As it plans to move a spinoff company to Chicago, food industry giant Kellogg is looking to sublease its office in the River North neighborhood and find different space in the city for the soon-to-be-formed company’s headquarters.
Kellogg has hired brokers to seek a tenant to take over its Chicago space in the boutique office building at 412 N. Wells St., spokesperson Kris Bahner said in an email to CoStar News.
The company leases all 38,968 square feet of office space in the building through February 2029, according to marketing materials from JLL, which is representing Kellogg in the sublease. The space includes part of the ground floor and all eight floors above it, with the smaller top floor opening onto a roof deck.
The thin-floor-plate building runs along elevated CTA train tracks and is near the sprawling Merchandise Mart just north of the Chicago River, where Kellogg previously had an office and where Conagra Brands has been headquartered since relocating from Omaha, Nebraska, in 2016.
“We’ve determined that our downtown Chicago office space is not fully meeting the needs of our collaborative culture,” Bahner said. “As such, we are planning to sublet the current downtown office space and identify a new downtown location for our Chicago-based employees and visitors to work.”
Bahner declined to comment on which areas of the downtown office market Kellogg plans to search or how many square feet it expects to lease in the new deal.
Kellogg’s move to switch spaces comes after the Battle Creek, Michigan-based company announced in June that it will split into three separate, publicly traded companies by the end of 2023.
The largest of those yet-to-be-named companies, a snack company accounting for about 80% of Kellogg’s total sales, is set to be based in Chicago. There are about 300 Chicago-area employees, including some at an office at 263 Shuman Blvd. in Naperville, Illinois, and that number is not expected to change with the new headquarters designation, the company has said.
Well-known brands that will be part of the Chicago-based snack company include Pop-Tarts, Cheez-It, Nutri-Grain, Kellogg’s Rice Crispies Treats, Pringles and RXBAR.
Kellogg took over the space when it acquired RXBAR, a Chicago-based protein-bar maker, in 2017 around the time RXBAR moved into the newly opened office building on Wells Street.
The building is now owned by a wealthy family from Spain, which bought it from developers Hubbard Street Group and Centrum Realty & Development for more than $31 million in early 2019.
Kellogg’s space is up for sublease during a challenging time for office demand, nearly three years into COVID-19 and amid a wobbly economy.
There is a near-record 98.1 million square feet of office space available in the Chicago area, or 19.2% of the total supply, according to CoStar data.
To offload its space, Kellogg will face competition from landlords and other companies looking to sublet space.
Tyson Foods, which is relocating jobs to its Arkansas headquarters, recently put its 233,000-square-foot Chicago building at 400 S. Jefferson St. on the market in one of the largest subleases in the city since the start of the pandemic.
For the Record
Kellogg is represented in the sublease by JLL brokers Brad Despot and Kerry Middleton. JLL’s Jeff Liljeberg is representing JLL in its search for new space.