Magazine publishers have been crushed by slumping advertising revenue because of the pandemic. Conde Nast could be the latest magazine publisher to experience financial difficulties as it skips out on a $2.4 million rent payment in January for its office at the One World Trade, reported WSJ.
Conde Nast is no small potatoes in the media industry. It's the publisher of ARS Technica, GQ, Teen Vogue, The New Yorker, Vanity Fair, Vogue, Wired, among other popular magazines.
Conde Nast is a major anchor tenant in the new World Trade Center. The publisher withheld rent payment in January as it asked for rent discounts and a reduction in square footage. The publisher plans not to pay rent until a resolution is found.
A filing with the Port Authority of New York and New Jersey, a co-owner of One World Trade, "believes it has strong contractual rights to enforce full payment by Advance (Advance Publications Inc, owner of Conde Nast) which it intends to assert."
Advance has been in discussions with the Port Authority and another co-owners of the building, Durst Organization, to renegotiate a 25-year lease with Conde Nast.
An Advance spokesman told WSJ: "Advance continues to be in discussions about bringing the lease in 1WTC into line with current market conditions and its ongoing needs at that location. We are also considering alternative solutions to address these requirements."
Conde Nast, like many publishers, is going through financial troubles. Last year, it laid off 100 employees and furloughed another 100. It has also taken steps to reduce working hours for some employees.
"These companies are entirely capable of satisfying their legal obligations, and the Port Authority has strong rights to enforce full payment," Ben Branham, a spokesman for the Port Authority, said.
Declining advertising revenue is an ominous sign that Conde Nast will have to continue downsizing as it attempts to stop hemorrhaging cash. So far, the company has laid off and furloughed hundreds of employees to now skipping out on rent as it attempts to survive the pandemic.
This is more bad news for New York City's commercial real estate on shaky ground.