Slate Office REIT is buying a 23-story Loop office building for $156 million, the move coming a few months after the Toronto-based firm made its first foray into the Chicago office market.
Slate is close to completing the deal for the building at 120 South LaSalle Street and an adjacent parking garage from a joint venture of Lincoln Property and the Illinois Teachers Retirement System, according to Crain’s.
The firm bought its first building in Chicago in February, a 31-story office tower at 20 South Clark Street, for $85.6 million.
Lincoln Property and the teachers pension fund paid $121 million for the building in 2006, financing the purchase with a $72.3 million loan, according to Cook County property records. The duo refinanced in 2013 with a $80 million mortgage, records show.
The sellers recently signed anchor tenant CIBC to a six-year lease extension through 2029, according to a flyer from real estate brokerage CBRE, which marketed the property. The banking firm accounts for 45 percent of the building’s 656,000 square feet.
But the tower still has 19 percent of its space vacant, higher than the downtown average of 13 percent. The vacancy rate remained steady despite the addition of 1 million square feet in the second quarter.
But some 7 million square feet of new office space is expected to come online in the next three years, prompting fears of declining rent growth for landlords, according to Savills Studley.
CBRE’s Cody Huntermark, Tom Sitz and Blake Johnson represented the sellers in the 120 South LaSalle deal. [Crain’s] — John O’Brien