Beacon makes largest office purchase in Chicago since early 2022

Bought Wacker Drive tower for $125M from AFL-CIO Building Investment Trust

Beacon Buys Chicago Office Tower for $125M
Beacon Capital’s Fred Seigel with 333 Wacker Drive (Beacon Capital, KPF)

Beacon Capital Partners has stepped up to make the largest office purchase in downtown Chicago in years, at a time when many investors are steering clear of the struggling asset class. 

The Boston-based firm has finalized a deal to pay $125 million for the 36-story riverfront tower at 333 West Wacker Drive, CoStar reported. The price comes to $144 per square foot for the 867,600-square-foot building.

The seller was AFL-CIO Building Investment Trust, which bought the tower for $320.5 million in 2015. Cushman & Wakefield brokers Cody Hundertmark, Tom Sitz and Dan Deuter represented the seller. 

The building’s staggering drop in value reflects the beleaguered state of Chicago’s office sector, which continues to get hammered by remote-work trends and high interest rates. The city’s office vacancy rate topped 25 percent for the first time ever in the first quarter, according to CBRE.

Despite the its depreciation, the $125 million price point marks the most expensive office sale in Chicago since early 2022, when investor Tim Callahan and New York’s Oak Hill Advisors paid $210 million for a controlling stake in the 55-story tower at 110 North Wacker Drive. 

A Chicago office sale hasn’t topped nine figures since Google’s $105 million purchase of the James R. Thompson Center in July 2022. 

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Beacon Capital has owned the Wacker Drive building once before, having previously sold it for $208 million in 2004 to German investor KanAm Group.

The amount Beacon paid for the tower is lower than the $156 million loan taken out by the previous owner, from Germany’s Allianz Life Insurance, in 2015. Allianz loaned $185 million to Beacon upon acquisition. 

Beacon’s exact plans for the building are unclear, although scaffolding around the base indicates renovations. The construction activity may be linked to an agreement with the tower’s largest tenant, Nuveen, which has committed to a long-term lease of 165,000 square feet through 2037. Beacon is obligated to invest $36 million in building improvements, including upgraded lobbies, a restaurant-cafe, an outdoor deck and a tenant lounge.

The tower, developed in 1983 by Hines, has received $24 million in renovations since 2018. Its occupancy rate is projected to fall to 73 percent with upcoming lease expirations, the outlet reported.

—Quinn Donoghue 

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