Groupon pays $9.6M to terminate lease at 600 West Chicago

Groupon is terminating its headquarters lease early, leaving a huge hole for Sterling Bay to fill.

The digital coupon company paid a $9.6 million termination fee that will end its 300,000-square-foot lease at 600 West Chicago Avenue on January 31, 2024, though it was originally supposed to expire in January 2026, Crain’s reported. 

Groupon, whose interim CEO is Dušan Šenkypl, has been struggling for a while now. The company had offered its entire footprint in the 1.6 million-square-foot building for sublease in 2021, and with remote-work trends still intact from the pandemic, Groupon is accepting its fate.

“Teamwork and collaboration still require face time, but new tools and technology also allow for effective and efficient hybrid work,” Groupon’s Emma Coleman told the outlet. “Taking all this into consideration we are always assessing office spaces to ensure we have a set up that meets our requirements and those of our team.”

Once Groupon leaves 600 West Chicago, the building’s occupancy rate will drop from 96 percent leased to less than 80 percent, close to the downtown average for office buildings of about 78 percent.

Complicating Groupon’s real estate demand, the company sued Uptake, one of the tenants that subleased its space, for $1.5 million in January, claiming the technology company hadn’t made a payment since July. 

The lease termination is another blow to Chicago’s beleaguered office market. Rising interest rates, hiked construction costs and a series of company downsizings led to a record high vacancy rate of more than 22 percent in the city last quarter. 

Groupon’s early exit also adds to the issues Sterling Bay is facing at the building. In March, the Andy Gloor-led company was hit with a $515,000 lawsuit from Farehouse Market, a retail tenant and food service operator at 600 West Chicago, due to the lack of business coming from tenants at the building.

Elsewhere in Chicago, Sterling Bay is seeking a refinancing package for its megadevelopment Lincoln Yards, and Gloor blamed outgoing Mayor Lori Lightfoot’s administration for contributing to delays with the project.

— Quinn Donoghue