Another trophy tower may be headed for a fire sale in downtown Chicago.
Long Island-based Kohan Retail Investment Group is under contract to buy 311 South Wacker Drive, one of Chicago’s tallest office towers, for a deep discount — potentially less than a quarter of what it last sold for, CoStar reported.
The 65-story, 1.3 million-square-foot tower has been up for grabs since at least early 2022, with multiple failed buyer attempts. Chicago-based Zeller Realty and China’s Cindat Capital paid $302 million ($232 per square foot) for the property a decade ago at the height of the market, but rising vacancies, remote work trends and financing challenges have since crushed valuations.
Kohan’s deal comes after a recent failed bid from local investors John Murphy and Gerald Kostelny, who had tried to renegotiate their $70 million ($54 per square foot) offer due to mounting tenant losses. Washington, D.C.-area firm Firenze Group backed out of a $300 million deal ($231 per square foot) in 2022 as the market began to slide.
The price for Kohan’s deal hasn’t been disclosed, but sources say it’s lower than Murphy’s offer, potentially setting a low-water mark for office deals in Chicago. The sale is still subject to lender signoff and could still fall apart. JLL’s Jaime Fink, Bruce Miller, Patrick Shields and Sam DiFrancesca are brokering the sale.
Kohan is best known for scooping up distressed shopping centers around the country and has drawn scrutiny for missed tax payments and deferred maintenance. It recently bought a 25-story office building in Midtown Manhattan with plans to convert it to residential, but it’s unclear if a similar redevelopment is on the table for 311 South Wacker.
The property, built in 1990, was once slated for major repositioning. Murphy and Kostelny had considered partial conversion to apartments or a hotel, and even floated full demolition for a multi-tower ground-up project with Hines. One source said the plan would’ve been “the biggest voluntary demolition in world history.”
Instead, the skyscraper may land in the hands of a discount-hunting firm known more for malls than for offices.
— Judah Duke