A major downtown Chicago office tower has changed hands for the first time in over a year, hinting at a possible recovery for an office sector that’s still reeling from the pandemic while highlighting how much Loop office buildings have depreciated recently.
Oregon-based investor Menashe Properties paid nearly $45 million for the 623,000-square-foot building at 230 West Monroe Street, a staggeringly low amount given that the property last traded for $122 million in 2014, when Florida-based Accesso Partners bought it, Crain’s reported. Eastdil Secured brokers Bryan Rosenberg and David Caprile helped arrange the sale.
The sale price is nearly half the amount of Morgan Stanley’s $87.7 million loan that it provided Accesso in 2019 as part of a refinancing deal.
The building’s roughly 65 percent drop in value since 2014 further demonstrates the beleaguered state of Chicago’s office market. Remote work trends continue to present challenges, as do company layoffs and gobs of available sublease space in office towers. Hiked interest rates and a tight lending climate have made it even tougher for landlords to stay afloat, as the city’s office vacancy rate reached new heights last quarter.
Menashe’s purchase does have a silver lining, though. It’s the first time a large Loop-area office property has traded since July 2022, when Google bought the James R. Thompson Center for $105 million.
Plus, the sale shows some of the advantages of being able to buy a large property at a steep discount. The investor was able to pay cash for 230 West Monrose and avoided the headache of taking out a loan amid a rising interest rate climate. The firm can also aggressively pursue tenants as a result of spending a relatively small amount.
“We’re open for business,” company CEO Jordan Menashe told the outlet. He added that while many investors are steering clear of office acquisitions, “we are going to benefit from being a first mover.”
“Anybody that can make decisions and take care of tenants and customers is in a pretty good position right now,” he told the publication.
The 29-story building has an occupancy rate of 60 percent, down from the citywide average of roughly 77 percent. By 2026, 15 percent of its rentable space will have leases expire, the outlet reported.
Menashe plans to perform several renovations, such as upgrading the lobby, building move-in ready offices and bringing a “younger vibe” to the site.
— Quinn Donoghue
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