Millbrook Real Estate is in a race to sell a five-building office campus in Lisle as several mortgage deadlines approach for the sprawling property.
The firm has hired Cushman & Wakefield brokers Dan Deuter and Paul Lundstedt to market the 37-acre Arboretum Lakes complex at 801 Warrenville Road, Crain’s reported.
No official asking price has been revealed for the 807,000-square-foot asset in Chicago’s western suburbs, though Millbrook has more than $66 million in mortgages tied to the complex that are slated to mature in June 2024.
Rising interest rates, a tight commercial real estate lending climate and a beleaguered office leasing market in the Chicago area could make it tough to land a buyer.
If Milbrook struggles to find a taker, the property’s value will become clearer, and the firm will better be able to predict if it can pay off its debt. The campus’ net-operating income hasn’t been disclosed, but Cushman noted that a buyer could add about $3.1 million to its annual bottom line if it leased the 178,000 square feet currently available at the complex.
The remote work movement, set in motion by the pandemic, led to record-high office vacancies last quarter, forcing many office landlords into losses when forced to sell their holdings by a debt deadline. Those who choose to pursue refinancing deals instead are finding it much tougher to borrower due to rising interest rates, and several are facing foreclosure.
For some, marketing office properties as a redevelopment opportunity for industrial or residential use has proven to be effective, as both sectors have performed considerably better than office. But Cushman aims to attract a buyer that still has faith in the office market.
While Arboretum Lakes has a 73 percent occupancy rate, Cushman is playing up its move-in ready offices and 77 tenants, most of which are smaller users. The latter could appeal to prospective buyers because smaller tenants have been less impacted by the remote work movement and have had greater success luring employees back to the office, the outlet reported, citing marketing materials from Cushman and echoing a report from JLL.
— Quinn Donoghue
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