The Top 10 Downtown Chicago Office Building Sales Of 2017
An influx of new office product and cautious investor interest defined downtown Chicago office sales in 2017. The volume of this year's top 10 sales totaled $2.4M, 57% lower than 2015's record-setting $6.2B.
One distinctive pattern that emerged last year was a slowdown of activity in Q1 and Q4, with the majority of the year's top office trades happening in Q2 and Q3. Following are the top 10 office trades of the year in ascending order, based on available Cook County property records.
10. 500 North Michigan
Sale Price: $86M
Sale Date: July
Seller: Macerich
Buyer: Schapira
Macerich acquired the 347K SF tower for $71M in 2012 and had plans to connect it to its high-traffic Michigan Avenue retail asset, the Shops at North Bridge, and convert the lower floors to retail. The new ownership will work with developer David Bossy to renovate the property into mixed-use office and retail.
9. 150 North Michigan
Sale Price: $130M
Sale Date: September
Seller: John Hancock Real Estate
Buyer: CBRE Global Investors
John Hancock paid $102M for the 41-story tower with the distinctive angled diamond-shaped roof in 2012 and, despite a higher vacancy rate when it bought the asset, still saw a strong return on the property thanks in large part to its location next to Millennium Park. CBRE sees this as an opportunity to push rent growth.
8. 125 South Wacker
Sale Price: $145M
Sale Date: April
Seller: MetLife
Buyer: Ivanhoé Cambridge/Callahan Capital
MetLife paid $109M to acquire the building in October 2012. JLL, which brokered the sale, marketed the 31-story tower as a redevelopment opportunity. For the Ivanhoé Cambridge/Callahan Capital joint venture, 125 South Wacker joins a downtown portfolio that includes 10 and 120 South Riverside, 180 North LaSalle and 515 North State St.
7. 123 North Wacker
Sale Price: $147M
Sale Date: January
Seller: LNR Properties
Buyer: LaSalle Investment Management
This 30-story building was one of the highest-profile casualties of the 2008 market crash and was locked in a sticky bankruptcy for years before LNR assumed ownership of the building in February 2016. LaSalle Managing Director Joe Munoz said the firm is working on renovating the building to compete for tenants with other Class-A downtown properties.
6. 300 South Wacker
Sale Price: $155M
Sale Date: May
Seller: Beacon Capital Partners
Buyer: Golub & Co./Alcion Ventures
Golub and Alcion's acquisition of this 35-story West Loop tower came amid a flurry of activity in the middle of the year that included the sales of 401 North Michigan, 311 West Monroe and the aforementioned 125 South Wacker.
5. 231 South LaSalle
Sale Price: $165M
Sale Date: July
Seller: Berkeley Properties
Buyer: Beacon Capital Partners
Beacon Capital sees long-term value with the former Continental Bank Building. The asset was 82% leased at the time of closing, and net operating income dropped to $4.8M last year. But the value of the building increased because of higher valuations of comparable properties.
4. Sullivan Center
Sale Price: $179M
Sale Date: September
Seller: Madison Capital/KKR
Buyer: The 601W Cos.
Madison Capital had only bought the landmark Sullivan Center in a complicated $267M deal in April 2016 before it decided on a quick cash-out and sought bids as high as $200M. But the sellers still saw a strong exit because the joint venture was able to sell the office and retail portions separately. Madison Capital sold the retail portion of the building to Acadia Realty Trust for $147M in August 2016.
3. 401 North Michigan
Sale Price: $350M
Sale Date: May
Seller: Walton Street Capital
Buyer: Zeller Realty
Zeller's repositioning of the 35-story building paid huge dividends when Walton Street agreed to buy the asset in May. The property's value was enhanced by capital improvements like Apple's new $27M Michigan Avenue flagship store and improvements to the riverwalk adjacent to the building.
2. 181 West Madison
Sale Price: $360M
Sale Date: February
Seller: CBRE Global Investors
Buyer: HNA Group
CBRE put the 50-story tower on the market in December 2015 and waited as investor interest cooled after a record-setting 2015 for close to the $400M price it sought. HNA is now contemplating a sale of U.S. and Australian real estate holdings amid pressure from the Chinese government to regulate the flow of outbound capital.
1. Prudential Plaza
Sale Price: $680M
Sale Date: July
Seller: The 601W Cos.
Buyer: Sterling Bay
Sterling Bay crowned its transition from an adaptive reuse specialist to a buyer of trophy assets with its largest acquisition to date. The ability to collect market-rate asset management and leasing fees at the 2.3M SF property were a major attraction, and Sterling Bay is already building on the work of 601W Cos. in turning the formerly beleaguered property around. The Chicago Tribune's parent company, Tronc, agreed last August to move its offices to Prudential Plaza in mid-2018.
