Coastal Partners Buys River North Building From KBS for $17M

Coastal Partners has purchased the Institute Place Lofts office building in Chicago’s River North neighborhood for $17 million.

The transaction amounts to a big loss for seller KBS Growth & Income REIT, which acquired the seven-story building, at 213 West Institute Place, for $43.5 million in 2017, CoStar reported. Cushman & Wakefield brokers Tom Sitz and Cody Hundertmark marketed the 155,000-square-foot building.

The price works out to almost $110 per square foot.

Its massive drop in value can be attributed to the pandemic, which ignited remote work and drove up office vacancies to a record high in the Windy City. Hiked interest rates and a sluggish season for office sales also contributed to a slump in property values across the Chicago area.

KBS Growth & Income, a nontraded REIT managed by KBS Capital Advisors, included the office building and a parking lot, as well as a neighboring office building at 210-216 West Chicago Avenue, in the listing. The parking lot was part of the $17 million deal, but the adjacent 16,000-square-foot building wasn’t part of the sale.

This offloading is part of KBS’s liquidation plan, accelerated by declining property performances in recent years. The REIT previously sold the Commonwealth Building in Portland, Oregon, through a foreclosure sale, the outlet reported.

Chicago-based Coastal Partners owns various real estate assets across California, Illinois, Indiana, Ohio, Tennessee and South Carolina. The Institute Place property was marketed as an opportunity for future development, potentially including apartments or a hotel.

KBS Growth & Income is among several REITs and investment platforms managed by KBS, which boasts a track record of nearly $45 billion in real estate transactions for private and institutional investors.

Another River North office property that’s on the market is Blackstone’s two-tower, 1.3 million-square-foot complex at 350 North Orleans Street. It was listed almost four months after its $310 million CMBS loan matured.

—Quinn Donoghue