A Chicago loft building once adorned with handprints of famous athletes such as Michael Jordan and Walter Payton is for sale in a deal that could extend a national run of office properties selling for less than the value of their debt.
Next Realty has hired brokers from Cushman & Wakefield to seek a sale of the 89,514-square-foot building at 620 N. LaSalle St., the firm told CoStar News. Amid high office vacancy, a year of rising interest rates and worries about the economy, the property could sell for less than a loan of about $14 million, an option known as a short sale, according to people familiar with the building.
A change in owners would add to the colorful history of the eight-story longtime retail property that was converted to offices before the pandemic, when coworking firm Spaces signed a lease for the entire building.
But Spaces, part of flexible workspace provider IWG, moved out of the building early in the pandemic. That left Next Realty with a block of empty space and about $14.3 million left to pay to Wintrust Bank from a 2018 refinancing, according to Cook County property records.
Skokie, Illinois-based Next Realty has owned the building at LaSalle and Ontario streets since 2002, when it was a huge Sports Authority store.
“After 20-plus years of ownership and transforming the building to a fully automated modern timber loft office building, it is time for a new owner to steward the building for the next 20 years,” Marc Blum, president and chief operating officer of Next Realty, said in a statement to CoStar News. “We’re very proud of the transformation and the unique opportunity it creates for a range of users and investors.”
Known for Sporting Goods
Many Chicagoans remember the building for its once-extensive collection of handprints displayed on the interior and exterior as an attraction for customers of sporting goods stores that previously occupied it.
The building was a longtime home to Morrie Mages’ local chain of sporting goods stores before that company was sold to MC Sporting Goods in 1987. Morrie Mages Sports began the tradition of collecting handprints of famous athletes such as Chicago Bulls basketball star Jordan and Chicago Bears football great Payton.
Next Realty CEO Andrew Hochberg also has an extensive history in the Chicago-area sporting goods arena. Hochberg once led his family’s Sportmart chain, which merged with Gart Sports in 1998, before that company merged with Sports Authority in 2003.
The building at 620 N. LaSalle was a Sports Authority store in 2016 when the retailer filed for bankruptcy and closed all its stores.
Less than half the building is now occupied by short-term office tenants that were signed by Next Realty after it took back the space, according to people familiar with the building. That includes Cameo, the Chicago company whose app sells personalized video messages from celebrities.
The building is more than 55% vacant, according to CoStar data.
A full renovation of the building, launched in 2018, included demolition of all interior finishes and adding new windows, elevators and a large rooftop deck with views of the skyline, according to Next Realty’s statement. The overhaul also replaced the plumbing, electrical, heating and cooling systems.
Amenities also include a gym with lock rooms and showers.
“We are excited to bring 620 N. LaSalle to the investment community given its well-documented history in Chicago and the unique opportunity it creates because of its size, location and comprehensive redevelopment,” Hochberg said in the statement.
New Uses Possible
A new owner of 620 N. LaSalle could look to continue running it as a coworking business or reconfigure it for one or more long-term office tenants. The building also could interest companies that want to own their own office space or residential developers.
It’s yet to be seen whether the property at LaSalle and Ontario streets will join a list of local and national offices selling for less than their debt, a scenario in which owners send proceeds directly to lenders, paying for some but not all of the remaining balance of the property’s loan.
The closest parallel could be 20 W. Kinzie St., another River North property just going on the market for sale. The deal involves another longtime local owner, the Alter Group, and the recent exit of another coworking company, WeWork.
The office portion of the 17-story building is expected to sell for significantly less than the $60 million loan, CoStar News reported last month.
In another ongoing deal in Chicago, developer R2 is negotiating to buy the 41-story tower at 150 N. Michigan Ave. for about $70 million, or about $16 million less than the debt.
For the Record
Cushman & Wakefield brokers Cody Hundertmark, Tom Sitz, Dan Deuter, Paul Lundstedt and Kelsey Berry are representing the seller.