A historic Loop office building that was recently handed back to its lender has hit the market, offering prospective buyers a chance to assume the debt or attain a new loan.
JLL brokers Sam DiFrancesca, Patrick Shields, Jaime Fink and Bruce Miller have been hired to sell the 12-story, 143,000-square-foot building at 209 West Jackson Boulevard, CoStar reported.
Miami-based Market Street Real Estate Partners surrendered the property via deed-in-lieu of foreclosure last month, allowing lender ACRES Capital to take control of the property. Market Street refinanced 209 West Jackson about four years ago with a $25 million loan from an affiliate of Uniondale.
The offering is another effect of financial distress on commercial real estate as rising interest rates combine with low demand for office space coming out of the pandemic to squeeze landlords throughout Chicago, including across the street. Longtime owner Marc Realty hasn’t responded to a foreclosure lawsuit for its 10-story, 177,000-square-foot vintage office building at 216 West Jackson, and a judge has approved a trustee for its debt holders to market the property for sale.
The 209 West Jackson building is a staggering 66 percent vacant, far below the average office vacancy rate of 22.6 percent last quarter in Chicago, which marked a new record. It’s the latest sign of an office sector that’s still reeling from the pandemic-fueled remote work era, climbing interest rates and banking failures. Many office properties these days are often being sold for much less than when they last traded, returned to their lender or going into foreclosure.
Despite the building’s poor performance, there are some attractive features for a potential buyer. ACRES will offer buyers a chance to assume Market Street’s debt or provide a new loan. This tactic can offset high interest rates and a tight lending climate that’s made it tough for buyers to score adequate funds for transactions.
Plus, the building is recognized by the National Register of Historic Places, potentially offering historic tax credits and Class L tax incentives for a new owner. Zoning allows for a residential conversion or another form of reuse, but razing the site is likely out of the question given the property’s historic designation.
— Quinn Donoghue
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