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Commercial
Chicago

River North office building triples in value since 2014

West Walton Street building in $14M sale-leaseback to Spanish investor

311 W Walton Street (LoopNet)
311 W Walton Street (LoopNet)

A five-story office building in Chicago’s River North neighborhood sold for more than triple the price it last traded for eight years ago, underscoring the value of sale-leaseback deals outside the city’s central business district.

A Spanish investor purchased the 41,000 square foot property at 311 West Walton Street for $14.4 million in a deal that closed June 22, according to Miami real estate investment and management firm Azora Exan, which represented the buyer. The deal is a sale-leaseback, meaning the property is sold then immediately leased back to the building’s sole tenant, Chicago marketing firm AgencyEA.

The property last sold for $4.6 million in 2014, Cook County public records show. The buyer is “a private ultra-high net worth investor from Spain,” said Azora Exan’s Thania Potosome, declining to provide the buyer’s name.

At its sale price, just under the $15 million asking price, it offers the new owner a 6.2 percent cap rate, a measure of rental income after expenses divided by a property’s purchase price, said James Mead of SVN’s Chicago office, who represented the seller, SALF 920 LLC. The seller put less than $5 million into the property since buying it eight years ago, adding features such as a rooftop deck.

“Despite all the negative publicity Chicago is getting, there is still appetite from foreign investors for these types of deals,” Mead said.

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The sale demonstrates the value of Class B buildings off the beaten path — the building is outside Chicago’s main business district, the Loop — especially when leased to a single tenant. The sale-leaseback setup is a factor in adding value to such properties, Mead said.

“A lot of buildings in that market are multi-tenant and it’s not as attractive to some investors,” Mead said.

Demand for sale-leasebacks has strengthened during the pandemic because they allow owners to free up cash, although they were trending upward before 2020.

Earlier this month, CME sold a 300,000-square-foot building at 333 South LaSalle Street for $39.5 million in a sale-leaseback transaction with electric utility ComEd.

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