Sterling Bay is buying the office and parking portions of the former John Hancock Center for more than $300 million, the latest in its string of blockbuster downtown office acquisitions.
The Chicago-based firm and an unnamed partner are under contract to buy the 900,000 square feet of offices on floors 13 to 41 of the 100-story tower at 875 North Michigan Avenue, along with 700 parking spaces on floors 4 to 12 from Chicago developer Hearn, according to Crain’s.
Sterling Bay paid $510 million in February for the Groupon headquarters at 600 West Chicago Avenue from Equity Commonwealth and closed on its deal to buy Prudential Plaza from 601W Companies for $680 million this spring.
The Michigan Avenue tower recently lost the John Hancock name after the insurance company asked that it be removed from the building. Its offices are 90 percent leased, according to CoStar, with ad agency DraftFCB its largest tenant. The overall downtown office occupancy rate is around 87 percent, according to a recent CBRE report.
Representatives of Sterling Bay and Hearn could not be reached, nor could Eastdil Secured, which was hired last year to sell the building’s offices and parking.
Hearn paid $140 million for the office and parking condos in 2013 and took out a $150 million loan on the property at the time. Hearn said last year that the owners spent about $69 million in upgrades to the building since then.
The latest office acquisition for Sterling Bay comes as it’s ramping up plans for the massive Lincoln Yards development along the North Branch of the Chicago River. It also continues to be one of the most active developers in booming Fulton Market, where it has a number of office and hotel projects.[Crain’s] — John O’Brien