Omnicom Group undertakes real estate consolidation

Omnicom Group is downsizing office space in Chicago as part of what one executive described as a “massive” real estate consolidation across the country. According to several people familiar with the plan, the holding company is looking to significantly pare real estate costs in markets including San Francisco, Dallas and now Chicago. In some instances, they said, Omnicom agencies will share space with other shops within the holding company as a means to utilize office space that has remained empty following COVID-driven closures. Check out the latest Ad Age events and award programs While declining to comment on specific plans or specific markets, a holding company spokeswoman said, “with current occupancy, as low as 12%, on average, our real estate team has reconfigured our offices to accommodate 60%-70% of our staff five days a week (3 days a week of attendance).” Those three days are Wednesday through Friday, which several people within Omnicom agencies said are the days the holding company is requiring in-person attendance. “You'll see some reports that we are consistently bringing people back at least three days a week. That will be finished and completed but way before the end of this quarter,” Omnicom CEO John Wren said on a February earnings call. Agency news: Why four-day workweeks aren't being adopted Some shops in the network said that they have at least one unoccupied floor; some said there are Omnicom agencies that once had four or more bustling floors in New York and L.A. down to a single occupied floor. “Clients are not spending. Business is not changing as quickly as we would like,” said a senior executive with an Omnicom agency, explaining the move as cost cutting. Read more: The last major ad agency to leave Madison Ave. Lack of communication But the way Omnicom is hurriedly going about the Chicago move is upsetting some employees. Most workers are now housed across multiple floors in a building at 225 N. Michigan Ave. and it is expected that Omnicom will consolidate to fewer floors. On Friday, March 31, agency leaders were told by Omnicom Group corporate leaders that they would have to vacate their space by Monday, April 3—but were given few other details, according to an Omnicom employee who spoke on the condition of anonymity. Workers were later told they would have more time to move, but many agency workers still don’t know where they are going, this person said. “How do you wake up in the morning and go to work for a holding company that treats you like this?” this person said. Agencies housed in the building include DDB, Energy BBDO, Tracy-Locke, The Marketing Arm and Porter Novelli. It is expected that DDB will keep its space on the 10th floor of the building but will now have to share space with other agencies. There’s also some concern, according to a senior Omnicom agency executive, that there could be an issue with consolidating agency brands within a single space. Unlike WPP, which has merged some of its creative agencies and has “co-located” many of its agencies into campuses such as New York’s World Trade Center, Omnicom has staunchly maintained independence for its shops. “They need to be careful not to muddy the agencies up to fix a real estate problem,” said the agency executive. Some Omnicom agencies have already consolidated into one space. In January, TBWA\Chiat\Day New York moved into a new building that houses other Omnicom agencies including PHD Media, Organic and Cline Davis & Mann. A few years ago, DDB New York also left Madison Avenue for a building that houses DDB Worldwide’s corporate office on 195 Broadway. The office space consolidation comes as agencies and holding companies across the country adjust to new working realities that have led to more people spending more time working from home. This has led to more office vacancies—but figuring out how to optimize space can be challenging, considering that many agencies are deploying hybrid models. Also read: Agencies struggle to get employees back in the office Omnicom’s Chicago shakeup follows a February move by Publicis Groupe to put 350,000 square feet of its downtown Chicago offices up for sublease. The property at 35 W. Wacker Drive is known as the Leo Burnett building. Publicis Groupe at the time stated that the sublease listing “is a normal course of business aligned with our future of work planning, rooted in purposeful time together in the office, with flexible models that benefit both talent and our business.” Contributing: Judann Pollack, Lindsay Rittenhouse Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here

Omnicom Group undertakes real estate consolidation

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