Namdar, Mason Buy Chicago Office Tower at Massive Discount

Two New York firms purchased a distressed office tower in Chicago’s Loop for an estimated $85 million, in the largest downtown office sale since 2022.

Namdar Realty Group and Mason Asset Management acquired the 1.4 million-square-foot 70 West Madison Street in an all-cash deal, CoStar reported. The estimated price pencils out to $60 per square foot.

The purchase marks a 77 percent discount from the $374.6 million ($268 per square foot) the sellers paid for the property in 2014, a period when Chicago’s office leasing and investment sales market was thriving.

The seller is an ownership group that includes Chicago firms Hearn and GEM Realty Capital, along with San Francisco hedge fund Farallon Capital Management. CBRE’s David Knapp, Blake Johnson and John Saletta represented the sellers.

Namdar and Mason are no strangers to distressed property acquisitions. The firms, led by executives Igal Namdar and Elliot Nassim, have also acquired the 47-story skyscraper at One North LaSalle Street, the 200 Public Square office tower in Cleveland and a retail property on Chicago’s Magnificent Mile.

A wave of distress hit Chicago’s downtown office market last year, marked by low demand, record-high vacancies and declining valuations.

Signs of distress for the West Madison tower trace to a $305 million ($218 per square foot) refinancing deal completed in 2018, which was at the center of a $275 million foreclosure lawsuit last year.

The buyers have an opportunity to revitalize the tower, supported by more than $53 million in renovations carried out by the sellers.

These upgrades — renovated lobbies, fitness center and conference rooms — could help attract tenants. At the time of the sale, the building was 68 percent leased with a weighted average lease term of 5.4 years, according to a CBRE brochure. Tenants include law firms K&L Gates and Nixon Peabody.

The West Madison tower is the largest downtown Chicago office property to be sold since March 2022, when Chicago investor Tim Callahan and New York’s Oak Hill Advisors paid $210 million for a controlling stake in the 1.5 million-square-foot Bank of America Tower at 110 North Wacker Drive.