The 105-story West Loop building did see a net occupancy loss of 40,613 sf last year, bringing the rate down to 93.9%. "None of that was related to 9/11," Steve Budorik, in charge of TrizecHahn's Atlanta and Chicago properties, flatly tells GlobeSt.com. He explains a major factor was a managerial decision not to allow 50,000 sf in the building to hit the sublease market at $6 per sf net, a move the company has made several times.

Meanwhile, Budorik's leasing team already has wrapped up 80% of the 171,325 sf – just 5% of the building's total area – in leases expiring in 2002. He adds negotiations are underway now involving 70% of the 168,105 sf rolling over in 2003.

It also doesn't hurt that Sears Tower's largest tenant is Ernst & Young LLP, which at 352,000 sf accounts for 11% of the building's space. The accounting firm, which has more than 10 years remaining on its lease, is expected to benefit from the Enron-related fallout that reportedly has Andersen officials mulling bankruptcy. Although more employees are moving into Ernst & Young's space, no talks are underway about a lease expansion, Budorik says.

As a result, Budorik told analysts in New York recently he expects Sears Tower will finish the year 95.3% occupied, with the rate increasing to 95.7% in the building's first full year under complete TrizecHahn ownership.

TrizecHahn has leased and managed the building since paying $70 million for a controlling interest in December 1997. In addition, TrizecHahn has loaned $230.3 million to a subsidiary of Sears, Roebuck & Co., which abandoned its namesake tower for new corporate headquarters in northwest suburban Hoffman Estates. The loans are in the form of junior mortgages behind MetLife's position, now approximately $750 million with interest.

Sears conceivably could retain ownership of its former headquarters in a move that would put them back on the hook for debt that with interest, was $363 million at the beginning of the year.

As a result of becoming sole owner of Sears Tower, net operating income from TrizecHahn's five Chicago properties is projected to rise to $120 million in 2003, $84.4 million coming from Sears Tower. Net operating income at Sears Tower was just under $67.8 million last year, according to the company.

Budorik notes the market has seen an increase in discount shoppers after a lull in the fourth quarter. "We didn't get a lot of activity in showing space at Sears Tower from September through December," he says. "We didn't get a lot of activity in our other buildings, either."

TrizecHahn's West Loop holdings include 10 S. Riverside Plaza, 120 S. Riverside Plaza and 550 W. Washington Blvd. It also owns 2 N. LaSalle St. in the Central Loop.