Donald Bren Tests Chicago Office Market With Potential Sale

Donald Bren’s firm, Irvine Company, might be preparing to test how much market appetite remains for top-tier office buildings in downtown Chicago.

The Newport Beach, California-based firm is moving toward a potential sale of the 50-story tower at 1 North Wacker Drive, according to sources familiar with the matter and first reported in Crain’s. Irvine recently interviewed brokerage teams and tapped Eastdil Secured to conduct a strategic review of the 1.4 million-square-foot skyscraper. Should Irvine formally list the tower, it would be the company’s first Chicago office sale since it entered the market in 2010.

Eastdil Managing Director Bryan Rosenberg confirmed to the publication that the firm was retained, but said the property has not been listed.

Any sale would be closely watched, as downtown office values have been battered by recent market conditions. But the tower at 1 North Wacker possesses a lot to work with, such as a prime riverfront address, strong cash flow and a roster of blue-chip tenants, according to the outlet.

The tower generated $47.2 million in net operating income in 2023, according to Bloomberg data tied to its $353 million commercial mortgage-based securities mortgage, which Irvine put in place during a 2021 refinancing. The building was appraised at $664 million at the time.

The tower would likely trade far above recent Chicago office deals, many of which involved distressed or sparsely leased properties. Just a couple blocks south, towers at 125 and 200 South Wacker Drive sold last year for under $100 per square foot.

Irvine, led by the 93-year-old billionaire Bren, has long cultivated a reputation as a patient, long-term holder. In Chicago, the firm also owns the building at 71 South Wacker Drive and last year paid off a $431 million loan on its tower at 300 North LaSalle Street, signaling staying power. But the company has shown it will sell when the timing suits it, having unloaded its entire downtown San Diego office portfolio over the past two years.

While downtown Chicago office vacancy sits at about 28 percent, 1 North Wacker is roughly 92 percent leased, according to CoStar. Trophy buildings citywide are faring much better than the broader market, with vacancy closer to 11 percent, Colliers data shows.

The tower has also proven resilient post-pandemic. PricewaterhouseCoopers signed a 10-year lease extension last year for more than 282,000 square feet, pushing its term to 2038, while Barnes & Thornburg expanded and extended its lease through 2036. Irvine also recently poured $10 million into upgrading the building’s amenity floor.

— Eric Weilbacher