Andy Farbman group buys discounted West Loop office building

If you need further proof that commercial real estate in Chicago is spiraling, look no further than a West Loop loft office building that sold for less than half of what the sellers paid for it just five years ago.

A venture of Andy Farbman-led Farbman Group paid $11 million for the eight-story property at 600 West Jackson Boulevard, Crain’s reported. The sellers, San Francisco-based Stockbridge Capital Group took a steep loss on the 117,000-square-foot building, which it paid $23.5 million for in 2017, plus an additional $8 million in renovations.

Chicago’s office market is suffering from a glut of vacant office space. As landlords try to find tenants in a post-pandemic environment where remote working models remain popular, rising interest rates and companies offering space on the sublease market have led to many property owners to sell office buildings assets at heavily discounted prices.

The Jackson building is Farbman’s second deep-discount buy in the past 13 months. He also picked up the 25-story building at 100 North LaSalle Street for $16.4 million — half of what it sold for in 2016.

Farbman’s newest building is half occupied, which is an improvement from the 62 percent vacancy rate it had when Stockbridge bought it. But it still presents a leasing challenge for the veteran investor.

“We’re hopeful that our reset basis will allow us to capture the tenants that are now finding it more difficult to work remotely. We’re hoping to capture some of that demand with cool, well-located space,” Farbman told the outlet. “We believe that we can catch some of the tenants as they continue to migrate west, wanting to be close to Union Station, Ogilvie (Transportation Center) and highway exits, but not willing to pay the freight to move to Fulton Market.”

Farbman said that he has seen smaller companies having more success in returning to the physical office, so his company tends to focus on smaller 5,000- to 20,000-square-foot spaces rather than 100,000- and 200,000-square-foot properties.

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