A West Loop office landlord has been dealt another blow, as a key tenant prepares to vacate its space.
Newark Electronics, a technology distributor under the Avnet umbrella, will close its Chicago office, in the 23-story building at 300 South Riverside Plaza, by the end of the year, Crain’s reported.
Newark’s decision comes a decade after it signed a 65,000-square-foot lease in the nearly 1.1 million-square-foot building, which is owned by a venture led by David Werner and Joseph Mizrachi.
“We are in the process of transitioning a portion of employees to other Newark locations or exiting the business based on our current and future needs,” a company spokesperson told the outlet.
Newark executives cited cost reduction initiatives in light of sluggish demand. Avnet, Newark’s parent company, reported a 7.6 percent decline in sales and a 21 percent dip in operating income for the fourth quarter, reflecting broader industry challenges.
The semiconductor and electronics components sector has experienced a downturn following the easing of supply-chain disruptions linked to the pandemic. Avnet anticipates persisting weak demand through 2024, necessitating strategic adjustments.
Werner and Mizrachi are grappling with several other challenges at the site. Last year, Evolent Health tacked on 50,000 square feet to its sublease listing in the building, upping its offering to 122,000 square feet. At the time, Evolent planned to keep only about 20,000 square feet.
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The owners also ran into trouble with their lender last year, after defaulting on $175 million from a South Korea-based entity.
Werner and Mizrachi bought the property for $190 million in 2010. Five years later, they sold the land beneath the building for $220 million in a lease-back deal with a joint venture of Rubin Schron’s Cammeby’s and David Lowenfeld’s World Wide Group.
—Quinn Donoghue