If you’re wondering whether suburban Chicago’s office market is bouncing back, here’s a clue: A vacant building in Rolling Meadows just sold for $13 million, two-thirds more than what it fetched in 2016, when it still had tenants.
The 10-story, 270,000-square-foot building at 2550 West Golf Road was bought by Arthur J. Gallagher & Co., whose office complex next door is home of its global headquarters.
The seller was an entity registered to leaders of Chicago-based Marc Realty, Gerald Nudo and Larry Weiner, which bought the property as a group led by broker David Stein, who declined to comment. His group bought the property for $7.8 million in 2016 after BlackBerry left the space, leaving it 41 percent vacant. That rate doubled after Gallagher moved 150 workers to its new campus, which it bought for $13.4 million at the same time, according to a contemporaneous report from Crain’s.
The sale shows that value remains in Chicago’s suburbs, even as vacancies hover near records. It also demonstrates the benefit of a location next to a Fortune 500 company like Gallagher that’s seeking influence over its choice of neighbors.
Gallagher representatives didn’t respond to a request for comment.
While the empty Class B property offers plenty of room for Gallagher it could also be a redevelopment opportunity. The buyer may use the site to bring amenities such as fitness centers, coffee shops, bars and outdoor hangouts that have become increasingly necessary to lure workers into the office since remote work arrangements swept the globe.
Class A offices generated almost three-quarters of all first-quarter leases, according to a JLL report.
When the Marc Realty group, which didn’t respond to requests for comment, bought the building for $7.8 million, it marked a loss of more than $3 million for its previous owner, Chicago-based John Buck Company. The seller planned to spend more than $3 million on renovations, Crain’s reported at the time. It was last mortgaged in 2019 for $5 million, public records show.
Gallagher joined New York investor Opal Holdings in the small crowd of recent suburban office buyers. A partnership between Opal and investor Katherine Cartagena just paid $73.3 million to buy the former OfficeMax headquarters in suburban Naperville.
Their purchases come as tenants have increasingly shed space in Chicago’s office markets when leases come up for renewal. Just to the west of Gallagher’s campus, The Atrium at 3800 Golf this year landed the FAA in a 116,000 square-foot lease, which marked a win after losing its largest tenant Capital One, but was still a downsize from even more space the FAA rented in Des Plaines.
“Suburban landlords continue to feel the negative effects of rightsizing tenants in the first quarter of the new year, but demand for quality Class A office buildings may be a sign of a brighter future in the year ahead,” the JLL report said.