Menashe Buying Wacker Drive Tower from Canadian Pension Fund

Menashe Properties is coming back to Chicago for another piece of its office market.

Nearly two years after breaking in with a steeply-discounted Loop tower purchase, the Portland, Oregon-based firm is teeing up a Wacker Drive deal.

Menashe has a deal in the works to acquire 125 South Wacker Drive, a 31-story office building owned by La Caisse, formerly known as Ivanhoé Cambridge, the real estate arm of Quebec’s largest pension fund, CoStar reported. The sale price hasn’t been disclosed but is expected to come in far below the $145 million La Caisse paid to buy it in 2017.

The deal is still preliminary and could fall apart, but if completed, it would mark Menashe’s second Chicago office tower purchase after its $45 million acquisition of 230 West Monroe Street in 2022. That snapped a long drought in Chicago office sales and underscored how far pricing had fallen as high interest rates and uncertainty around office demand kept most investors sidelined.

La Caisse hired JLL in April to market the 577,000-square-foot Wacker Drive property, which was just 63 percent leased at the time, with a weighted average lease term of 4.3 years. The building’s rent roll is dominated by smaller occupiers averaging just over 8,000 square feet each, atypical of nearby Wacker Drive towers with anchor tenants.

That profile fits Menashe’s playbook: the firm has said it struck nearly 50 leases totaling 150,000 square feet at 230 West Monroe in less than two years by targeting smaller tenants overlooked in some big office tower strategies.

The Canadian seller, meanwhile, has been under pressure to trim office exposure. Earlier this year, La Caisse blamed its bets on New York and Chicago office towers for dragging down real estate performance. In June, Bloomberg reported it had defaulted on the mortgage tied to 85 Broad Street in Manhattan. In Chicago, the fund also owns 10 and 120 South Riverside Plaza, where a $75 million renovation campaign has buoyed leasing.

The pending deal reinforces a contrarian bet on Chicago’s battered office sector. CEO Jordan Menashe declined to discuss the Wacker Drive building specifically but said he was bullish on the market. “I love Chicago, I love the West Loop, and I’m excited to come back for more,” he told the outlet.

— Eric Weilbacher