Tribune Co. puts tower on the block Zell also would consider sale of L.A. Times site By Robert Manor and Phil Rosenthal | Chicago Tribune reporters 11:22 PM CDT, June 25, 2008 Tribune Tower, the neo-Gothic landmark that adorns Michigan Avenue near the Chicago River, is on the market. Tribune Co. Chairman and Chief Executive Sam Zell said Wednesday that he is exploring options for maximizing the value of the headquarters building, which houses the Chicago Tribune, as well as the Los Angeles Times' home, Times Mirror Square. Zell, who engineered the $8.2 billion deal that took media giant Tribune Co. private in December, would use proceeds from a transaction to pay down debtâif the price is right. He is asking a number of real estate firms for ideas on how to capitalize on the Tribune and Times properties. Requests for proposals went out Wednesday morning, one source said. "We are not rushing this process, and I can assure you we will not accept anything but full-market value for these assets," Zell said in a statement that didn't go into specifics. Video Related links Steve Chapman: Tribune Tower for sale? Why not? Blair Kamin: 'Col. McCormick Condos' Tribune Co. properties Photos What could the Tower be worth? Tribune Company history Photos Iconic Tribune Tower may be up for sale Video Downtown offices feel sales pinch Zell memo to staff on future of Tribune Tower, Times Mirror Square Tribune Tower sale talk simmers Tribune Tower could be put up for sale Tribune Co.'s debts total around $13 billion, and there are major obligations due this year and next. Zell has said this year should be covered through Cablevision Systems Corp.'s $650 million deal to acquire control of Newsday, Tribune Co.'s paper in Long Island, N.Y. The anticipated sale of the Chicago Cubs and Wrigley Field is expected to help cover next year's obligation. Sharper-than-expected declines in print revenue have complicated Tribune Co.'s business plan, however, and the company has said it intends to cut costs. To that end, Tribune Co.'s Baltimore Sun Media Group announced Wednesday that it will eliminate about 100 jobs from its workforce of around 1,400 by early August, and staffers at Tribune Co.'s Hartford Courant were told of plans to cut around 25 percent of its newsroom, which currently numbers 232 positions. It isn't clear how much Tribune Tower and Times Mirror Square would fetch if Zell decides to sell. The company said it intends to maintain an ongoing ownership position in both. Only a few commercial buildings in Chicago have sold this year as a result of the credit crunch, making it difficult to estimate the value of a building such as the tower. One individual, speaking on condition of anonymity, said the Tribune headquarters and an adjacent one-acre parking lot could be worth about $200 million. The 940,000-square-foot tower is about 35 percent vacant, according to a source. The Chicago Tribune newspaper staff and the company's corporate offices occupy about 55 percent of the building. Third-party tenants, including CNN's Chicago bureau, occupy the remainder. Groundbreaking building Completed in 1925, the tower was one of the first Chicago skyscrapers built north of the river. It has 36 above-ground stories; 40 including those below grade. Along with its flying buttresses, the building may be best known for the historic stones and artifacts embedded in its limestone facade, a popular tourist attraction. But Tribune Tower's floor plan is broken up into small spaces with pillars and other obstructions and does not offer the open floor space that many modern tenants seek. Still, the tower could command a high lease rate because "there are prospects out there that would appreciate the historic nature of that building," said Gary Denenberg, a senior vice president with MB Real Estate. Specifically, the building could attract smaller, high-end tenants such as advertising firms or public relations agencies that need little space but desire a prestigious address, Denenberg said. Also, vacancy rates in the North Michigan Avenue area are low. Denenberg said that if properly renovated, Tribune Tower might be able to charge $28 to $30 per square foot, which would rank it among the city's more expensive buildings. Steven Kelley, a vice president at Appraisal Research Counselors, said that earlier in the decade "it would have been a definite redevelopment candidate for residential condos, but that market has stalled." A record number of downtown condos are coming on the market this year, and real estate experts say they expect it will take years to sell them. There are other ways to turn office space into money. Owners can sell part of their building, or sell all of it but lease back space. Or they can repurpose a building completely. For example, developers recycled the former Carbon and Carbide Building at 230 N. Michigan Ave. into the Hard Rock Hotel Chicago at a reported cost of $106 million. Operations likely to stay put Employees of both the Chicago Tribune and Los Angeles Times are likely to stay put for the foreseeable future, Zell indicated. And the Chicago Tribune's Freedom Center printing plant at 777 W. Chicago Ave. is not part of the proposal, a source said. The Los Angeles Times complex, which spans a downtown city block, includes a hodgepodge of five interconnected structures built between the 1930s and the 1970s. Visitors often lose their way trying to navigate the complex, which has large blocks of space with no natural lighting. The Times property also includes an adjacent parcel of vacant land and a parking lot. The most valuable pieces of the Times property are the two office buildings facing First Street, said David Zoraster of CB Richard Ellis, including one completed in 1935 with an Art Deco-style lobby. It isn't an official historic landmark but has been determined to be eligible for listing in the National Register of Historic Places, which offers some protection from being razed, according to the Los Angeles Conservancy. "It's one of the great buildings of L.A. history," said Linda Dishman, executive director of the conservancy. Zoraster declined to estimate what the property might be worth, saying there has been almost no sales activity downtown in the last six months. "I don't know who would buy it at this point," he said.