601W Companies lands $310M loan for 1 South Wacker purchase, renovation

Blackstone provided financing on the 40-story office tower: “We’ve got a lot of leasing to do,” said 601W principal Mark Karasick

Dec.December 18, 2018 04:04 PM

1 South Wacker Drive (Credit: iStock)

601W Companies secured a $310 million loan for its acquisition and planned overhaul of 1 South Wacker, The Real Deal has learned.

Blackstone Group provided the financing for the 1.2 million-square-foot office tower. News of the New York firm’s plan to buy the 40-story building from Manulife John Hancock for $310 million surfaced in September.

The deal on the 36-year-old tower officially closed last week, according to Cook County records.

Roughly 70 percent of the Blackstone loan went to the acquisition, with the remaining 30 percent — $93 million — earmarked for improvements, said 601W Principal Mark Karasick.

The building is nearly 25 percent vacant, well above the average vacancy rate for Downtown and up from nearly 15 percent when Manulife bought it in 2015.

“We’ve got a lot of leasing to do,” he said.

601W plans a number of changes to tenant amenities, including an updated lounge and conference center. The biggest and most expensive project will be replacing the tinted glass that is part of the Helmut Jahn-designed facade, which Karasick said would likely be unpopular with potential tenants.

“We’re going to make it more light-friendly,” he added.

601W has embarked on similar facelifts at other Chicago properties, including Prudential Plaza, which it sold earlier this year to Chicago developer Sterling Bay for $680 million.

601W is also in the middle of a $185 million overhaul at the Aon Center that includes plans for an exterior elevator and observatory.

Its biggest reclamation project in Chicago is the ongoing conversion of the hulking, long-vacant Old Main Post Office into 2.8 million square feet of new office space.

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