German real estate firm Metropolis Investment Holdings is about to have another big hole to fill in its trophy Chicago office building, the NBC Tower at 455 North Riverside Plaza Drive.
The 36-story property’s namesake tenant NBC is set to hand back a little more than half of its office space to landlord Metropolis as part of a long-term lease that will keep the broadcaster in the building through 2040, according to people familiar with the transaction.
The deal will take NBC down to a little more than 68,000 square feet in the building, a cut of more than 50 percent. NBC will also retain naming rights for the nearly 900,000-square-foot tower, which has the tenant’s logo on its rooftop.
NBC’s decision to downsize adds to the wave of office tenants cutting back on commercial real estate since the pandemic spurred remote work, a trend that has pushed Chicago’s vacancy rate past 25 percent in recent months for the first time ever. It follows a planned move-out and trim by another big NBC Tower tenant, as law firm Crowell & Moring signed a lease for 50,000 square feet for Irvine Company’s 300 North LaSalle Street, with a plan to shed about a third of its current space leased from Metropolis.
Metropolis and NBC didn’t immediately return requests for comment.
Plenty of other landlords, including Irvine, have been hit by the space-shedding trend — another law firm, Akerman, recently downsized by one floor at Irvine’s 71 South Wacker Drive, handing back a bit less than half its space to the landlord.
On the bright side for Metropolis, it owns NBC Tower without holding debt tied to the property, giving it more flexibility on leasing terms while negotiating with tenants than landlords who have to answer to a lender.
But holding onto a debt-free asset can be tricky, Transwestern’s Eric Myers, who represents Metropolis in leasing NBC Tower, told The Real Deal earlier this year. Owners without debt can struggle to compete for tenants with landlords that can tap into financing packages to offer rent concessions or fund pricey interior build-outs.
“They’re not going to fill up all the space with crazy deals, but they are at least going to sign enough tenants to cover the tax bill,” Myers said.
NBC was represented by a CBRE team led by Brad Serot and Dan Persa in negotiating its lease extension, while Meyers’ Transwestern team represented the landlord.
Editor’s note: This story was updated to add that Persa was part of the tenant’s negotiating team.
Read more
Commercial
Chicago
Debt-free office buildings can give Chicago landlords an edge
Commercial
Chicago
Irvine scores 50K sf lease to law firm at LaSalle Street tower