KBS REIT To Sell Two River North Office Buildings

KBS is moving forward with offloading its Chicago holdings to gain liquidity amid a struggling office market that’s showing minimal signs of recovery.

The company’s Growth & Income REIT hired Cushman & Wakefield to sell the seven-story Institute Place Lofts at 213 West Institute Place and the neighboring, two-story office building at 210-216 West Chicago Avenue, both in the River North neighborhood, CoStar reported. Brokers Tom Sitz, Cody Hundertmark, Dan Deuter and Paul Lundstedt are marketing the properties, which also includes an 8,000-square-foot parking lot.

The two buildings are collectively 80 percent leased with average weighted remaining lease terms of a little less than four years, the outlet reported. They comprise half of the REIT’s portfolio, which KBS said in December it plans to dissolve. Its struggles also reflect the overall office market, as rising interest rates, lingering remote-work trends and other economic factors brought vacancy rates to a record high last quarter in downtown Chicago.

The nontraded REIT, a subsidiary of California-based KBS Capital Advisors, paid $43.5 million for the 155,000-square-foot Institute Place Lofts in 2017, and it paid almost $5.4 million for the 16,000-square-foot West Chicago building in 2019.

Cushman & Wakefield is marketing the parking lot as a development opportunity for new apartments or a hotel that, if built, would boost the site’s long-term value. A developer would need to attain zoning approval first, but there’s room to build 160,000 square feet on the parking lot, the brokers said.

It’s unclear how much the listings will fetch from a buyer, but other recent sales in River North could serve as a benchmark. Last year, a Spanish investor bought the 41,000-square-foot office building a few blocks to the north at 311 West Walton Street for $14.4 million, or about $351 per square foot, in a deal where the seller, marketing firm AgencyEA, was also the buildings sole tenant and leased back the property.

— Quinn Donoghue