A half-empty Loop office tower is the latest landlord banking on the “Google effect” to revive Downtown Chicago’s battered office market.
Located at 2 North LaSalle Street, the tower is just north of 713,000 square feet, but is only half-full, according to CoStar. JLL brokers were hired to sell the 26-story property, which is currently owned by New York-based Torchlight Loan Services, who specialize in properties in distressed debt. The current tenants are the city of Chicago, which holds the lease for about 319,000 square feet of the property. The outlet reported that 1,200 city employees work out of the building, and the lease won’t run out until mid-2035.
On the heels of the pandemic and subsequent remote work patterns, previous owners Hearn and the New York-based Fortress Investment Group were forced to surrender ownership to Torchlight in 2023, who became the building’s special servicer on a commercial mortgage-backed securities loan which today is close to $138 million. Even though Chicago-based Hearn no longer holds the building’s title, it continues to manage the property, according to the publication.
Despite market headwinds and the building’s history, there’s renewed optimism that the property could sell for a significant chunk of change. The building appears to be in a solid location, close to city hall and a new Google office redevelopment of the Helmut Jahn-designed Thompson Center. There have also been several properties sold close to the location in the recent past, giving some faith to the idea that there could be a buyer willing to take a big risk for a potential big reward of the “Google effect.”
According to CoStar, brokers JLL are banking on that renewed optimism to find a seller. While the price tag would be steep to cover the loan balance relative to other nearby recent distress sales, the momentum in the area could be enough to entice a specific kind of buyer, according to the outlet. And Hearn and Fortress were hardly uninterested owners, as they spent $10 million on move-in-ready suites, a lobby renovation and other amenities.
— Hunter Cooke
Read more
Commercial
Chicago
Hearn, Fortress give up keys to LaSalle Street office tower lender
Commercial
Chicago
Next! Haircut looms for Hearn, Fortress at 2 North LaSalle