United Airlines is giving up about 150,000 square feet of space in its Willis Tower headquarters, becoming the latest downtown Chicago office tenant to shrink its footprint in response to the COVID-19 pandemic.
Chicago-based United on Wednesday said it would give back three floors of its 850,000-square-foot space in the city’s tallest skyscraper, effective next January.
The airline is one of the largest tenants leasing office space in downtown Chicago, and the company less than two years ago extended its lease in the 110-story tower until 2033. The lease duration is not affected by the reduction in space, according United.
“Due to the unprecedented impact the COVID-19 pandemic has had on our industry, United continues to find new ways to become more efficient as we continue to navigate through this crisis,” United spokeswoman Rachael Rivas said in a statement. “As a result of being a smaller airline and a reduction in our workforce, United will be consolidating its operations at its Corporate Support Center at Willis Tower in Chicago by three floors so that we can ensure we are utilizing our space as efficiently as possible.”
United’s headquarters downsizing comes after months of cost-cutting measures during a year where the airline lost $7.1 billion.
In October, United said it had cut 2,700 corporate jobs during the pandemic, which CEO Scott Kirby said weren’t likely to return.
At Willis Tower, its head count fell from 5,000 to about 3,500, Rivas said. The downsizing will leave United with 14 floors, she said.
Earlier this week, United said it has offered some employees a new round of voluntary separation programs. The airline declined to comment on details of the programs.
Frontline employees have been affected, too. About 13,000 have been recalled from furloughs, though the airline has warned the reprieve could be temporary, and another 9,000 took part in programs designed to reduce the number of furloughs, including voluntary leave and early retirement programs.
United’s decision to giver back space adds to the challenges faced by downtown Chicago, which some experts believe could take years to fully bounce back from the economic devastation brought on the by public health crisis. Downtown office buildings have been largely unused since March, which negatively affects other businesses such as restaurants, bars and shops.
More than 2 million square feet of sublease space has been added to the downtown Chicago office market, creating an all-time high of leased but unwanted space. The market is bracing for more vacant space as companies continue to assess their real estate needs post-pandemic.
Employers that have sought to shed large blocks of space during the pandemic include Groupon, Uber and Chicago Tribune parent company Tribune Publishing, which is moving the newspaper out of Prudential Plaza to the Freedom Center printing facility north of the Loop.
Crain’s Chicago Business first reported United’s plans.
The former Sears Tower is owned by the office arm of private-equity giant Blackstone Group, which acquired the Wacker Drive tower for a Chicago-record $1.3 billion in 2015. The skyscraper, once the world’s tallest, is in the late stages of a $500 million renovation that adds 300,000 square feet of retail and entertainment space to the base of the building.
Before the pandemic, there were 15,000 office workers per day in the 1,451-foot-tall skyscraper.
United has been a tenant in Willis Tower since 2008, and the company moved its headquarters there from a separate downtown office in 2013. In addition to corporate offices, United has a large operations center in the tower.
Before extending its lease, United strongly considered anchoring one of several megadevelopments planned along the Chicago River. When it announced its lease extension at Willis Tower just under two years ago, the company said it planned to invest hundreds of millions of dollars upgrading the space.
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