Distressed Former Bookfield Office Asset Listed in Chicago

A mostly vacant office building in Chicago’s West Loop is back on the market, this time under control of a CMBS trust.

The 1.4 million-square-foot building at 175 West Jackson Boulevard is being marketed by JLL on behalf of a receiver, Real Estate Alert reported.

The 22-story building, formerly owned by Brookfield Asset Management, was appraised at just $84 million ($60 per square foot) in November, a 72 percent drop from the $305 million ($218 per square foot) Brookfield bought it for in 2018.

Brookfield acquired the historic Daniel Burnham–designed building through a $280 million CMBS loan, which was originated by Deutsche Bank in 2013, with plans to reposition it through renovations and lease-up, investing $24 million in upgrades. But the property never reached full stabilization. Occupancy hovered below 70 percent at acquisition, and debt servicing issues led to the loan returning to special servicing in 2021.

Brookfield attempted to offload the building in 2023 with JLL but a deal never materialized. Special servicer LNR Partners foreclosed in January.

The building is 41 percent occupied, and brokers are pitching it as a value-add opportunity with income from long-term tenants and potential for spec suite buildouts.

Recent leases include 34,070 square feet to Loadsmart and a deal with wellness platform WellRight, part of a 50,000-square-foot surge in spec suite demand.

In March, the General Services Administration was negotiating penalties to terminate the SEC’s lease on the building’s 14th floor as part of federal cost-cutting plans under the Trump administration. The website for the Department of Government Efficiency, which tracks federal lease terminations, hadn’t recorded a termination as of Wednesday.

A sale near the appraisal price would track with other deep-discount trades in Chicago’s battered Loop office market. In January, Glenstar paid $68 million for 200 South Wacker, down 68 percent from its last sale. That same month, Phoenix-based 3Edgewood picked up 600 West Chicago for $88.7 million, an 82 percent drop from its 2018 price.

— Judah Duke