The world's largest retailer said Monday that it is selling its monument to bigness--the 110-story Sears Tower--and real estate experts guessed that the world's tallest building could garner at least $1 billion.
"When the Sears Tower was built it represented a prudent investment," Chairman and Chief Executive Edward A. Brennan said at a news conference at the landmark Chicago building. "We are proud of what it has meant to the rebirth of the West Loop and the city as a whole. It is equally prudent now to sell it and use those assets to fuel a growing Sears."
Brennan, who declined to predict a selling price for the building, said the company hasn't contacted any potential buyers for the building.
Brennan also declined to say what the current value of the building is on Sears' books. However, the building is carried at $330 million on the Cook County tax rolls, which generally assess value on commercial buildings of 39% to 40% of their market value.
The proposed sale was announced as part of a corporate strategy shift at Sears that will find the Chicago company revamping its basic marketing approach, buying back stock and selling its Los Angeles-based Coldwell Banker commercial real estate subsidiary to boost its stock price.
Big Buyer Expected
Real estate consultants said Sears Tower, which was completed in 1973, is worth at least $1 billion based on the building's rental income alone, with some guessing as high as $1.8 billion. Intangibles could boost the sales price of the 98%-leased tower in Chicago's relatively tight office space market, they said. "The fact it's the world's tallest building gives it a certain mystique, and investors will pay for that," said Craig Bayless, a spokesman for Cushman & Wakefield, a national real estate consulting firm.
The buyer could be a consortium of Japanese or U.S. investors because it is unlikely that any one investor could come up with enough money, said one real estate broker, who wished to remain anonymous.
"You never know. This market is crazy," he said. "The Sears Tower is a city in itself, basically."
The upcoming sale already has created some worries in Chicago, which is anxious to keep the 8,100 employees of Sears Merchandise Group that will be moving out of the building. About 600 corporate employees will remain, and Sears will keep its headquarters in the tower, where 13,000 people work.
"Some people think it signals a downturn in the economy of the city, and that's completely untrue," said Tim Wright, commissioner of the Chicago Department of Economic Development. "This comes at a time when retail and business activity is at an all-time high in this city. If a new investor comes in and buys the building, it could be a new show for Chicago."
The steel, glass, aluminum and concrete building has been called the "icon of Chicago," where skyscrapers got their start. Chicago Tribune Pulitzer Prize winning architecture critic Paul Gapp described it as a "slick, almost overpowering triumph of structural engineering." But Sears Tower has had its detractors.
"It's one of the ugliest buildings you've ever seen," said one Chicago real estate expert. "Only Sears would build the world's largest building and put second-rate appointments in it, like imitation brass handles."
And then there were the dozens of automobile owners whose cars were damaged in February when 56 m.p.h. winds knocked 90 windows from the building and in April when 75 m.p.h. winds caused the loss of 97 windows. No one was hurt, and Sears repeatedly said the building has no structural problems.
After the April glass shower, Sear's insurance carrier, Aetna Life & Casualty, initially said Sears was not liable for the damage because the incident was an act of God. Aetna subsequently decided to pay the claims.
Chicago Tribune columnist Mike Royko said in April that "placing the responsibility with God makes sense to me." Sears, beset by falling profits and intense competition, might finally have hit on a reasonable explanation for its problems, he said.
"Maybe it isn't poor corporate planning, weak advertising or any of the other theories," Royko wrote. "Maybe it is as simple as this: For whatever reason, Somebody Up There is mad at Sears."
Asked for his reflections Monday on the upcoming sale of Sears Tower, Royko said: "If they can fix up the windows, I would think they could probably sell it. If not, I wouldn't buy it."
SEARS TOWER: THE LONG AND THE SHORT OF IT Estimated current sale value: At least $1 billion Estimated building costs: $150 million to $200 million in 1973 (year of completion) Height: 1,454 feet, or 110 stories tall. Two 253-foot TV antennae on top. Designed to lean 5 inches to the west. Perimeter: 225 feet on a side Windows: 16,000 Elevators: 103 Floor space: 4.5 million square feet, equal to 16 city blocks Rentable space: 3.6 million square feet Safety: 40,000 fire sprinkler heads Occupants: 13,000 people work there, plus about 4,000 tourists daily Amenities: First large skyscraper with automatic window-washing machines. Robot mail delivery.