Oregon Firm Bets on Chicago Office Rebound in Bargain Buys

An Oregon investor is the latest to shop at the bottom of Chicago’s battered office market, snapping up a Wacker Drive tower at a deep discount to its last sale.

Portland-based Menashe Properties bought 125 South Wacker Drive from Canada’s La Caisse last week, Costar reported. La Caisse is the real estate arm of Quebec’s largest pension fund.

Menashe CEO Jordan Menashe declined to provide the selling price for the 547,000-square-foot building, but a person familiar with the deal told the outlet it was $51.5 million.

That would be $94 per square foot and a 65 percent drop from the $145 million that La Caisse, then operating as Ivanhoé Cambridge, paid for the 31-story building in 2017.

The sale adds to a growing list of downtown office trades closing at fractions of pre-pandemic valuations, as investors bet on the sector’s long-term recovery despite high vacancy, remote-work headwinds and expensive financing.

For Menashe, who entered Chicago’s market two years ago, the purchase fits a pattern. His firm bought the nearby 230 West Monroe Street tower for $45 million in September 2023 — another sharp markdown that’s since turned into a success story. That property, Menashe said, has been stabilized with about 50 new leases and renewals.

“This is very similar to 230,” Menashe told the outlet. “It’s a pure lease-up play.”

Menashe said he plans to add eight to 10 move-in-ready spec suites to fill the roughly 37 percent of the Wacker building that remains vacant.

While 125 South Wacker sits across from Willis Tower, it caters to smaller tenants occupying less than a full floor — a niche Menashe says is increasingly underserved.

“Take out ghost buildings that can’t transact, and figure that nothing new will be built for five or six years, and we’re under-officed,” he said, arguing that constrained supply will eventually lift values.

La Caisse invested $21 million in renovations to 125 South Wacker during its ownership, upgrading mechanical systems, common areas and amenities. JLL began marketing the tower for sale in April.

Menashe said he sees early signs of an office market recovery. A recent Costar analysis projects U.S. office occupancy to rise by 10 million square feet over the next year — a reversal from earlier expectations of decline.

“People went from office curious to office serious,” Menashe said. “That goes for everywhere from Chicago to Portland. The word is out — and that will push prices up.”

— Eric Weilbacher