Online deals company Groupon plans to slash more than 90% of its office space in a headquarters relocation within Chicago.
Groupon has subleased about 25,000 square feet in the 50-story tower at 35 W. Wacker Drive in a sublease deal with Publicis Groupe, Groupon confirmed in an emailed statement to CoStar News.
The agreement means Groupon’s office workers will be consolidated onto a single office floor, leaving behind more than 290,000 square feet in its once-bustling space at 600 W. Chicago Ave.
Groupon’s planned move is an extreme example of companies cutting their space as leases expire against a backdrop of remote and hybrid work trends taking hold since the onset of COVID-19 lockdowns in early 2020.
In Groupon’s case, the reduction in space also follows a massive reduction of a company’s business. Groupon, which turned down a $6 billion offer to be acquired by Google in 2010, has undergone rounds of layoffs in recent years.
Groupon’s market cap is just over $350 million today.
The company in May issued a warning that it may not be able to continue as a “going concern” and disclosed plans to pay $9.6 million to terminate its large lease at 600 W. Chicago in early 2024, two years earlier than the agreement was set to expire.
Groupon’s sublease is for just 22 months, the company said, with an expected move to the 25th-floor space in January. The deal was first reported by Crain’s Chicago Business.
“Groupon has always had a thriving office culture and this move to a space that is better aligned to our new hybrid working ethos is a great step to kick off 2024 for our Chicago team,” the company’s interim CEO, Dusan Senkypl, said in the statement.
The sublease puts a small dent in what earlier this year became the largest office sublease to hit the downtown Chicago market during the pandemic. Publicis in February confirmed it was offering as much as 350,000 square feet, or about half its total space, in the high-rise overlooking the Chicago River.
It became the largest sublease to hit the market during the health crisis, topping Groupon’s previous attempt to sublease its entire space at 600 W. Chicago before ultimately paying the termination fee.
Paris-based Publicis has several advertising and marketing brands in the tower, including Leo Burnett Worldwide, in a lease that runs through 2030. The deal with Groupon is the first to emerge since the space hit the market.
New York-based Opal Holdings owns the leasehold interest in the former Leo Burnett Building, meaning it collects rent from office tenants but makes payments on the separately owned ground beneath it in a 99-year lease.
The 1.1 million-square-foot tower is fully leased, but Winston & Strawn is set to leave its 250,000-square-foot space. The law firm is moving to 148,000 square feet in the 60-story tower at 300 N. LaSalle St.
For the Record
Groupon was represented by JLL brokers Andy Strand, Matt Carolan and Todd Mintz. Publicis was represented by Cushman & Wakefield brokers Steve Schneider, Andy Heymann, Chip Evans and Presley Norby.