Commentary

Conde Nast Rent Dispute Highlights NYC Office Dilemma

Condé Nast's parent company is withholding rent payments for the publisher's office in Manhattan's preeminent address: One World Trade Center. Before any of the company's suppliers jump to the conclusion that the publisher of Vogue, Vanity Fair and The New Yorkeris a deadbeat teetering on insolvency, it's important to consider the company's negotiating strategy with its landlord.

Advance Magazine Publishers Inc. refused to pay $2.4 million for January after asking for a reduction in rent and square footage, according to a Feb. 3 bond document filed by the building's co-owner, the Port Authority of New York & New Jersey. The filing also said Advance may withhold more rent until the parties reach a resolution on the issue, The Wall Street Journal reported.

A decade ago, Condé Nast announced plans to move into the skyscraper, which was built near where the Twin Towers once stood in Lower Manhattan, after signing a 25-year lease for 1.2 million square feet of space.
At that time, the company was praised for moving downtown as the area struggled to recover from the 9/11 terrorist attacks, though the Port Authority also provided $46 million in rent rebates and other incentives to encourage the move from its previous headquarters in Times Square. The publisher was a premiere tenant for the building, which had struggled to find other tenants to fill its 3.1 million square feet.
As Condé Nast looked to cut costs in the past few years, it sublet 150,000 square feet to other companies. It also started looking for another location for its headquarters, including Midtown Manhattan, the New York Post reported in August.
The pandemic has changed the equation for Condé Nast, and not only because of its negative effect on the demand for print media. Many businesses in New York City are re-evaluating how much office space they really need as workers seek more flexible work arrangements.
It's safe to say the company wants a stellar address that matches its upscale media brands, impresses clientele and makes employees feel good about coming to work. However, it can find a place to do all those things at a lower cost as New York's commercial vacancies soar to record levels.
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