Gene Staples is holding out hope that Chicago’s office sector will rebound from its post-pandemic slump, at least enough to buy a distressed building at a big discount.
A venture led by the local investor paid just under $30 million for the 302,000-square-foot International Tower at 8550 West Bryn Mawr Road, near the O’Hare International Airport, Crain’s reported. JLL’s Pat Shields, Sam DiFrancesca, Bruce Miller and Jaime Fink marketed the property on behalf of the seller, an affiliate of Utah-based Bridge Investment Group.
Bridge took control of the property last year, roughly three years after providing a $43.4 million loan to the previous owner, Chicago-based Golub.
Despite the sale, Bridge isn’t completely cutting ties with the building. The firm is maintaining a large stake in the property through seller financing — a move in which the seller provides a new loan to the buyer to help finance the acquisition. Such maneuvers are becoming increasingly common amid hiked interest rates and a tight lending climate.
The roughly $30 million sales price is far less than the building’s pre-pandemic value, reflecting the beleaguered state of Chicagoland’s office sector. Remote work trends continue to linger, compounding the hits landlords are taking from rate increases and muted demand coming out of the health crisis driving vacancies up to a record high.
International Tower is performing considerably worse than the city average, as it’s just 55 percent leased, with an average lease term of seven years. Food service company Newly Weds Foods is the largest tenant at the site, occupying about 45,000 square feet.
Golub bought the tower for $40.3 million in 2014 and had a chance to turn a profit before the pandemic struck. The $43.4 million loan it received from Bridge replaced a $28 million mortgage that Golub took out upon acquiring the property, the publication reported.
While much of Chicagoland’s office market is still reeling from the public health crisis, O’Hare’s is performing better than its suburban counterparts. For office buildings near the O’Hare airport, the vacancy rate was 23.6 percent by the end of June, below the overall suburban average of 29 percent.
— Quinn Donoghue
Read more
Commercial
Chicago
Bridge, American Landmark hunting for more suburban office buyers
Commercial
Chicago
R2 buying Michigan Avenue office tower for $70M as CBRE takes loss
Commercial
Chicago
Alliance loses nearly full Triangle Plaza to Varde over $78M debt