Werner, 601W Buy Downtown Chicago Office Tower at Discount

One of downtown Chicago’s larger office buildings just sold at a bargain price to a joint venture of two New York-based companies that includes the developer-owner of the Old Post Office.

David Werner Real Estate and 601W Companies paid $41 million for the 1.4 million-square-foot office building at 175 West Jackson Boulevard, Crain’s reported. The deal, which closed late last week, values the 22-story building at roughly $29 per square foot.

Northwind Group, a New York-based private equity firm, financed the purchase with a $58.5 million loan that included $33.5 million toward the acquisition and another $25 million earmarked for future leasing costs, according to a statement from the lender and people familiar with the deal. JLL brokers Jaime Fink, Bruce Miller and Sam DiFrancesca represented the seller.

The sale price is about 87 percent below the $306 million price Brookfield Asset Management paid for the Daniel Burnham–designed property in 2018, or nearly $219 per square foot. Brookfield also poured roughly $24 million into renovations before the market turned, the outlet reported.

The transaction completes a painful haircut for Brookfield and for bondholders tied to the building’s $280 million commercial mortgage-backed securities loan, which landed the prooerty in foreclosure in 2022. LNR Partners, the special servicer overseeing the debt, confirmed the sale, but declined to comment. Brookfield also declined to comment, according to the publication.

The building — which spans an entire city block from West Jackson Boulevard to West Van Buren Street — was 47 percent leased as of the middle of last year, according to JLL marketing materials. A court-appointed receiver managed to stabilize things somewhat by extending the lease of anchor tenant Enova International, though the fintech firm downsized. Wolverine Trading, the property’s second-largest tenant, is set to vacate about 88,000 square feet in 2027 for the Old Post Office.

The purchase adds to a growing Loop portfolio for 601W, built on distress. The firm and Werner paid about $63 million late last year for the building at 303 East Wacker Drive, a roughly 66 percent discount off its 2018 price, with Northwind also providing financing. In November, 601W paid $35 million for the building at 525 West Van Buren Street, down 74 percent from its prior sale price.

The buying spree comes even as 601W grapples with its own office headaches, including looming debt on the Aon Center and 1 South Wacker Drive in Chicago.

— Eric Weilbacher