Advertising, marketing and public relations company Interpublic Group is closing in on a deal to move some of its Chicago operations from one of the country’s tallest buildings to one of its widest.
IPG is negotiating a deal for about 70,000 to 80,000 square feet of office space at the Merchandise Mart along the Chicago River, according to people familiar with the deal.
If the deal is completed as expected, IPG would move workers to the ultrawide, 25-story art deco building from the 100-story former John Hancock Center on North Michigan Avenue.
Landing IPG would be one of the first fruits of a major renovation of the former design showroom, also known as the Mart, recently completed by New York-based owner Vornado Realty Trust.
The 4.2-million-square-foot structure was the largest in the world when it opened in 1930 as a Marshall Field & Co. warehouse and marketplace. Vornado has owned it since 1998.
Vornado recently completed several upgrades to the Mart, including a new riverfront plaza and new exercise, lounge, conference, retail and work areas inside.
The deal New York-based IPG is negotiating is for its Golin and Weber Shandwick agencies to move out of about 140,000 square feet in the Michigan Avenue skyscraper, according to people familiar with the deal. A larger space leased to IPG's FCB Global is not part of the move, although that agency could look to move out in the years to come as its lease is closer to expiration.
IPG and Vornado did not respond to requests for comment from CoStar News.
Those companies already have a relationship in New York, where IPG leases 628,270 square feet in Vornado’s building at 100 W. 33rd St. and another 230,979 square feet in Vornado’s building at 909 Third Ave., according to CoStar data.
The lease would be the latest example of an office tenant decreasing space in a relocation, which has been a common theme nationally since remote work trends emerged with the arrival of COVID-19 in early 2020.
There have been a few recent exceptions in Chicago, including renewable energy firm Invenergy nearly doubling the size of its headquarters at 1 S. Wacker Drive.
Amid corporate cutbacks on real estate, rising interest rates and other worries, Vornado earlier this year announced it was suspending dividend payments and stock buybacks.
Tenants in its massive Chicago building include the headquarters of Conagra Brands and Motorola Mobility.
The Mart was 80.1% occupied at the end of the second quarter, according to Vornado public filings.
In a call with analysts in late July, Vornado Chairman and CEO Steven Roth described the Chicago office leasing market as soft, but he said the firm still viewed the Mart as “a great piece of real estate.”
For the Record
The tenant is represented by JLL brokers Kyle Harding and Deanna Becker. The landlord is represented by Stream Realty Partners brokers Andrea Saewitz, Wendy Katz and Ben Cleveland.