Bargain-Bin Deals And 5 Years Of Free Rent: How Discount Buyers Are Resetting Chicago's Office Market

When Woodcrest Capital bought a steeply discounted office property in the Chicago suburb of Lincolnshire earlier this month, the deal terms were dramatic enough to raise eyebrows.

The Texas-based family office scooped up the roughly 800K SF fully vacant 4 Overlook Park office complex for just $6.2M, or about $7 per SF, in an all-cash purchase. A little over a decade ago, VEREIT dropped $148M for the same site.  

If the near-96% price drop didn’t capture commercial real estate's attention, the company’s leasing strategy did: Woodcrest is offering some tenants up to five years of free rent and rates as low as $5 per SF for others. 

“We want to offer something that the market has either never heard of, or they haven't heard of it in decades,” said Michael Roy, the company’s president of property management.

The opportunistic deal signals an emerging wave of new, hungry investors circling city skies on the hunt for office properties that present significant upside potential on a low-cost basis.

The dealmakers investing capital in these acquisitions are deploying a range of strategies, from aggressive leasing terms to targeted upgrades. They aim to position themselves for profit as a new market begins to materialize.

Eight downtown office properties changed hands in the first quarter of 2025, and CBD office sales “have shown a steady increase each quarter since mid-2023,” according to Colliers' first-quarter office report. In the suburbs, two office assets totaling 500K SF sold during that period. 

Colliers noted  that “an increase of novice investors are circling the Chicago office market investment landscape in search of value.”

The suburban office market still shows particular signs of distress. Suburban vacancy grew by 0.76% quarter-over-quarter to 32.2%, rising across Class-B and C properties while falling in Class-A. Downtown vacancy also ticked up 10 basis points to 23.4%, per Colliers, although some brokers expect leasing activity to pick up later this year.

Amid persistent high vacancy, more seasoned players are still hanging back. But Woodcrest’s bargain buy fits in with a broader trend of bolder investors seeking value in the postpandemic office market.

Glenstar also scooped up a deal at a discount in January, buying 200 S. Wacker for about $68M. Glenstar, in partnership with Patrick Halloran, bought a $151M nonperforming loan on the 200 S. Wacker Dr. property from lender Bank of China.

In October, the company partnered with the same investor to buy an office complex near O’Hare International Airport for less than half of what it sold for in 2018.

Glenstar Executive Director Jeff Koukol said the discounted pricing allows the company to further invest in the buildings to increase their attractiveness to tenants. Their goal is to pull tenants from less desirable submarkets or obsolete buildings. 

“We've targeted buildings that are what we view [as] buildings that got hurt because of Covid and no other reason why,” Koukol said.

“They're fantastic buildings. They're in great submarkets where tenants want to be, and they're high-quality buildings within that submarket. Those buildings were just impaired financially, and they needed that reset basis to make it a viable business plan for that next person.”

To gain market share, Glenstar is early in its plans for a $30M renovation at 200 S. Wacker. Plans call for a conference facility that can accommodate at least 150 people, a high-quality fitness center and a riverside lounge. 

The goal is creating a space to keep people at the building and give them a reason to bring in clients or have happy hours with their coworkers, Koukol said.

Woodcrest bought 4 Overlook Point without a lender involved after the company saw the property marketed on traditional outlets like CoStar and Ten-X and identified an opportunity, Roy said.

The company has always been a “very opportunistic” buyer and focuses on value-add deals. 

“We said, ‘Man, this thing's going to trade at an incredible value, and we want to be the one to pick it up,’” Roy said. 

While Woodcrest is willing to offer tenant improvements, he doesn’t think that captures the eye of prospective tenants in the same way that its aggressive leasing strategy does. The company's low-cost basis enables it to offer deals that wouldn’t make financial sense for other owners in the area.

Other competing landlords are still asking for between $20 and $30 per SF and have been sitting on vacancies for years, Roy said. He acknowledged that Woodcrest will have to deal with carrying costs on 800K SF of vacant space until tenants start signing leases, but it is in a good position to do so considering the rock-bottom purchase price. 

Other landlords “don't make money if they lease it out at $5 [per SF], but we will,” Roy said. 

Meanwhile, the market is very healthy for top-shelf buildings, Koukol said. Glenstar isn’t expecting its new holdings to directly compete with those buildings but thinks they will vie for position with the next tier of properties. 

“You're going to continue to see momentum at the top-quality buildings and in top submarkets, and from there, I think it's going to be a little bit of musical chairs into the nicer product,” Koukol said.

Overall office stats might look dreary right now, but there is opportunity “when you peel back the onion,” Koukol said, especially considering the dearth of new office product coming online. As of late last year, just one office building was under construction in Chicago's downtown area, and reinforcements were not on the way.

The city's vast sea of sublease space has also receded, he said.

“You finally are seeing some buildings going through short sales and foreclosures and going to a new buyer, who is going to invest capital in and make some attractive space for new tenants,” he said. “So I think when you kind of take all those factors combined, [investing] feels better.”