Tribune Publishing in talks to leave Prudential Plaza offices
CHICAGO — The Chicago Tribune’s offices could be on the move for the second time in less than three years, as the newspaper’s parent company seeks an exit from Prudential Plaza amid the coronavirus pandemic.
Tribune Publishing is in talks with Prudential Plaza owner Sterling Bay for a buyout of its approximately 137,000-square-foot lease in the office complex overlooking Millennium Park, according to real estate sources.
Sterling Bay and Tribune Publishing’s brokers from Jones Lang LaSalle have begun informally marketing the entire space to potential tenants in anticipation of the company’s exit, according to sources.
The newspaper company, whose other titles include the Baltimore Sun and New York Daily News, hasn’t made rent payments at most of the properties it leases since March, according to a regulatory filing.
It’s unclear where the Chicago Tribune’s newsroom and offices, as well as the corporate parent’s headquarters, would relocate.
The Freedom Center printing facility along the Chicago River has some office space, but real estate experts are unsure the building is large or modern enough to accommodate even a scaled-down Tribune office.
Tribune Publishing spokesman Max Reinsdorf and Sterling Bay CEO Andy Gloor declined to comment.
The negotiations come a little more than two years after the Tribune moved from Tribune Tower to One Prudential Plaza in June 2018. That ended a 93-year run in the landmark tower on North Michigan Avenue, which was sold in 2016 and is being converted into condominiums.
Tribune Publishing is among many companies taking steps to reduce real estate and other costs during a pandemic that has left many office employees working from home since March.
Measures companies are taking include stopping rent payments, seeking rent relief and offering space for sublease. Uber and Groupon are among those with sublease space on the market, and a wave of additional sublease offerings is expected to flood the market in the coming months.
Before the pandemic, Tribune Publishing’s office brokers were circulating marketing materials offering the top two floors of One Prudential Plaza for sublease. The company moved out of that 21,952-square-foot space on floors 40 and 41, which had served as the corporate headquarters.
The Tribune newsroom and other functions occupy the second, third and fourth floors, which have remained open but lightly used during the pandemic. Those floors have not been formally placed on the market for lease.
Because of COVID-19, Tribune Publishing is seeking various forms of rent relief at its properties, including restructuring leases, delaying rent payments and terminating leases, according to a regulatory filing made Wednesday with its quarterly results.
“The company has been notified by a number of lessors that it is in default and certain of such lessors have formally filed complaints in their local jurisdictions,” the filing said. “The company is negotiating with such lessors on terms of the rent relief and the lessors’ remedies and is responding timely to all filed complaints.”
As of June 28, Tribune Publishing “has secured rent abatements and deferrals for approximately 11 leases,” the filing said. Another 13 leases were modified and four were terminated during the second quarter, the company said. Since the end of the second quarter, another four leases have been terminated.
In its Wednesday earnings call with analysts, Tribune Publishing CEO Terry Jimenez referenced savings in occupancy costs, “where we’ve reduced our rent and related expenditures, especially relevant as a result of not working out of our own offices.”
Jimenez added, “However, in order to sustain ourselves for the long term, we’ve positioned the company as a smaller, more agile operation. To do so, we have and are taking steps to reduce our primary expense drivers by focusing on our fixed cost infrastructure, reducing our real estate footprint, and reducing compensation expense.”
The newspaper company’s largest shareholder, Alden Global Capital, has a history of slashing costs.
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