Beacon Capital Partners is betting on the long-awaited recovery of Chicago’s office market, where record-high vacancies and distress symptoms persist.
The Boston-based firm is finalizing a deal to purchase the 36-story office building at 333 West Wacker Drive from a venture of the AFL-CIO Building Investment Trust, Crain’s reported. It would be the largest downtown office trade since the sale of the 1.2 million-square-foot former BMO Harris building in July 2022.
Beacon is engaged in talks with Germany-based insurance giant Allianz, which provided a $156 million loan for the investment trust’s $320 million purchase of the 867,000-square-foot building in 2015. Allianz is expected to offer seller financing — a move in which the seller acts as the lender, and the buyer makes installment payments — for Beacon’s acquisition.
Although the purchase price has not been disclosed, it is likely to be less than the remaining balance of the Allianz loan. If the deal is completed, it would erase a huge chunk of equity for the seller.
The remote-work era and high interest rates continue to crush office property values across the city. A beleaguered office market, along with tight lending standards, have stymied sales in recent years. Properties that have changed hands have typically traded for far less than they were worth pre-pandemic.
However, Beacon’s investment in 333 West Wacker signals optimism, as the firm has a track record of revitalizing office properties and adding value through renovations and amenities.
The building is 80 percent leased, compared to the Chicago average of 75 percent. Its anchor tenant, Chicago-based investment manager Nuveen, recently signed a long-term lease extension and will retain most of its 180,000-square-foot occupancy, the outlet reported.
—Quinn Donoghue
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