WP Carey Lists Vacant Chicago Office Building

W.P. Carey is looking to offload a downtown office property after abandoning plans for a 100,000-square-foot expansion amid weak demand in the city’s urban core.

The New York real estate investment trust tapped Cushman & Wakefield to find a buyer for the 227,500-square-foot building at 550 West Randolph Street, Crain’s reported. Brokers Tom Sitz, Cody Hundertmark and Dan Deuter are managing the listing.

The asking price hasn’t been confirmed, but insiders suggest the building could sell between $15 million and $20 million. A transaction in that range would break down to between $65 and $88 per square foot.

Built in 1909, the brick-and-timber building has served various purposes throughout its history, including as a warehouse for McKesson & Robbins. In 1990, W.P. Carey purchased the property, which was leased to data analytics firm IRI until its exit in 2020.

Since then, the property has remained vacant, despite its proximity to the busy Ogilvie Transportation Center.

W.P. Carey proposed a significant renovation and expansion to the building, including the addition on an adjacent surface lot, in an effort to revive the property. However, shifting market conditions and challenges exacerbated by the pandemic scuttled those plans.

Many downtown landlords are struggling to fill vacant space following the sharp decline in office demand caused by the pandemic and remote-work patterns.

Chicago’s downtown office vacancy rate climbed to 26.3 percent in the fourth quarter, up from 23.8 percent at the end of 2023 and more than double the 13.8 percent rate at the start of the pandemic, according to CBRE.

This marks the 10th consecutive quarter of rising vacancies for downtown landlords. The fourth quarter alone saw over 150,000 square feet of net negative absorption, nearly doubling the previous quarter’s total. For the year, net absorption was negative 1.6 million square feet, the lowest since 2021.

Once W.P. Carey’s has fully divested from the Chicago’s office market, it plans to focus its efforts on industrial and retail properties. The company’s portfolio consists of 1,430 properties spanning 172 million square feet, along with 78 self-storage properties, according to a regulatory filing.

— Andrew Terrell