The southwest corner of the Loop, long an unproven spot for office users, is suddenly on fire: With more than $2 billion pouring into redevelopment projects at Willis Tower, the Old Main Post Office and Union Station, companies over the past seven months have inked more than 1 million square feet of new leases in mostly vacant and planned buildings near the South Branch of the Chicago River. And the area between the city’s tallest skyscraper and the Jane Byrne Interchange is still gaining traction, as Uber Technologies and Federal Home Loan Bank of Chicago are eyeing what could be another 575,000 square feet of offices at the Post Office, which is being turned into a modern office building.

The flock of new tenants and hefty investments are anchoring a breakout moment in a pocket of downtown that has labored to establish itself as a corporate destination while companies have gone elsewhere in the Loop, West Loop, River North and the Fulton Market District.

But the area has finally shed its no-man’s-land reputation, Klein says. With big, amenity-laden developments coming, “everything in that area gets a little more attractive.”

Developer Sterling Bay first turned heads in the area in 2012 when it converted a four-story concrete loft building at 400 S. Jefferson St. into Tyson Foods’ new headquarters. But since then, the blocks between the river’s South Branch and the Kennedy Expressway have largely missed out on the parade of suburban companies uprooting for the city.

A new 20-story office building at 625 W. Adams St. symbolized that struggle, as developers White Oak Realty Partners, CA Office and Vanderbilt Partners finished it early last year without a tenant lined up—even amid rampant demand for downtown office space. Finally, after Walgreens Boots Alliance helped validate the nearby Post Office’s long-awaited redevelopment with a 200,000-square-foot lease, the momentum began. The Adams Street developers reached a 300,000-square-foot deal with technology products company CDW to move its downtown office there from 120 S. Riverside Plaza a few blocks away; it has already started to backfill that space.

OTHER DEALS

Another tenant-famished office building, at 550 W. Jackson Blvd., which 601W is updating with a $12.5 million renovation, has inked deals in recent months totaling more than 140,000 square feet with four companies, some of which are moving from coveted Wacker Drive addresses.

Southwest Loop landlords are gaining leverage, too. Asking rents at the Post Office today are $7 to $8 more expensive per square foot than they were when the building’s leasing team formally began marketing it in January 2018, tenant reps say.

Even for a behemoth like the Post Office that has a wide range of amenities built in, the surrounding projects have been a key recruitment tool, says Dan Heckman, leasing director at Telos Group, whose marketing presentation for the property highlights more than 430,000 square feet of retail, food and beverage space that will be up and running within two blocks of the behemoth in the next few years.

“I think it’s important to highlight that this is not just a one-off building in this area,” he says. “It shows you how important it is to have other people that are buying into this location as well.”

Part of the location’s new popularity comes, somewhat counterintuitively, from the growing strength of the suburbs rather than the city, says CA Office and Vanderbilt Partners Principal John Dempsey. Millennials that have waited longer to get married, have kids and leave the city for the suburbs than the previous generation will soon place a higher premium on the southwest Loop’s proximity to Metra hubs and highways, he says.

“You’re seeing this kind of aha moment where people are saying, ‘Those train lines are pretty important—why don’t we aggregate around them?’ ” says Dempsey, whose decades of leasing experience include longtime assignments at the Merchandise Mart and Willis Tower. “One thing they can see for sure is this southwest quadrant is best-served for accessibility. It’s the most accessible for the majority, not a select few.”

A bellwether for how hot the southwest Loop hand can get is a couple of blocks south of the Post Office at 801 S. Canal St., where Northern Trust is about to vacate a 575,000-square-foot office building as it shuffles its downtown offices. The six-story property’s longtime owners are now trying to sell the building—jokingly referred to as “Canalcatraz” among some bank employees for its isolation relative to the Loop—hoping to find a buyer to renovate it and re-lease it to multiple tenants.