A Boston-based investor has paid $125 million for a high-profile, 36-story tower along the Chicago River, completing the priciest office acquisition in the city in more than two years.
Beacon Capital Partners completed the purchase last month of the green-tinted glass tower at 333 W. Wacker Drive at the confluence of the north and south branches of the river, according to Cook County property records.
The sale by the AFL-CIO Building Investment Trust was the most paid for a Chicago office property since early 2022, when the sale of a controlling stake in the Bank of America Tower at 110 N. Wacker Drive valued the new skyscraper at more than $1 billion, plus the former Leo Burnett Building at 35 W. Wacker was sold for $415 million and split into separate ground lease and leasehold ownership interests, CoStar News reported at the time.
Not long after those deals, interest-rate increases contributed to a drought of more than a year between major downtown Chicago office sales as some demand across the country also slowed. As a result, large sales are drawing more attention as commercial real estate investors look for signs of an improving market.
Designed by Kohn Pedersen Fox Architects and completed in 1982, the Wacker Drive tower is known for tinted glass that reflects the water, sky and nearby buildings. It is one of the structures highlighted on architecture boat tours.
Beacon’s deal represents the second time the firm has owned the tower. The Boston firm and Chicago-based John Buck previously sold it for $208 million to German investor KanAm Group in August 2004.
Though this is the highest downtown price in more than two years, it follows a trend of losses by both sellers and lenders, with lenders often providing seller financing to a new owner to help limit their loss on a previous loan.
Lower Office Demand
The onset of the pandemic in early 2020 has led to persisting remote and hybrid work schedules, creating historically low demand for corporate space, even before rising interest rates cut into real estate values throughout the country.
The Washington, D.C.-based Building Investment Trust bought 333 W. Wacker for $320.5 million in 2015 as property values were soaring in and around the Loop business district.
The sale price is less than the value of the $156 million loan the previous owner took out from Germany’s Allianz Life Insurance in 2015.
Allianz provided Beacon with a new loan of up to $185 million as part of the acquisition last month, according to property records.
Beacon’s plans to buy back the building were previously reported in April, but the sale price was not known at the time.
The new owner’s plans for the building are unknown, and the firm declined to comment to CoStar News on Tuesday.
Allianz also declined to comment on the property sale and the new loan to CoStar News.
Scaffolding recently went up along the base of the tower, with construction work ongoing.
That may be part of the previously struck agreement by the tower’s largest tenant, Nuveen, to lease 165,000 square feet through 2037, according to a brochure from Cushman & Wakefield, which brokered the sale. That is a reduction from 180,000 square feet on a lease that would have expired next year.
With Beacon’s acquisition, the firm was required to make $36 million in improvements to the building that the previous owner agreed to make as part of Nuveen’s long-term renewal, according to the brochure.
Improvements are set to include upgraded lobbies and fitness center, a new restaurant-cafe and a new exterior deck, a tenant lounge and a conference center atop the tower. That follows $24 million in renovations already made since 2018, according to the Cushman & Wakefield materials, which say occupancy is set to fall to 73% with upcoming lease expirations.
For the Record
The seller was represented by Cushman & Wakefield brokers Cody Hundertmark, Tom Sitz and Dan Deuter.