It will require a daring buyer to take on a hefty loan tied to a distressed downtown office building, one of many in Chicago amid record-high vacancies and looming maturities.
Newmark brokers will begin accepting bids this week for the $74 million loan on the 47-story tower at 1 North LaSalle Street, Crain’s reported.
Utah-based Bridge Investment Group bought the 494,000-square-foot building for $113 million, or $229 per square foot, in 2018, taking out an $85 million loan upon purchase. Last year, the property was reappraised at $37 million, down 74 percent from its 2018 valuation of $142.4 million.
Offers are expected to fall below its latest appraisal, spotlighting the troubled state of Chicago’s office market. The pandemic-fueled remote-work era contributed to a vacancy rate of more than 25 percent for the first time ever last quarter, with foreclosures and other signs of distress continuing to surge. Tight lending standards have exacerbated challenges in recent years, as landlords struggle to refinance their assets.
The 493,000-square-foot building’s occupancy sits at 56 percent, a fall from 76 percent in 2021, when Bridge paid down a portion of the loan balance. The property, which is listed on the National Register of Historic Places, generated $1.9 million in net operating income in 2022, down from $4.5 million the year prior, the outlet reported, citing Bloomberg data.
A number of struggling office properties are up for grabs in downtown Chicago, most of which are expected to sell for a fraction of what they were once worth. Earlier this week, Metropolitan Life Insurance listed the 16-story, 372,600-square-foot building at 550 West Washington Boulevard, where the occupancy rate stands at 31 percent.
Distressed buildings at 444 North Michigan Avenue and 30 West Monroe Street also hit the market earlier this month.
—Quinn Donoghue
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