The Irvine Company is debt free on a prominent commercial property in Chicago’s River North.
The Newport Beach, California-based real estate giant, led by CEO Donald Bren, paid off its $431 million balance for 300 North LaSalle Street, Crain’s reported. The payoff positions the 60-story office tower to attract tenants in a competitive and challenging market.
The firm borrowed $475 million to finance its $850 million purchase of the 1.3 million-square-foot building in 2014, and the loan matured this month, when $431 million came due, the outlet reported, citing an anonymous source. The purchase price equated to $654 per square foot, and the debt payoff comes to $332 per square foot.
The tower, which fronts the Chicago River and was developed by Hines in 2009, recently underwent a tenant reshuffle.
It lost major tenants Kirkland & Ellis and Boston Consulting Group, but the landlord quickly secured leases with law firms Winston & Strawn, White & Case and Crowell & Moring, as well as real estate investment trust Ventas. They have taken over 310,000 square feet, collectively, signaling continued confidence in the building’s value.
The deep-pocketed landlord is investing $30 million in renovations to further enhance the building’s appeal, including a modernized lobby and an indoor-outdoor terrace connected to the Chicago Riverwalk.
“Our financial stability allows us to invest in the kind of workspaces that companies are looking for,” said Roger DeWames, president of Irvine Company Office Properties.
Settling the debt means Irvine will avoid the refinancing hurdles that have plagued many other office landlords, who are grappling with elevated interest rates, remote work trends and rising vacancy across downtown Chicago.
The central business district has experienced a significant shift over the past year, when companies vacated 1.9 million square feet of office space in downtown Chicago neighborhoods. Downtown’s office vacancy has been hitting record highs quarter-after-quarter, landing at 25.8 percent at the halfway point of this year.
Not all buildings are struggling equally. Newer and recently renovated properties, such as Irvine’s 300 North LaSalle Street, have been performing better than their older counterparts.
Vacancy in Class A office buildings declined to 18 percent in the second quarter, just above the 16.1 percent recorded in mid-2023. Meanwhile, Class B buildings are far emptier than they were last year, with vacancy rising from 22.3 percent to 29 percent over the same period.
— Andrew Terrell
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