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Commercial
Chicago

Pandemic forces sale of two downtown Chicago office buildings

California-based REIT plans to sell two River North loft office properties

213 W. Institute Place and 210-216 W. Chicago Ave (KBS)
213 W. Institute Place and 210-216 W. Chicago Ave (KBS)

Two more downtown Chicago office buildings are slated to hit the market as a result of the coronavirus pandemic.

KBS Growth & Income REIT, a Newport Beach, California real estate investment trust, announced in regulatory filings that it will begin selling office properties due to financial stress, including two loft offices in Chicago’s River North neighborhood, Crain’s reported, citing CoStar.

KBS owns 213 W. Institute Place, a 157,000-square-foot building, and the adjacent parking lot, which it bought in 2017 for $43.5 million, according to Crain’s. It also owns a 16,000-square-foot building at 210-216 W. Chicago Ave.

If KBS lists the buildings independently from the rest of its portfolio, it could be a signal that loft office buildings in downtown Chicago – with open floor plans and high, wood-beam ceilings favored by financial service firms – remain popular, wrote Crain’s. KBS identified River North as a growth market when it purchased 213 W. Institute Place in 2017, according to a company press release announcing the acquisition.

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“This acquisition is consistent with KBS’ strategy of targeting growth markets, particularly attractive to high value employees, which we believe 213 West Institute Place will allow us to do,” said Ken Robertson, regional president with KBS, in a release at the time of the purchase. “These growth trends also provide value for investors as companies continue to compete for top talent.”

KBS initially announced plans to liquidate in August 2020 as a result of the pandemic and civil unrest in Portland, Oregon, and Chicago, where much of its real estate portfolio is located, Crain’s reported. Those plans were put on hold as investor demand for properties softened, but have been set in motion now, after the value of its assets fell by about a third since 2020.

KBS Growth & Income REIT is an affiliate of KBS Capital Advisors, which owns the Accenture Tower at 500 W. Madison Street, according to Crain’s.

[Crain’s] — Harrison Connery

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