Financial Crisis Hurting Office Market

(Crain's) -- J. P. Morgan Chase & Co. has terminated a 52,100-square-foot lease of a former Bear Stearns Cos. office in the Central Loop, as Wall Street's woes begin to rattle the downtown Chicago office market.

Five financial services firms that were sold or taken over as a result of the crisis, including Merrill Lynch & Co. and American International Group Inc., lease about 835,000 square feet downtown, according to a third-quarter report by tenant representation firm Studley Inc.

The companies, which also include Lehman Bros. Holdings Inc. and Wachovia Corp., account for just 1.4% of top-quality, so-called Class A space in the downtown office market. Yet that could be enough to "tip the balance" in tenants' favor, in light of the other challenges facing landlords, such as the wave of new buildings, Studley says.

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