Blackstone is trying to obtain a new loan to refinance a struggling River North office tower.
The investment firm, led by CEO Stephen A. Schwarzman, had its $310 million CMBS loan on the property at 350 North Orleans transferred to a special servicer ahead of its July maturity, Bloomberg reported.
While payments on the non-recourse loan are current, Blackstone “effectively” wrote down its investment in the tower to zero last year, company spokesperson Jillian Kary told the outlet.
The 1.3 million-square-foot office tower, like many office buildings in Chicago, is struggling to maintain healthy occupancy levels. With remote work’s rise in prominence during the pandemic, and commercial tenants slashing the amount of space they lease, the office sector in Chicago and much of the nation has been pummeled, forcing many landlords to either sell, refinance or repurpose their holdings.
More recently, high interest rates, massive company downsizings and a tight lending climate have compounded lingering effects from the pandemic, leading to a record-high office vacancy rate in Chicago last quarter of more than 22 percent.
“The property is experiencing the well-known headwinds facing US traditional office buildings lacking first-class, modern amenities,” Kary told the outlet. “This location in the River North submarket has been particularly challenging.”
KBRA has downgraded ratings on the loan due to the building’s poor performance and low occupancy. Blackstone bought 350 North Orleans for $378 million in 2015 and performed a renovation in 2018.
Yet, only the most recently renovated or newly built buildings are managing to stay afloat, as they present a better chance for companies to lure employees back to the office. New construction in Fulton Market — once considered a tech-focused office submarket — has particularly begun appealing to more professional services firms.
Some of the city’s largest professional services tenants, namely Boston Consulting Group and law firm Greenberg Traurig, are heading to Fulton Market to occupy Sterling Bay’s in-progress tower at 360 North Green Street.
— Quinn Donoghue
Read more
