Investors looking to take a chance on Chicagoland’s beleaguered office sector have a prime opportunity to snag a west suburban asset at a steep discount from the lender that took back the property last summer.
An affiliate of New York-based JPMorgan Chase has hired Cushman & Wakefield brokers Dan Deuter, Tom Sitz and Cody Hundertmark to sell the mostly vacant Landmark V office building, at 3005 Highland Parkway in Downers Grove, Crain’s reported.
Adventus Realty Trust, the previous owner of the 251,000-square-foot Landmark V, ran into trouble with its $35.7 million loan from JPMorgan Chase in 2020. Adventus, which bought the building for $71.6 million in 2015, was facing a looming November deadline to pay off its $28.9 million balance.
The building’s value has likely fallen well below the loan tied to it, partly because anchor tenant Adtalem Global Education, which once leased more than 170,000 square feet, is vacating the site, dropping its occupancy rate to just 32 percent, the outlet reported.
The building is one of many Chicago-area office assets dealing with symptoms of distress. Persistent remote-work trends continue to drive up vacancies to record highs. Plus, high interest rates and tough lending standards have compounded challenges facing landlords since last year, culminating in an increase of foreclosures, lender take-backs and properties selling for far less than they were once worth.
Despite the challenges surrounding the property, Cushman & Wakefield is playing up the aspects working in its favor. Industrial manufacturing company Dover recently upped its occupancy to 79,800 square feet, while extending its lease through the end of 2030.
Landmark V, completed in 2008, is one of the newest office properties in Chicago’s suburbs. Demand can be higher for newly built or renovated office buildings, as companies try to lure employees back to the office.
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The success of a nearby property, 3500 Lacey Drive, which secured significant leasing post-pandemic, serves as a testament to the resilience of newer buildings.
Commercial real estate is still grappling with broader challenges. Nationwide, office sales in suburban areas plummeted by 55 percent last year to $38.6 billion, according to research firm MSCI Real Assets.
Notable transactions in Chicagoland in recent months include Blackstone Group’s $60 million sale of the Oakbrook Terrace Tower and a Wylie Capital-led venture’s $30 million purchase of an office complex in Vernon Hills.
—Quinn Donoghue