601W in Talks to Buy Office Next to Chicago’s Old Post Office

The developer behind one of Chicago’s most ambitious office redevelopments is eyeing another major acquisition, this time right across the street.

New York-based 601W Companies is in advanced talks to buy the 16-story, 516,400-square-foot tower at 525 West Van Buren Street, just west of its landmark Old Post Office redevelopment, CoStar reported.

The sale price is expected to fall in the low-to-mid $30 million range. It would be a dramatic drop from the $135 million Boston-based AEW Capital Management paid for the building in 2015; that pencils out to a potential discounted range of about 74 to 77.8 percent off, down from roughly $261 per square foot to $58 or $68 per square foot.

The deal is not yet finalized and could still fall through, but if completed, it would mark another deep-discount trade in a market reeling from high vacancies and weakened demand for office space.

The property, built in 2001, is 66 percent vacant, with a weighted average lease term of 4.4 years, according to marketing materials.

The building was quietly marketed earlier this year with the expectation it would sell at a significant loss. JLL’s Jaime Fink, Bruce Miller, Patrick Shields and Sam DiFrancesca are representing AEW in the sale. AEW and 601W haven’t commented.

601W is among the most active office investors in downtown Chicago and has a storied history in the area. The firm began investing locally more than two decades ago, with its purchase of 550 West Jackson Boulevard in 2005, and it has since owned or redeveloped trophy assets like the Aon Center and Prudential Plaza. It sold the latter in 2018.

Its most transformative move, however, came with the acquisition and $1.3 billion redevelopment of the Old Post Office at 433 West Van Buren, which is now more than 99 percent leased to tenants including Uber, PepsiCo, Walgreens and Cboe Global Markets. The firm also owns 801 South Canal, a nearby building it’s marketing for office and data storage tenants.

If the Van Buren Street acquisition closes, it would follow a recent trend of opportunistic buys by 601W. The firm also picked up 303 East Wacker Drive in December for about $63 million, less than half its previous sale price.

— Judah Duke