A 16-story building on the western edge of Chicago’s Loop business district is the latest high-vacancy office property for sale, adding to a wave of similar deals coming to the market in recent months.
Metropolitan Life Insurance has hired JLL brokers to sell the 372,596-square-foot building at 550 W. Washington Blvd., where occupancy is just 31%, according to a JLL brochure.
MetLife is the latest office investor testing the waters on offerings likely to fall well short of previous sale prices, in this case a nearly $111 million deal from early 2013 when the building was 92% leased.
It is hitting the market after recent deals, including the 36-story tower at 444 N. Michigan Ave., the 19-story Inland Steel building at 30 W. Madison St. and a portion of the 10-story building at 111 W. Illinois St. also went up for sale in what are expected to result in major price cuts.
Lenders or owners of those properties are bracing for losses after some highly discounted deals already have crossed the finish line amid historically low office demand, rising interest rates and other factors pushing down deal volume.
Completed deals include the 41-story tower at 150 N. Michigan Ave. and the office portion of 20 W. Kinzie St., both of which traded hands at prices far below the value of their previous debt.
In the case of 550 W. Washington, there is no loan on the property, but it likely has lost tens of millions of dollars of value because of the sharp increase in vacancy and overall falling values in Chicago and other cities.
It’s unclear how much MetLife is expecting in a sale. MetLife did not immediately respond to a request for comment from CoStar News on Wednesday.
Marketing materials describe 550 W. Washington as an opportunity to buy at a “substantial discount to replacement cost,” leaving room for an investor to pour additional dollars into re-leasing office space or converting the 24-year-old tower into apartments.
A contiguous block of about 237,0000 square feet is the largest in the West Loop among buildings completed since 2000, according to JLL, and there are exterior signage and naming rights available to a large tenant.
Architecture firm Gensler also has conducted a preliminary study that concluded the building could be suitable for conversion into about 388 apartment units, a project that would require a zoning change, according to JLL.
For the Record
The seller is represented by JLL brokers Jaime Fink, Bruce Miller, Patrick Shields and Sam DiFrancesca.