Golub & Co. is the latest office landlord looking to offload a Loop property, even if it means a loss on its investment.
A venture led by the Chicago-based firm has hired Cushman & Wakefield to sell a leasehold interest in the historic 22-story Burnham Center at 111 West Washington Street, nearly four years after acquiring the 584,000-square-foot building for $80.3 million, CoStar reported.
It’s unclear how much Golub is looking to fetch in a sale, but it will likely be less than what it paid in 2019. The pandemic-fueled remote work movement has pummeled Chicago’s office sector, leading to a record-high vacancy rate of more than 22 percent last quarter. More recently, high interest rates compounded the issue and pushed down commercial property values even more.
However, Cushman is playing up the “Google effect.” The tech giant announced last year that it would move into the James R. Thompson Center in 2026, potentially reviving the Loop’s beleaguered office market. The Burnham Center is also home to GrubHub’s headquarters, where the food delivery platform occupies 164,100 square feet. In addition, Cushman’s Cody Hundertmark attested that the GrubHub’s workforce is back in the office about three days a week, Crain’s reported.
Nonetheless, the building is struggling to stay financially afloat. It currently has an occupancy rate of just under 65 percent after losing several tenants, including film school Flashpoint Chicago.
The Golub venture took out a $75.4 million loan from CIT Group to finance its acquisition, which included only the leasehold interest in the building while a separate company, Pennsylvania-based Alliance HSP, retained control of the ground beneath the structure. The Golub venture makes ground rent payments to Alliance. Capital structures involving ground leases have started stirring trouble for landlords of other downtown Chicago office properties, too, including 55 East Jackson Boulevard and 300 South Riverside Plaza, where owners are facing prospects of default on big loans tied to ground leases.
It’s possible that selling the Burnham Center wouldn’t generate enough cash to pay off its debt. It’s also possible that Golub ends up pulling the listing off the market.
Its construction was completed in 1914, and is named for its famed architect, Daniel Burnham.
— Quinn Donoghue
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