Mark Karasick’s 601W Companies landed $215 million in financing to advance a plan to transform a vacant southwest Loop property into a modern 700,000-square-foot office building.
The venture, managed by Karasick along with Michael Silberberg and Victor Gerstein, bought the parcel at 801 South Canal Street, which holds the six-story building, in 2020 for $68 million. It’s a block from 601W’s $1 billion redevelopment of Chicago’s Old Post Office into offices, now 95 percent leased by the likes of Uber and Walgreens.
The loans toward the Canal Street project consist of $148 million in senior debt from Bank OZK and $68 million in mezzanine debt from Fisher Brothers-affiliated Lionheart Strategic Management, according to a Lionheart statement.
It’s another show of confidence in the office market amid record vacancies downtown and underscores a move by Chicago developers toward repositioning existing assets, rather than attempting to build from the ground up in a real estate market still finding its footing after the pandemic.
Developer R2 Companies renovated a Goose Island creative office building and then fully leased it and sold it to Hines this year for $47 million. Another repositioning effort, Mike Reschke’s planned refit of the Thompson Center in the Loop, lured Google in to buy the entire building once it’s overhauled.
On Canal Street, 601W is entering an existing building that was developed for Northern Trust, which occupied it since 1990 and vacated in 2020 to consolidate the two Chicago offices it had at the time into one at 333 South Wabash Street.
The developer is gambling that enhancing the property’s amenities will draw back workers whose employers feel they need to staff offices in person.
Andy Klein and Sang Kim led the deal for Lionheart.
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Commercial
Chicago
601W Cos. is again betting big on Chicago office market
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