Knighthead Selling West Loop Office-to-Migrant Shelter Conversion

Tom Wagner’s debt firm is ready to move on from a West Loop property that got weighed down by low demand for Chicago offices and revived as a migrant shelter, and then drew two lawsuits.

Wagner’s firm Knighthead Funding provided an $11.5 million loan for the five-story property at 344 North Ogden Avenue, and later initiated legal battles against landlords Scott Goodman and A.G. Hollis over its use as a shelter, as well as allegedly late loan payments.

Connecticut-based Knighthead hired JLL to sell the loft office building and its two adjacent properties that total over 62,000 square feet, CoStar reported.

The building was originally offices, but got converted by Goodman and Hollis into use as a migrant shelter in 2023 after Texas Governor Greg Abbott began bussing thousands of migrants to Chicago, leaving local leaders searching for somewhere to house the asylum seekers. Goodman and Hollis agreed to use the building for housing and take $150,000 per month in rent.

But in May 2024 Knighthead Funding filed a foreclosure lawsuit over a loan issued to the business partners for the property, which is just west of the sought-after commercial real estate in the Fulton Market District neighborhood. The lawsuit alleges they missed $1.2 million in interest payments and did not properly inform the lender of their intent to use the loft office building for “residential purposes.” In October, the lender filed a second lawsuit to foreclose on the property.

The first suit claims the landlords agreed to conceal the use of office loft for residential use from Knighthead without seeking approval for as long as possible. The second suit claims the action was a breach of contract and that the landlords had missed loan payments since September 2023.

Court records do not indicate whether the pair of lawsuits were settled or otherwise resolved, and it isn’t clear if Knighthead formally took possession of the property from Goodman and Hollis. The duo bought the property in 2016 for $10.85 million.

The sale comes at a time when the Fulton Market area — the building sits near its western edge — has become an active development scene, attracting residential, office and hotel ventures, though Goodman and Hollis originally agreed to use the building as a shelter at a time of low office demand.

Goodman is the founder of Farpoint Development and was co-founder of Sterling Bay, which he left in 2016 to launch his current company. Farpoint is one of the leaders of the development team behind the multi-billion dollar Bronzeville Lakefront megaproject set to bring new commercial uses to the former Michael Reese Hospital site on the South Side.

JLL broker Dan Reynolds is representing Knighthead Funding in the sale of the West Loop buildings.— Eric Weilbacher