Silicon Valley tech firm inks big West Loop lease

Although plenty of companies flock to the Fulton Market District these days, one growing tech firm has left it behind for another emerging downtown spot.

Mountain View, Calif.-based freelancing marketplace Upwork has leased 67,730 square feet at 525 W. Van Buren St., where it moved in earlier this month, the company confirmed.

After tripling its local headcount over the past 18 months to about 100 employees today, the company ran out of room at its 12,000-square-foot office at 224 N. Desplaines St., a couple of blocks east of Fulton Market.

Now it has joined the crowd of tech companies in the city expanding their office footprints as Chicago continues to build up its reputation as a deep tech talent pool.

"We’re continuing to hire talent across all functions and are thrilled to grow our team with local Chicago hires," said Upwork Senior Vice President of Sales Eric Gilpin in a statement. "Chicago has proven to be an incredible market for diverse talent from prestigious universities and leading companies and is one of the fastest growing tech innovation hubs outside the Bay Area."

Tech firms like Upwork have led the demand for downtown office space, hiring local employees who are generally more affordable and easier to retain than their counterparts in coastal cities. As of November, tech firms in Chicago employ more than 143,000 people across more than 4,000 companies, according to Mayor Rahm Emanuel's office.

That tech demand has kept a lot of downtown office landlords happy and has helped keep downtown office vacancy in check as new skyscrapers have debuted over the past couple of years.

Upwork ran its first Chicago office in early 2016 out of a WeWork co-working location near Grant Park before moving to the Desplaines Street office in mid-2017. The company went public in October, raising $187 million in an IPO, and today it has more than 400 employees total.

Upwork's online marketplace connects employers with freelance workers in various industries, with Upwork taking a cut of the payment when a worker is hired. The company reported revenue of $186 million year-to-date through September 2018, according to its most recent quarterly report.

At its new Chicago home on the 11th floor at 525 W. Van Buren, Upwork adds to a list of companies gravitating to a pocket of the West Loop near Union Station.

The building is across the street from the Old Main Post Office, where Walgreens Boots Alliance, Ferrara Candy and the Chicago Metropolitan Agency for Planning will soon move in as New York-based developer 601W completes a transformation of the long-vacant property into a modern office building. And immediately north of Upwork's new home, Chicago developer Riverside Investment & Development plans to build a 1.5 million-square-foot office skyscraper anchored by BMO Harris Bank, which will consolidate its downtown offices there.

Fulton Market didn't have the immediately available space for Upwork to grow, according to Gilpin, which sent the company looking elsewhere.

"Union Station is one of the fastest-growing areas in the West Loop and a key transportation hub," Gilpin's statement said. "Our team is excited to be part of its revitalization and tech expansion, while remaining centrally adjacent to the river and central loop."

Upwork's new lease notches a win for Boston-based AEW Capital Management, which paid $135 million for the 16-story building in 2015 when it was about 20 percent vacant. After a handful of completed deals over the past year, the building is now just 9 percent vacant, according to real estate information company CoStar Group.

Upwork said in a statement that it has sub-leased its old offices on Desplaines Street to two tenants with a lease that runs through October 2020. That building is owned by Irvine, Calif.-based Shopoff Realty Investments.

Jones Lang LaSalle brokers Melissa Rubenstein and Gary Kostecki represented AEW on the Upwork deal, and Allen Rogoway, Janna Luce and Eric Nolin of real estate brokerage Cresa represented Upwork.

Click here to read the original article on Crain's Chicago Business.