Software Company Signs Loop Lease for Big Chicago Expansion
New York-based Braze is expected to move in early 2022 to the 10th floor of the 16-story building from a small coworking office in the Civic Opera building. The spokesperson did not immediately provide details of the hiring plans, but the size of the office could easily accommodate more than 200 employees. Braze now has 80 employees in the city, a number that has more than doubled since early 2021. The head office is not moving to Chicago.
Braze has signed on for the remainder of Showpad’s lease term in the space, which runs until the first quarter of 2028, according to a source familiar with the deal.
The deal is a mixed blessing for downtown office owners struggling with record vacancy rates and eroding demand as the rise of remote work pushes many businesses to rethink their needs. offices. Braze’s new long-term commitment to physical office space removes much of the available space from downtown inventory and also demonstrates the value businesses continue to place on providing a strong, in-person office culture. The expansion also shows the value tech companies see in setting up their flag in Chicago to tap into the city’s vast pool of tech-savvy young talent.
But the sublet also cancels a major expansion that Showpad completed in mid-2019, when it nearly quadrupled its footprint in the building by adding the 10th floor.
It is not known why Showpad sublet the space, and a spokesperson for the Belgium-based company could not be reached. The company continues to lease approximately 18,000 square feet on the 11th floor of the building.
Subletting deals have skyrocketed at the start of the COVID-19 pandemic and continue to represent a large chunk of the available space downtown. Just over 6 million square feet of office space was available to sublet in the central business district at the end of the third quarter, 86% more than at the start of the pandemic, according to CBRE.
Braze joins a list of companies that have flocked to these ready-to-move-in offices, many of which offer significant discounts for renting straight from a building. Business intelligence firm Tegus, Crain Communications and TikTok are among the companies that signed sublease agreements this year.
Last month, Braze had more than 1,000 employees worldwide, according to a Wall Street Journal report.
“Our continued expansion in Chicago will enable Braze to empower more brands to create contextually relevant and personalized customer experiences that drive growth and retention,” Braze Co-Founder and CEO Bill Magnuson said in a statement. . “In 2022 and beyond, we are extremely pleased to continue to invest in our Chicago employee community and our customers across the region.”
The historic 1 N. State property was gaining traction with tech companies before the pandemic following a major renovation by San Francisco-based owner Shorenstein Properties. Shorenstein bought the property in 2016 and added a lot of tenant amenities, including a rooftop terrace and a two-level fitness center with a climbing wall. Showpad and online review aggregator ReviewTrackers signed up for space in the building in 2019, bringing it to over 80% rented at the time.
But rental activity has been slow in the Central Loop during the pandemic, much like throughout downtown except the Fulton Market District.
Net absorption in downtown offices, which measures the change in the number of leased and occupied spaces from the previous period, decreased by more than 2.3 million square feet in the first nine months of the year, according to CBRE. The losses wiped out all of the positive absorption of 2019 and 2020 combined, an amount that included the record 1.7 million square feet of net moves in 2019.
Robert Sevim and Cullen Hurley of the Chicago Savills brokerage firm represented Braze in the sublet. Brad Serot, Paul Reaumond and Allison Olszta of CBRE represented Showpad.