overcrowding in its new office some days, “but we were willing to take the bet that on those days, people would go (work) in more general areas of the building,” such as the 17-story property’s amenity spaces, he said.
“We never forced people to go into the office (before COVID) because we thought the model was goofy,” Mehmeti said. “The whole goal was to drive camaraderie.”
He estimates his company will surpass $70 million in revenue this year. The firm ranked fourth on Crain’s 2021 list of Chicago’s fastest-growing companies.
After looking at buildings elsewhere downtown, Mehmeti said his company chose pre-built space in the Dearborn building for its proximity to public transportation and the property’s tenant amenity spaces. A more quirky driver: The company, which has “11” in its name as a nod to fictional guitarist Nigel Tufnel’s amplifier with nobs that “go to 11” in the 1984 movie “This is Spinal Tap,” had to be on the 11th floor in a new building, just as it is today at the Wacker Drive tower. “That’s more karma-related,” Mehmeti said.
The Dearborn Street building has stood out in recent years from some of its vintage Loop office peers as proof that companies will lease space in older properties that have been updated with modern tenant perks. Marketing software company ActiveCampaign, logistics provider FourKites, the Chicago Fire FC Major League Soccer franchise and artificial intelligence company Narrative Science were among the companies that inked leases in the building in recent years.
The building today is nearly 90% leased, according to real estate information company CoStar Group, though it also has large sublease offerings available, including one from sports betting company Fubo Gaming, which just subleased space from Narrative Science last year.
Inspire11 is leaving behind a Wacker Drive building that is 80% leased, in line with the average for downtown office buildings at the end of 2021, according to CoStar. The 41-story building lost one of its largest tenants before the pandemic in insurance company Kemper, which moved to the Aon Center.
New York-based real estate firm AmTrust owns 1 E. Wacker and last year announced plans to renovate it as part of a larger $100 million investment in most of its downtown Chicago portfolio.
David Knight of Advocate Commercial Real Estate Advisors represented Inspire11 in negotiating the lease. Jack O’Brien and Caroline Colnon of Chicago-based Telos Group oversee leasing at 1 N. Dearborn St.