The Good, The Bad, The Glitzy: Chicago’s Biggest Deals Of 2023

Market activity slowed across the board in 2023, with high interest rates and overall difficulty securing financing gumming up the transactional works in Chicago for much of the year. 

With the Federal Open Market Committee holding interest rates between 5.25% and 5.5% for the past few months after a lengthy period of increases, the cost of capital remained high. The resultant paucity of deals kept normal activity muted, and stagnating return-to-office numbers kept investors skittish, with Menashe Properties' purchase of an office tower at 230 W. Monroe St. marking the only major office transaction in the central business district this year.

“The market is just waiting and waiting and waiting for something to happen,” Transwestern Research Director Caitlin Ritter said, adding she is hopeful the Federal Reserve will move forward with expected rate cuts in 2024.

“If interest rates go down a little bit, it’ll loosen things up a little bit,” Ritter said. “We can get a few more transactions, and then the market will know where it's at.” 

Despite the slowdown, commercial real estate players made a few notable deals in 2023. Here is a recap of the biggest transactions in Chicago industrial, office and multifamily this year and a brief takeaway from each.  

The Good — Industrial

The Chicago industrial market has come down from its meteoric pandemic highs, but user sales activity in the first nine months of the year was still roughly 6M SF, down from about 7M SF over the same period in 2022, according to Colliers data. 

“For industrial, that market is still very, very strong,” Ritter said. “It's cooling, but it's cooling from crazy, crazy hot.” 

Here are the top three deals in the Chicago industrial sector ordered by sale price, according to CoStar data:

21-81 N. Weber Road and 121- 151 N. Weber Road, Romeoville

• Sale price: $114M
• Size: 897K SF
• Price per SF: $127.04
• Sale date: Oct. 9
• Seller: Molto Properties
• Buyer: California State Teachers’ Retirement System
• Property makeup: Logistics park with two warehouse buildings

Takeaway: A California teachers pension fund purchased the newly built Weber55 logistics park in the southwest suburbs in the largest Chicago-area industrial sale of the year. The two-building deal highlighted the continued appeal of the market's industrial sector for big-name and institutional investors seeking stability.

4700-4800 Proviso Drive and 5000 Proviso Drive, Melrose Park

• Sale price: $87.7M 
• Size: 1.1M SF
• Price per SF: $77.73
• Sale date: Nov. 27
• Seller: AEW Capital Management
• Buyer: Hines
• Property makeup: Two-building industrial campus

Takeaway: Hines acquired a two-building industrial campus with plans to implement a “strategic value-add capital improvement plan at the properties.” Hines called the 100% leased building a compelling infill opportunity in the O'Hare International Airport submarket, citing a scarcity of bulk industrial sites in the area.

1200 Orchard Gateway Blvd., Aurora

• Sale price: $55.5M 
• Size: 605K SF
• Price per SF: $91.80
• Sale date: May 25
• Seller: American Realty Advisors
• Buyer: Bank of America
• Building makeup: Class-A logistics center

Takeaway: Bank of America bought the logistics center for almost $10M more than the seller, American Realty Advisors, paid for it in 2015 in a deal a Colliers representative called “an opportunity to make a safe investment in a high-quality logistics facility at a price substantially below the cost to replace.”

The Bad — Office

The Chicago office market continued to move at a glacial pace in 2023, with large transactions mostly moribund. There still hasn’t been a sale of an office building for more than $50M downtown since Google’s $105M purchase of the Thompson Center in July 2022. 

“Partly what's keeping the market frozen is no one knows how to move forward,” Ritter said. “No one knows how much value has been lost. So buyers and sellers just cannot come to an agreement.” 

Here are the top three deals in the Chicago office sector, according to Transwestern data:

Largest CBD office sale: 230 W. Monroe St.

• Sale price: $45M 
• Size: 624K SF
• Price per SF: $72
• Sale date: Sept. 21
• Seller: Morgan Stanley
• Buyer: Menashe Properties
• Building makeup: 29-story Class-B office tower 

Takeaway: Menashe’s all-cash deal for the office tower was the first sign of life for the CBD office market in over a year, but the property sold for about half the amount of the $87.7M loan that Morgan Stanley provided Accesso in 2019 as part of a refinancing deal.

Highest-price-per-SF CBD office sale: 213 W. Institute Place

• Sale price: $17M 
• Size: 157K SF
• Price per SF: $108
• Sale date: Dec. 4
• Seller: KBS
• Buyer: Coastal Partners
• Building makeup: Seven-story Class-B office building

Takeaway: The real estate investment trust that sold the building took a major loss on its value, realizing just a fraction of the $43.5M it paid for the property in 2017. The sale underlined how much office properties' values have declined in the age of hybrid and remote work.

Largest suburban investment sale: 3333 Beverly Road, Hoffman Estates

• Sale price: $194M 
• Size: 2.3M SF
• Price per SF: $84
• Sale date: Sept. 15
• Seller: Transformco
• Buyer: Compass Datacenters
• Building makeup: Former Sears headquarters

Takeaway: The developer that purchased the office property is expected to demolish the existing campus of interconnected buildings and replace it with data centers to store cloud data. Data center growth has accelerated rapidly in the Chicago area, with the main issue for projects being a lack of available land.

The Glitzy — Multifamily

The sales of two top-of-the-line apartment buildings headlined the biggest deals in Chicago in 2023. The luxury apartment buildings that sold were among the most profitable deals by sale price across the top three asset classes, making multifamily the city's best sector in 2023.

But the news isn't all good. Multifamily sales volume in Chicago dropped over the year, according to a Matthews multifamily report, albeit not as significantly as the decrease in the city’s other major commercial property sectors.

Here are the top three deals in the Chicago multifamily sector ordered by sale price, according to CoStar data:

727 W. Madison St.

• Sale price: $231.5M
• Size: 396K SF
• Price per SF: $584.99
• Sale date: Aug. 4
• Seller: F & F Realty, Ares Management Corp.
• Buyer: Ponte Gadea USA Inc.
• Building makeup: 492-unit Class-A apartment building

Takeaway: Spanish billionaire Amancio Ortega, founder of the clothing retailer Zara, set the high mark for a multifamily sale with his investment company’s purchase of a West Loop apartment building. The sale marked one of the largest downtown Chicago deals in recent memory.

340 E. North Water St.

• Sale price: $173M
• Size: 571K SF
• Price per SF: $302.92
• Sale date: June 13
• Seller: Invesco Ltd.
• Buyer: Crescent Heights
• Building makeup: 398-unit Class-A apartment building

Takeaway: Miami-based developer Crescent Heights scooped up the residential section of a 50-story tower in Streeterville for $173M in June while also putting a separate 76-story luxury apartment tower on the market in November. At the time, the sale marked the largest price for a downtown apartment complex in about two years, but it still represented a nearly 28% valuation drop from its last sale — $240M in 2016.

3233 S. King Drive

• Sale price: $161M 
• Size: 1.5M SF
• Price per SF: $106.49
• Sale date: May 30
• Seller: Draper and Kramer Inc.
• Buyer: Antheus Capital
• Building makeup: 1,869-unit Class-C apartment building

Takeaway: The deal marked the largest single multifamily property to trade by total units in the Chicago area in over 15 years. Antheus’ South Side apartment portfolio is approaching 7,000 units.