Beer giant Molson Coors is in talks to move its headquarters across the Chicago River to a new downtown tower in a deal that would build on the national trend of office tenants upgrading the quality of their space while reducing the size.
Molson Coors is in advanced negotiations to lease more than 70,000 square feet at BMO Tower, according to people familiar with the situation. The deal in the 52-story tower at 320 S. Canal St., which opened last year, is ongoing and still could fall apart.
If the lease is completed, it would be the latest example of the so-called flight to quality across the country, with tenants moving into newer and higher-end spaces. Many such deals have involved significantly decreasing space as remote and hybrid work models persist more than three years into COVID-19.
For Molson Coors, the never-used space at BMO Tower is less than half the approximately 167,000 square feet it now leases just across the river about a block east at 250 S. Wacker Drive.
In a statement emailed to CoStar News, Molson Coors’ chief communications and corporate affairs officer, Adam Collins, neither confirmed nor denied the company’s interest in moving to BMO Tower.
“Our current lease is up in 2024, and as a result we have been exploring options for other downtown Chicago office spaces,” Collins said in the statement. “The fact is that no decisions have been made, and while we have been exploring a range of options, we also may ultimately renew our lease at our current location.”
Molson Coors’ relocation talks come as overall availability of office space in the Chicago area remains near all-time highs, with 101 million square feet available, according to CoStar data. That is 19.7% of the total supply.
Big-name tenants including Facebook parent Meta, Salesforce, Publicis Groupe, Tyson Foods and Uber are looking to sublease large blocks of their space in Chicago.
Amid the lingering effects of the pandemic, rising interest rates, recent bank failures, layoffs and other economic challenges, the newest and highest-rent office towers continue to outperform the overall market, particularly along the river and to the west in the fast-growing Fulton Market district.
BMO Tower, which Chicago developers Riverside Investment & Development and Convexity Properties broke ground on shortly before the start of the pandemic, is among the newest wave of buildings landing tenants that have been moving out of older properties in and around the Loop business district.
That includes BMO Financial, which leased 500,000 square feet in a deal that included naming rights and signage on the 1.5 million-square-foot tower. The bank is among several major tenants that have left the city’s longtime financial core on and around LaSalle Street, leaving developers to ponder new uses for older office space, including potential residential conversions and even vertical farming.
Other companies that have leased space in BMO Tower include law firms Skaden, Arps, Slate, Meagher & Flom; Chapman & Cutler; and Faegre Drinker Biddle & Reath.
In what has become a rare example of a relocation and expansion, Antares Capital recently announced plans to move into 87,586 square feet in the Canal Street tower. That deal, first reported by Crain’s Chicago Business, is a move from 69,646 square feet at 500 W. Monroe St.
After that lease, BMO Tower was 68% leased, the tenant and landlord said in a statement last week.
The skyscraper was built along Union Station, and the property includes a 1.5-acre, privately owned park along the west side of the tower.
Riverside CEO John O’Donnell declined to comment on the Molson Coors deal.
The beer company first leased its space at 250 S. Wacker in 2008, when it was known as MillerCoors.
In 2019, the company retired the MillerCoors name and moved its headquarters to Chicago from Denver as part of an overhaul of its business. At the time, Molson Coors Brewing Co. changed its full name to Molson Coors Beverage Co.
The name change reflected an expansion of its offerings that recently included launching a bourbon brand called Barmen 1873.
Known for beers such as Coors Light, Miller Lite, Molson Canadian, Blue Moon and Leinenkugel’s, Molson Coors’ other products include Five Tail blended American whiskey, Smith & Forge Hard Cider, energy drink ZOA and the Roxie nonalcoholic cocktail product line.
Molson Coors is the second-largest brewer of beer in the United States after Anheuser-Busch InBev.
Molson Coors is represented by Cushman & Wakefield brokers Dan Maslauski and Michael Sessa. The landlord is represented by Riverside brokers Christy Domin and Drew Nieman.