A Chicago investor known for big real estate projects in emerging areas has a deal to buy a 50-story office tower in the center of the city’s long-established Loop business district, across the street from a high-profile building that Google plans to buy and occupy.
Farpoint Development has been chosen as the buyer of the nearly 1.1 million-square-foot building at 161 N. Clark St., according to people familiar with the situation.
The deal is preliminary and still could fall apart amid a shaky office leasing, investment and lending market. An exact price could not be determined, but it is expected to be far below the value of a $230 million loan the tower’s longtime owner — South Korea’s postal system, advised by CBRE Investment Management — borrowed from Societe Generale in 2018. That came about five years after the Korea Post venture bought the tower.
Buying a major Loop office tower would be a contrarian move of sorts for Farpoint founding principal Scott Goodman, the co-founder of Chicago-based Sterling Bay. That firm is known for pioneering investments away from the Loop, including landing Google’s Midwest headquarters for the redevelopment of a cold storage building in Fulton Market, a deal that helped lead to the former meatpacking district’s ongoing high-rise construction boom.
The 161 N. Clark loan appears to have matured in August, a few months after the tower went on the market for sale, according to Cook County property records. The building opened in 1992.
Societe Generale filed a foreclosure suit in October, the Real Deal Chicago previously reported.
If Farpoint lines up an investment partner and completes the deal, it is expected to follow the recent trend of lenders providing financing to new owners to limit losses on the previous loan.
In a similar deal, Chicago-based R2 recently bought the 41-story office tower at 150 N. Michigan Ave. for $60 million, about half its previous sale price from 2017. That buyer was another CBRE Investment Management venture.
The Paris-based bank did not immediately respond to a request for comment from CoStar News. Farpoint and CBRE Investment Management declined to comment.
A turnaround of the building could require investments to improve amenities and fill at least 30% of the space amid historically low office demand throughout the country. Farpoint is among investors betting they can use sharp discounts on purchases to leave enough room for profit after making upgrades and paying leasing costs.
Goodman’s current firm also is in the early stages of building infrastructure to support the multibillion-dollar Bronzeville Lakefront megadevelopment on the city’s Near South Side.
With the 161 N. Clark deal, Goodman once again could be looking to capitalize on the Google effect that he watched play out in Fulton Market about a decade ago.
The tech giant is in the process of redeveloping and eventually buying and occupying the formerly state-owned James R. Thompson Center across the street from 161 N. Clark.
In December, Google provided the first public look at its vision for the spaceship-like building designed by Helmut Jahn that's known for its 17-story atrium.
Farpoint recently completed another acquisition in a well-established area of Chicago, buying a vacant retail building on the Magnificent Mile for $40 million.
For the Record
Eastdil Secured brokers Bryan Rosenberg and David Caprile are representing the seller.