United Airlines Abandoning A Portion Of Its Willis Tower HQ
After losing nearly $2B in Q4, United Airlines has decided to vacate 150K SF it occupies on three floors at its Willis Tower headquarters in Chicago. The airline, the nation’s second-largest by fleet size, signed a lease in 2019 for 850K SF spread across 17 floors.
The move was first reported Wednesday morning by Crain’s Chicago Business.
It’s the latest blow to an office market still reeling from the effects of COVID-19, which has transformed Chicago’s core into a ghost town. Officials from Beam Suntory, a global liquor firm that owns brands like Jim Beam and Maker’s Mark whiskeys, announced Tuesday it would move its headquarters from Chicago’s Merchandise Mart to Midtown Manhattan, although the majority of employees will remain in the Mart. And Chicago Tribune officials said last week they would leave 137K SF in Sterling Bay’s Prudential Plaza for space in the newspaper’s River North printing plant.
United Airlines reported a net loss of $1.9B in Q4, according to an earnings statement released on Jan. 20. That brought its total losses for the year to $7.1B. The company eliminated more than 2,500 office jobs over the course of the pandemic, many of those employees worked in Willis.
"Due to the unprecedented impact the COVID-19 pandemic has had on our industry, United continues to find new ways to become more efficient as we continue to navigate through this crisis," United spokeswoman Rachael Rivas said in a statement provided to Crain’s. "As a result of being a smaller airline and a reduction in our workforce, United will be consolidating its operations at its Corporate Support Center at Willis Tower in Chicago by three floors so that we can ensure we are utilizing our space as efficiently as possible."
Downtown Chicago has bled leased office space ever since the pandemic’s onset. In Q4, the overall vacancy rate increased 120 basis points to 15%, the highest level since the Great Recession in 2009, according to Colliers International. The downtown also recorded 1.13M SF of negative net absorption, bringing the 2020 total to 1.28M SF.
The Blackstone Group has placed a big bet on the iconic 110-story Willis Tower. It purchased the building in 2015 for $1.3B and later launched an ongoing renovation expected to cost more than $650M. The update included adding 125K SF of tenant-exclusive amenities; Catalog, a new 300K SF retail, dining and entertainment venue; and a 30K SF outdoor deck and garden.