Let's be honest here: This is a crummy property being put on the market at a lousy time. But Tribune CEO Sam Zell, who wants to unload both the LAT building and Chicago’s Tribune Tower, could use the money - if not this year, then certainly by 2009 or 2010, as those debt payments keep coming due. Perhaps in a couple of years commercial real estate will start to pick up. Now if Zell really needs the money, like now, he might be willing to unload the place for a song. But it's doubtful. This is the big-league ego/pint-sized guy thing: Zell is a real estate maven, and it's just hard to believe that he'll want to deal with bottom feeders. And make no mistake - the LAT building is well-suited for the buy-low crowd. Various owners have considered dumping that property going back to the early 1990s, but the Civic Center location has not been considered desirable - even now, with the downtown renaissance. The Grand Avenue overhaul might eventually change that view, though who knows when that will be ready. It certainly won’t be on Zell’s watch.
Blogdowntown's Eric Richardson points out that while law firms would be the most likely candidates (close to the courts and all), "most are quite happy in downtown's more premier buildings. To attract such firms to the Times Mirror complex would inevitably require serious upgrades and the building to find a certain cachet for its tenants." The government is unlikely to be interested as well - there's already a bunch of open office space in the area. I suppose Rick Caruso and Tom Gilmore could always ride in and save the day – maybe an open-air mall called “Law & Order”? – but it just seems like too much tsuris, even for those guys. Besides, you're stuck negotiating with Sam, which you wouldn't want to wish on anyone. None of this, by the way, should come as a big surprise. Tribune announced back in April that it completed the $175-million purchase of properties that were still owned by the Chandler family. Up until then, the real estate had been leased to Tribune, though Zell & Co. was granted an accelerated option to acquire the eight properties once the company changed hands. That option was exercised in January.
Even if Zell winds up with a sucke-...er, buyer, he'll undoubtedly work out some sort of lease deal so that the remaining dozen or so LAT staffers don't wind up on the street. "While a near-term transaction is possible, we’ll be focusing on opportunities that allow for some level of ongoing occupancy in both buildings for the mid-term (defined as five years), for farther out (15 years), and beyond," he writes in his memo addressed to the company's "Partners."
Our request for proposals, which is being issued today, is likely to generate media attention and debate about what we should or should not do with the properties. Both Tribune Tower and Times Mirror Square are iconic structures, deeply intertwined with the history of this company. But, they are also both under-utilized, and as employee-owners, it’s in our best interests to maximize the value of all our assets. We will keep you posted as we solidify our plans, so don’t get distracted by speculation. Let’s keep our eye on the ball.