A Chicago developer is working on a deal to buy a vacant loft building near the border of the Loop business district and Fulton Market as seller W.P. Carey winds down its office investments throughout the world.
R2 is negotiating to buy the seven-story brick structure at 550 W. Randolph St., according to people familiar with the situation.
The deal is preliminary and still could fall apart amid economic challenges including worries about a global tariff war.
If the deal is completed as expected, it would add to a recent run of new projects in Chicago by R2 and continue a selloff in the office sector by New York-based W.P. Carey.
W.P. Carey hired Cushman & Wakefield brokers to seek a sale of the 168,750-square-foot building on Randolph Street in January. The property includes the building completed in 1909 and 11,500 square feet of adjacent land used as surface parking.
W.P. Carey has owned the property since 1990, and in recent years the firm considered expanding the building into the parking lot. It never landed a large office tenant to kick off the expansion project.
The firm in 2023 announced plans to exit the office sector and focus on industrial real estate investments.
At the time, the company said it would spin off 59 properties into a real estate investment trust called Net Lease Office Properties. By the end of 2024, that company still owned 37 properties in the U.S. and two in Europe.
One Net Lease Office Properties building that recently went on the market is a structure in Venice, California, that is known as the Binoculars Building. The Los Angeles-area property is leased to tech giant Google.
The building R2 is buying, which is not part of the REIT spinoff, is along the western edge of the Loop near the Ogilvie Transportation Center. It is just a short walk from high-demand Fulton Market.
The sale price could not be determined, and R2 declined to comment on the deal. W.P. Carey did not immediately respond to a request for comment from CoStar News on Tuesday.
R2 is known in Chicago for taking on historic buildings and converting them to modern offices and other uses.
Ongoing projects include upgrades to the 41-story tower at 150 N. Michigan Ave. that is known for its sloped, diamond-shaped top, the conversion of part of an office building at 79 W. Monroe St. to 117 apartments, a run of leases within the 44-story Chicago Board of Trade Building and the recent acquisition of the 83-acre Innovation Park Lake County campus in Libertyville, Illinois.
For the record
The seller is represented by Cushman & Wakefield brokers Tom Sitz, Cody Hundertmark and Dan Deuter.