Consulting giant McKinsey & Co. is in talks to move its Chicago office to the 60-story Salesforce Tower along the Chicago River, in the latest example of blue-chip tenants in major cities scooping up rare blocks of available space in trophy towers.
Nearly a century after the firm was created in Chicago, McKinsey is in advanced negotiations to sublease three floors, or about 72,000 square feet, from the namesake tenant, according to people familiar with the situation.
The deal is not completed yet and could still fall apart during a challenging office leasing market.
Earlier this month, Bloomberg reported that McKinsey is looking to reduce costs through measures that could include thousands of job cuts.
The consultant has a deep history in Chicago. It was founded in 1926 by University of Chicago professor James McKinsey.
McKinsey is now a tenant in Blue Cross Blue Shield Tower at 300 E. Randolph St. across from Millennium Park. Its lease for 106,746 square feet there expires in December 2027, according to CoStar data.
Salesforce and McKinsey did not respond to requests for comment from CoStar News.
If McKinsey does complete the Salesforce Tower sublease, it would remove the final three floors of space that the namesake tenant first made available in early 2023.
Previous single-floor deals were made with commercial real estate brokerage Newmark and Chicago private-equity firm Wind Point Partners.
Although office demand remains historically low, spaces in brand-new, well-located towers have remained in high demand, with virtually no such space now available in Chicago.
That demand has led to high valuations for trophy towers even as older-generation properties have sold for fractions of their pre-pandemic values.
The owners of Salesforce Tower, who kicked off the project in the early weeks of COVID-19, recently landed a $610 million loan. The refinancing of the tower, which was completed in 2023, created a long-term valuation of $888 million, according to a presale report that early this year went out to prospective bondholders on the commercial mortgage-backed securities loan offering.
Salesforce’s commitment to lease 500,000 square feet in the more than 1.2 million-square-foot tower allowed a development team including the Kennedy family and Hines to break ground early in the pandemic. The developers later secured law firm Kirkland & Ellis to lease most of the remaining space.
The project was led by development giant Hines and Chris Kennedy, the son of Robert F. Kennedy and nephew of President John F. Kennedy. Chris Kennedy’s grandfather, political dynasty patriarch Joseph Kennedy, bought the Wolf Point site in 1945.
In previous construction phases, two apartment towers were constructed on the riverfront site.
For the record
McKinsey is represented by JLL broker Bill Rogers. Salesforce is represented by CBRE brokers Brad Serot, Paul Reaumond and Mark Cassata.