Co-working firm Level Office bought three floors of a Wacker Drive building where it already has offices, expanding its space in Chicago to more than 250,000 square feet.
Chicago-based Level Office paid $4.5 million on Jan. 19 for the sixth, eighth and ninth floors of the 18-story tower at 211 W. Wacker Drive, founder Bill Bennett said. The deal increases its space in the vintage building by 25,000 square feet, to 43,000 square feet total.
“We’ve been seeing that building fill up, and we believe there is still demand,” Bennett said. “We’ve seen a big market in Chicago from 10- to 50-person companies.”
The deal is Level Office’s third addition of space in its hometown since the spring, following the acquisition of a five-story River North building at 420 W. Huron St. and the purchase of six floors in a West Loop building at 318 W. Adams St.
Chicago and other large cities have seen an explosion of co-working space, where companies or individuals pay for short-term memberships. Players in Chicago range from New York-based industry giant WeWork to Virgin Hotels Chicago, which opened a 2,600-square-foot space in the Loop hotel.
Level Office is the low-cost alternative in Chicago and several other cities where it has offices, including Indianapolis, Seattle, Houston, Dallas and suburban Washington, D.C., Bennett said. The company controls costs by opportunistically buying its own space, rather than signing long-term leases with other landlords, Bennett said.
The company owns more than 900,000 square feet throughout the country, including more than 250,000 in Chicago, he said.
The proliferation of local and national players could lead to a shakeout in 2017 or 2018 in Chicago, where some providers could exit the area or go bankrupt, Bennett said.
“Globally, we’re the low-cost provider,” he said. “I think that means we’ll have staying power, but time will tell.”
Level Office bought the Wacker Drive floors from Chicago-based Ameritus Real Estate Investment Management, which has been selling portions of the building as office condominiums. Ameritus has sold 94.5 percent of the building’s space, said Ameritus partner Jeb Scherb.