Goldman Sachs Renews, Cuts Space

December 2010

Goldman Sachs Group Inc. renewed its lease at One Financial Place in the South Loop but is slashing its space in the tower in half.  Sources say Goldman re-upped for 81,000 square feet at the building, 440 S. LaSalle St., in one of the larger office deals of 2010.

The New York investment bank’s existing lease for about 163,000 square feet was to expire in April 2011, according to a 2008 Securities and Exchange Commission filing by One Financial’s owner, Behringer Harvard REIT I Inc.  The lease provided Goldman two five-year renewal options, according to the filing. The length of Goldman’s extension couldn’t be determined.  A Goldman spokeswoman wouldn’t comment on the lease but says the firm’s local staff isn’t being cut.  “This is not about headcount,” she says. “We’re not downsizing our business.”  She declines to say what operations Goldman has at One Financial. The firm’s primary Chicago office is at Hyatt Center, 71 S. Wacker Drive in the West Loop.

A Jones Lang LaSalle Inc. executive who oversees leasing at One Financial Place didn’t return a call Tuesday, and a spokeswoman with suburban Dallas-based Behringer Harvard declines to comment.
An executive with the Chicago office of Studley Inc., which represented Goldman, declines to comment.
Goldman’s main business at One Financial Place is a clearinghouse for electronic trading firms, says downtown office broker Craig Braham, whose firm Advocate Commercial Real Estate Advisors has several trading and financial services clients. Mr. Braham says that business has suffered in recent years as its main client base — small, mom-and-pop-type traders — has hit rough patches while improved technology has enabled them and bigger rivals to open offices farther away from the trading floors.  “They probably don’t need as much space as they did 10 years ago,” he says.

The space reduction is a blow to Behringer Harvard, which said in the 2008 filing that Goldman’s annual rent was $3.8 million — highest among its major tenants. But keeping a tenant like Goldman also can be viewed as a win and could aid efforts to refinance $413.6 million in loans that come due next November on the 40-story, 1-million-square-foot tower along with the 10 & 120 S. Riverside Plaza complex.
Behringer Harvard recently said in an SEC filing that it’s negotiating to restructure a $95-million loan that comes due in February on 200 S. Wacker Drive, the REIT’s other holding here, and that the firm doesn’t believe the 759,000-square-foot tower is now worth its loan amount.

Source:  Crain's Chicago