Law firm bucks trend, boosts office space

October 2015

By Ryan Ori

At a time when many law firms are shrinking their space, Clark Hill is nearly doubling the size of its Chicago office with a new lease at Prudential Plaza.

Clark Hill said it leased 71,813 square feet in the 41-story tower at 130 E. Randolph St., the shorter of two towers in the 2.2 million-square-foot office complex overlooking Millennium Park.

The 15-year deal nearly doubles the 36,848 square feet the firm has in the Crain Communications Building across the street at 150 N. Michigan Ave.

The move stands out among law firms, where the trend in recent years has been a downsizingof the industry's once-spacious offices in an effort to slash rent costs. In one such recent move, Chicago-based Mayer Brown cut about one-quarter of its space at the Hyatt Center in the West Loop.

Clark Hill, whose largest office is in Detroit, is adding space because it now has 58 lawyers in Chicago, up from just 14 when the firm moved to larger space within 150 N. Michigan in 2009,said Ray Koenig, managing member of the Chicago office and a member of the firm's executive committee.

'WE EXPECT OUR GROWTH TO CONTINUE'

At One Prudential Plaza, there will be room for about 120 lawyer offices, he said.

“We would expect to need that many based on our firm's growth and our growth in Chicago,” Koenig said. “We've outgrown our space, and we expect our growth to continue.”

New hires will push the total to more than 60 Chicago lawyers in January, Koenig said. Clark Hill, which opened a Chicago office in 2007 and expanded its space in 2009, has 95 total employees here, he said.

The firm is not in talks for a large merger or acquisition but plans to continue hiring individual lawyers or teams of lawyers, Koenig said. In recent years the firm known most for litigation has added or expanded practices such as real estate, employment, health care, intellectual property and tax litigation, he said.

Clark Hill plans to start moving to the larger office in September and will complete the move by the end of 2016, Koenig said.

All lawyers will have the same size office, 11 by 15 feet, and some offices will be on the interior away from the window line, he said. The lease is near the top of the building, on the 37th, 38th and 39th floors, offering expansive views of the park and Lake Michigan.

Clark Hill was represented by Craig Braham of Chicago-based Advocate Real Estate Advisors and Todd Lippman and Bill Sheehy of Los Angeles-based CBRE. The owner of Prudential Plaza, a venture of New York-based 601W Cos. and Nanuet, N.Y.-based Berkley Properties, was represented by William Truszkowski, Matt Pistorio and Caroline Colnan of Chicago-based Telos Group.

VALUE JUMP

Pru Plaza has undergone major renovations since the owners took control of the previously distressed property in 2013, including an overhaul of the lobby and additions of a fitness center and a large roof deck for tenants.

The owners refinanced Prudential Plaza in July with a $415 million loan, a commercial mortgage-backed securities deal that demonstrates how much the property's value has soared since it was appraised at $317 million in 2012. At the time of the new loan in June, the property was appraised at $642 million, according to a Bloomberg loan report.

Clark Hill's need for a larger space coincided with a tightening supply in downtown Chicago. During the third quarter, overall downtown vacancy fell below 13 percent for the first time since 2008, according to CBRE.

At one point, it was unclear whether the high-rise floors at One Prudential would be available as the landlord discussed a potential larger deal with Oak Brook-based fast-food giant McDonald's.

“We decided to move forward with (Prudential Plaza) despite the potential of being bumped for a larger tenant,” Koenig said.

In September, Crain's reported that McDonald's had walked away from the deal, apparently putting its downtown aspirations on hold.

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