Offices Occupied by Higher Education Tenants Listed for Sale

Separate owners of two suburban Chicago office buildings tied to higher education institutions have listed the properties for sale, making an uncommon pair of offerings for the Chicago area that could yield much different outcomes for each asset.

Downers Grove-based SADA Capital Partners is asking $11.6 million for the 57,000-square-foot office building at 850 Warrenville Road in Lisle occupied by National Louis University, according to the listing from Colliers’ Peter Block and Eric Okleshen.

And in neighboring Naperville, DeVry University’s former owner Adtalem Global Education has hired CBRE to market the 109,000-square-foot office building at 1200 East Diehl Road. That listing doesn’t include an asking price, though people familiar with the offering anticipate it to sell for about $8.5 million. DeVry bought the building for $8.1 million in 2004.

While a sale by SADA at its asking price would mark the completion of a turnaround for the landlord, the DeVry property appears in need of one that would have to start upon a sale of that asset. DeVry’s lease at its building ends in December of this year, and it’s unlikely the university plans to stay, as CBRE is marketing the property as a redevelopment opportunity.

Meanwhile, SADA is aiming to hit the exit on the Lisle office after it picked up the building for only $6 million in a 2017 distressed sale. The former owner, New York-based LXP Industrial Trust, then called Lexington Realty Trust, lost the property to a foreclosure lawsuit on the property over a $10.5 million loan issued just before the Great Recession that fell into default as it neared its 2016 maturity.

Educational buildings like these rarely trade hands in Chicagoland, as most area universities own their own real estate. That makes these properties difficult to value. Though the pandemic and economic conditions have battered the suburban office market, educational buildings are configured differently from traditional office buildings for a specialized use that includes classroom settings, Block said.

The Lisle property’s price provides “an opportunity for a very good return that’s certainly beating inflation right now,” Block said.

SADA’s CEO is Shaukat Chaudhry, and the firm renegotiated the lease with National Louis, which consolidated into one building, according to Block. SADA did not return a request for comment.

National Louis, a private commuter school, has its main campus in the city of Chicago. It has occupied the Lisle location since 2004, where it serves working adults with programs from the university’s schools of education and professional studies. The property previously sold in 2006 for $15.3 million, according to DuPage County property records.

The owner of the Naperville property is DeVry University’s former parent institution, a university spokesperson said. Cogswell Education acquired the private, for-profit university at no cost from Downers Grove-based Adtalem in 2018 as part of a transaction involving the entire DeVry business, according to news reports.

If the predominantly online educator is adjusting its real estate footprint, it’s not alone. Robert Morris University vacated the historic office building at 401 South State Street in downtown Chicago at the end of March 2020. The building headed to the auction block this month.