R2 Buys Another Distressed River North Loft Office Building

Matt Garrison isn’t backing away from Chicago’s distressed loft office market.

His Chicago-based firm R2 Cos. added another distressed River North loft to its portfolio.

The firm purchased the building at 225 West Illinois Street in late December, according to a social media post from R2 partner Zack Cupkovic.

R2 paid $4.65 million for the 46,150-square-foot, five story building, Garrison told The Real Deal. The sale comes out to about $100 per square foot. While a deed detailing the sale is not yet available, the seller appears to be a subsidiary of State Farm Life Insurance, the lender that took over the building through a deed in lieu of foreclosure in October.

The building’s previous owner, Leigh Rabman’s RN Realty, surrendered the property to a subsidiary of State Farm in October, property records show. RN Realty took out an $8.5 million mortgage on the building in 2018, according to public documents.

Rabman and State Farm did not immediately respond to requests for comment.

The acquisition is R2’s latest play into downtown loft workspace, keeping up its bet that distressed and discounted boutique offices will rebound. A venture of R2 and its Chicago-based partner Cubed Real Estate acquired a similar building two blocks north, at 225 West Ohio Street, out of distress in August.

Garrison said the firm is targeting well-positioned lofts in River North and West Loop to build its portfolio. The buildings offer a low-cost way to compete with larger office towers, he said.

“They allow us to offer smaller spaces cost effectively, and the space is interesting and feels good. More like an apartment versus a cold tower,” he said. “More importantly, the cost structure of these buildings is less than half of tower economics.”

R2 has also dabbled in the distressed office tower market, however. In early 2024, it bought the 41-story building at 150 North Michigan Avenue in partnership with Anagram Capital and Italy’s billionaire Garavoglia family, in a deal that marked a massive drop in value for the property. R2 and its partners paid just $60 million for the property, down from more than $121 million its previous owners had paid for it in 2017 before sinking $35 million more into renovations.

At 225 West Illinois, R2 plans to upgrade the building’s lobby and restrooms, and put money into improving the office spaces, Garrison said.

R2’s confidence in the subsector comes against the backdrop of stubbornly high downtown office vacancy rates, especially for Class B properties like the Illinois Street loft building. Vacancy rates in the Central Business District reached 28 percent in the third quarter of 2025, according to CBRE. At Class B spaces, the rate rose to 35 percent.

Property records show Rabman’s firm acquired the building in 2000 from a trust administered by Cole Taylor Bank. While records don’t indicate a purchase price for the long ago transaction, his firm took out a $5.5 million mortgage when it purchased the building.

The structure, which was built in 1976, was renovated in 2000, according to property details on Loopnet.

RN Realty refinanced the property multiple times during its ownership. It took out a $5.25 million mortgage in 2010, then a $6.25 million mortgage in 2015. The last $8.5 million mortgage with State Farm landed the building in distress and led to the lender to take back the property through a deed in lieu of foreclosure, prior to R2’s purchase.