A venture led by Oak Hill Advisors is buying a controlling interest in a new, 55-story Chicago office tower.
The investment firm, which has offices all around the world, agreed to buy a stake in the building at 110 North Wacker Drive from Howard Hughes Corp., the Wall Street Journal reported.
The deal, which will be closed next year, values the 1.5-million-square-foot office tower at more than $1 billion, the Journal reported, citing people familiar with the transaction. That would be the highest price paid for a Chicago office property since the beginning of the pandemic.
Oak Hill’s purchase shows there is still a demand for office properties with great views and state-of-the-art air filtration systems, despite the pandemic limiting the amount of time spent in offices. Much of Chicago’s office market is bifurcated, meaning buildings with updated amenities in popular locations like Fulton Market are finding new tenants relatively quickly, while older buildings are struggling to secure new tenants.
Owners of office properties may still face an uphill battle in the months to come as many businesses have adopted a hybrid workplace model that allows employees to work from home at least part of the time.
The 110 North Wacker building, located right on the Chicago River, opened in October 2020 and is currently more than 85 percent leased. The building features a 45-foot lobby, dining options and a secondary air-filtration system that was added after the pandemic. Tenants of the building include Bank of America and the Morgan and Lewis law firm.
Howard Hughes listed the building for sale earlier this year after deciding to unload nonessential assets.
Another Chicago office property that recently sold was the all-brick class B property at 2401 West Grace Street, which is exclusively occupied by AT&T. An international investment fund with offices in Mexico City and Miami paid $16.3 million for the four-story building and two acres of land it sits on.
[WSJ] — Victoria Pruitt