A Florida investor is working on a deal to buy a high-vacancy office property in Chicago’s Loop business district at a massive discount from previous pricing, betting a low entry point can lead to a turnaround of the historic tower.
Triple Double Real Estate is negotiating to buy the office portion of the 16-story building at 1 N. State St., according to people familiar with the deal.
It is the latest example of offices in Chicago and other cities being priced at huge discounts to pre-pandemic values.
The deal has not been completed and could still fall apart in a challenging market for office sales throughout the country. The sector has been held back by historically low demand and, until recently, continued increases in borrowing costs.
An exact price could not be determined. Crain’s Chicago Business, which previously reported Triple Double’s talks to buy the property, estimated the investor is paying close to $13 million.
That would be a huge loss from the nearly $80 million that San Francisco-based Shorenstein Properties paid in 2016, when property values were higher and the building’s vacancy was far lower. Shorenstein’s purchase was backed by a $68.15 million loan from U.S. Bank.
When the property was going on the market for sale in June, CoStar News reported that the loan had been paid down to a principal of $35.75 million, according to Cook County property records.
That reduces the potential loss for the lender.
Tamarac, Florida-based Triple Double did not respond to requests for comment. Shorenstein and U.S. Bank declined to comment.
As of the time 1 N. State went on the market for sale, it was more than 58% vacant, according to a JLL brochure. The offering does not include separately owned retail space on the first and second floors of the structure completed in 1912.
A new owner could capitalize on $36.5 million in improvements made by Shorenstein, including a recently completed Town Hall tenant lounge and a rooftop deck, to attract new tenants, according to the JLL materials.
For the record
The seller is represented by JLL brokers Jaime Fink, Bruce Miller, Patrick Shields, Sam DiFrancesca and John Mason.