FHLB Downsizes to 63,000 SF at Aon Center

"The thing that made it unique was that we combined the economics of the sublease with the economics of what the deal would be with the building and we were able to work out a deal that worked on a lot of fronts," says Stephen Smith, managing director with Jones Lang LaSalle, which leases Aon Center for building owner Piedmont Office Realty Trust Inc. "The floors, the space, the amenities, the quality, the location and the look of the building all made it work."

Through 2013, the bank will sublease the space from Aon Corp., which leases 500,000 square feet in floors three through 20 of the 82-story building. For another 11 years after that, FHLB Chicago will lease directly from Piedmont. Asking lease rates in the building are around $20 per square foot, net, which is close to what the bank will be paying for its space, Smith says.

"The Aon Center is in good condition so it didn't require them to use as much on a tenant improvement allowance," Smith says. "This is a step up for them in the quality of their building. Economically it works, but the bottom line was that the space they were in didn't work as well for them." Mike Curran, SVP with Jones Lang LaSalle, worked with Smith on the deal, while the bank was represented by Joseph Learner, executive vice president with Studley. Learner could not be reached to comment on the lease.

Aon Corp., which has been in the building for nearly a decade, is not currently looking to sublease any of the rest of its space there, according to Smith. The company was represented by Mark Gunderson, of Jones Lang LaSalle, in the sublease.

The Aon Center is currently about 90% occupied - more so than other buildings in the East Loop submarket, which Smith says has an 87% occupancy rate overall. "It's actually not that bad," Smith tells GlobeSt.com. "You can feel at times that clearly there's a slowdown in new activity, but there hasn't been a really huge fall out, like there has been in New York City and even suburban Chicago. Downtown vacancy is at 12%, which is significantly better than what's going on in the suburbs, but the level of activity and absorption is down from what we saw a year or two ago."