601W Locks Up Chicago Office Buy with Sheridan Capital Loan

Office giant 601W Companies snapped up 525 West Van Buren Street in Chicago’s West Loop at a major discount from its previous value, sealing the deal with a $26 million bridge loan from Sheridan Capital.

The 16-story, 516,000-square-foot office tower changed hands for $35 million, well below the $135 million its previous owner, Boston-based AEW Capital Management, paid in 2015. The price works out to $68 per square foot.

New York-based 601W turned to Sheridan to finance the acquisition, tapping the lender’s appetite for complex deals with tight timelines. Aaron Kurlansky and Michael Yassky led the origination for Sheridan, which also announced two additional loans that same week, including an $18 million multifamily deal in Baton Rouge and a $4 million healthcare facility loan in Minnesota.

The Van Buren property is 36 percent leased, with Tropicana and the federal government’s GSA as tenants in the high-vacancy asset. It sits directly across from 601W’s flagship redevelopment of the Old Post Office and a block away from transit hub Union Station — a key selling point in a sluggish office leasing environment.

601W has a track record of taking on large, distressed or underperforming buildings and repositioning them, often with an eye toward modern amenities or conversions.

Details on 601W’s plans for the West Loop building weren’t disclosed, but the firm had explored repositioning the nearby former Northern Trust office building just to the south at 801 South Canal Street as an upgraded office building. But the landlord later backed away from those plans and is toying with converting it into a data center asset.

The submarket in the southwest portion of the Loop and just over the river to the southern portion of the West Loop has struggled with vacancy, but the Van Buren Street building’s proximity to 601W’s existing holdings may offer cost and operational synergies.

601W is also in talks to buy the severely distressed 175 West Jackson Boulevard just to the east, after landlord Brookfield defaulted on a massive loan tied to the property amid the depths of the pandemic.

Sheridan, meanwhile, is positioning itself as a go-to bridge lender in a market still plagued by high interest rates and valuation resets. Its bet on 601W signals confidence not just in the borrower’s execution but in the long-term viability of well-located office assets, even those with leasing challenges.

The transaction comes amid a wave of distressed office sales in Chicago, as institutional owners look to cut losses or exit troubled assets. For 601W, the Van Buren pickup is a discounted play next to one of its crown jewels — and now, another shot at a turnaround.