Blackstone unit eyes $100M+ for tallest suburban tower

Blackstone’s EQ office is selling suburban Chicago’s tallest building, a 31-story tower that will test the status of an office sector that’s been out of favor with investors lately.

Brokerage Eastdil Secured is marketing the Oakbrook Terrace Tower, a 792,000-square-foot building at 1 Tower Lane in the western suburb, according to people familiar with the offering. An EQ Office spokesperson declined to comment.

The company is eyeing a price of more than $100 million, a person familiar with the offering said, while some skeptics figure it will fetch closer to $90 million. If it sells within that range — and it’s a big if, amid rising interest rates and falling demand among both commercial real estate buyers and tenants as the pandemic’s impacts carry on — it would get the Blackstone unit just more than the value the property commanded eight years ago as part of a massive portfolio trade.

Blackstone is apt to make deals even in unfavorable markets, said one prominent Chicago office sales broker who’s not involved with the Oakbrook Terrace. “It’s currently awful,” the person said of the current office market.

Suburban Chicago’s office vacancy rate rose to 25 percent last quarter, Newmark found, and leasing has been driven by tenants contracting their real estate footprints rather than expanding.

More than 160,000 square feet — about 20 percent of the property — is listed as available in the Oakbrook Terrace Tower on the building’s website. It landed a 110,000-square-feet lease with Germany-based Bosch, which became the building’s largest tenant in 2019.

EQ Office acquired Oakbrook Terrace Tower, completed in 1987, through a $23 billion deal with GE Capital that involved real estate across the nation, including multiple suburban Chicago buildings. As part of that deal, the Oakbrook property was valued at $88 million, DuPage County records show.

If the Blackstone unit makes a deal, it would extend its area office selloff. Between 2016 and 2019, the company sold eight suburban office buildings for $845 million, according to published reports.

Some sellers have still found deals on suburban Chicago offices this year, in large part due to Shaya Prager’s Opal Holdings. The company has dropped more than $2 billion on suburban offices across the country during the pandemic and lately concentrated on the Midwest, handing gains to sellers on a $73 million deal for the Shuman offices in Naperville and the $180 million purchase of the Corporate 500 complex in Deerfield.

Another suburban office campus, Kemper Lakes in Lake County, was bought by New York-based Northeast Capital Group earlier this year for $190 million in the priciest suburban Chicago office transaction since 2005.

Read more

Chicago

Blackstone Group notches big real estate win in Chicago suburbs