Buyer revealed for Google-leased 1K Fulton

Office Properties Trust is nearing a deal to pay $357 million for the Google-leased 1K Fulton, a price that could recalibrate office property valuations in the pandemic-battered market.

The deal for the 531,000-square-foot building in Fulton Market was first reported earlier this month but without a buyer. Office Properties was expected to complete the sale as soon as this week, according to the Chicago Tribune.

Google leases about 386,000 square feet at its Midwest headquarters from American Realty Advisors, which paid $304 million for the office complex in 2016. The company listed the property in late April, eyeing about $350 million.

It would be one of the priciest office sales to come out of the booming district in recent years, and at a time when Downtown office vacancy is still at a record high. The pending sale pencils out to about $672 per square foot, generating about a 4.2 percent estimated annual return, according to the report.

If the deal closes, it will be the second Chicago office acquisition for the Massachusetts-based REIT and its fourth in Illinois. The company also owns 400 S. Jefferson Street, a 250,000-square-foot complex in the city. Office Properties focuses its investments on assets with long-term, single tenants with good credit.

The Sterling Bay-developed complex at 1000 W. Fulton Street checks off those boxes.The Office Properties purchase would also stand as the second most expensive sale in Fulton Market. Last year, a joint venture of Sterling Bay and JPMorgan sold the 575,000-square-foot McDonald’s headquarters for $412 million to Pittsburgh-based Normandy Properties.

The 10-story building, a redevelopment of the Fulton Market Cold Storage site, was Sterling Bay’s first major foray in the neighborhood west of the Loop. [Tribune] — Jennifer Waters