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Former Groupon HQ Sold In Largest Chicago Office Deal Since 2022

Groupon’s 1.6M SF former headquarters building along the Chicago River has sold to 3Edgewood, the largest downtown office sale by square footage to close in almost three years.

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3Edgewood paid $88.7M for the 600 W. Chicago Ave. property, a source with the company confirmed to Bisnow. That marks a steep decline from the $510M former owner Sterling Bay paid for the property in 2018.

Eastdil Secured, the adviser on the transaction, confirmed the buyer to Bisnow.

“600 West Chicago is one of the most unique assets in Chicago,” 3Edgewood Head of Real Estate Jordan Mellovitz said in a statement. “The combination of the design, amenities, and suite-adjacent parking creates a desirable environment for office users today. Similarly, the large floorplates are attractive for collaboration amongst employees, which is probably the number one reason we see people coming back to the office.”

Mellovitz said the company was attracted by the building’s expansive window line, natural light and city views, and it plans to invest additional capital in the property.

“As an active owner, we are willing to spend money on the asset and will start doing that immediately,” he said.

Upgrades will include covered outdoor riverfront terraces for individual tenant suites, a spec suite program aimed at early-stage technology and health science companies, and hospitality enhancements to improve the tenant experience.

Sterling Bay will continue to oversee leasing and property management.

The 600 W. Chicago deal marks the fifth major Chicago office sale to be announced since the beginning of the year, a sign investor optimism is returning to the Chicago market as seller pricing expectations fall back to earth.

The former Groupon property is the largest building to trade hands since a controlling stake in the Bank of America Tower sold in March 2022.

600 W. Chicago was about 96% leased as recently as 2023, but after Groupon terminated its lease early and left the space in early 2024, it fell to 62% occupied. Groupon vacated 300K SF in the former Montgomery Ward catalog building, forking over a $9.6M fee to end its lease before it was up in 2026. 

The property could benefit from nearby developments in the works, like Bally's planned hotel and casino project and Onni Group's multifamily megadevelopment, which are expected to increase foot traffic in the area.

3Edgewood, a venture helmed by former Phoenix Suns owner Robert Sarver, was reportedly in talks with Sterling Bay to acquire the building in July.

Sarver formed 3Edgewood in 2023 to invest in real estate and has already snagged a distressed 2.2M SF office property in suburban Dallas for $576M, a 30% discount. He paired up with another investor to buy a 3M SF office portfolio in Houston.

3Edgewood's most recent purchase in Chicago is its fifth acquisition of a 1M SF-plus, Class-A office asset, bringing its total portfolio to 8.5M SF, the company said in a release.

Sarver owned the Suns franchise for nearly two decades and also owned the WNBA's Phoenix Mercury. Sarver sold both teams in 2023 to mortgage executive Mat Ishbia in a transaction that reportedly valued the franchises at $4B.

Others who have scooped up Chicago offices for bargain-basement prices in the past several weeks said the timing and conditions are ripe for office sales this year.

“There's no question there's been a reset in basis,” said Andrew Brog, managing member at Brog Properties, which bought a mostly empty 16-story office building at 550 W. Washington Blvd. late last month for about $18.5M.

That was about 83% less than the $111M a MetLife venture paid for it when it was almost fully leased in 2013. 

Will Follett contributed to this story.