A Los Angeles investor has snapped up a distressed downtown office building at a fraction of what it last traded for, spotlighting a market that’s still grappling with the pandemic’s aftermath and broader challenges facing commercial real estate.
Brog Properties paid $2.6 million for the 185,000-square-foot building at 216 West Jackson Boulevard via auction, with plans to aggressively pursue new deals with tenants and other measures to revitalize the mostly vacant property, CoStar reported. The price is about $14 per square foot.
The last time the 10-story building changed hands was in 2013, when Marc Realty bought it for $22.3 million, or about $120 per square foot.
“I like buying deeply discounted assets,” Andrew Brog, the firm’s managing member, told the outlet. “With the right deal structure and ability to invest capital in the property, we’ll change the momentum. With our cost basis, we’ll be able to do deals that make sense to us but that no one else will be able to do.”
Marc Realty was sued over a year ago after allegedly defaulting on a $16.5 million loan tied to the property. Marc eventually surrendered the property via deed-in-lieu of foreclosure, leading Florida-based special servicer LNR Partners to take control of the site last summer. The building hit the auction block in February, and the sale was finalized this week.
Brog aims to leverage the building’s location and historic charm to attract businesses seeking office spaces ranging from 3,500 to 9,000 square feet.
The historic building was just 15 percent leased when it hit the market earlier this year, highlighting the impact of the remote-work movement, which has led to a slew of downsizing moves in recent years. Persisting remote-work trends have contributed to record-high office vacancy in 12 of the last 14 quarters, exceeding 25 percent last quarter.
Brog’s acquisition exemplifies a broader trend of steeply discounted office sales in Chicago’s Loop. As landlords struggle to refinance their assets amid tough lending standards, they’re often pressed to sell their assets at a loss to avoid foreclosure.
Brog plans to breathe new life into the property through facade and lobby renovations and adding a ground-floor bar and restaurant. Brog emphasized a commitment to capitalizing on the building’s proximity to transportation hubs and dining establishments, including the iconic Willis Tower.
—Quinn Donoghue
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