Spear Street Gets A Discount On Loop Office Tower Due To Coronavirus Worries

225 West Wacker Drive

Spear Street Capital completed its purchase of 225 West Wacker Drive, a 651K SF tower on the Chicago River, and ended up getting a little knocked off the original price. The San Francisco-based investor first struck a $220M deal in March, but the seller, South Korea-based Mirae Asset Global Investments, eventually settled for $210M in cash, according to Real Estate Alert, which first reported the transaction.

Even at that 5% discount, it is Chicago’s largest trade since the onset of pandemic and sets off its office market from most others around the U.S., where significant sales dropped to zero.

“Many pending trades have fallen apart over the past two months, as buyers reassessed the risk profiles of commercial properties — and struggled to secure financing, with lenders largely sitting on the sidelines,” Real Estate Alert said.

But Spear Street is accustomed to placing big bets on the Chicago market’s long-term viability. In October, even as many investors were avoiding Chicago due to fears that commercial property taxes were set to rise, the company bought 500 West Monroe St. from Piedmont Office Realty Trust for $412M, the costliest Midwest transaction in 2019, according to CommercialCafé.com, beating out Starwood Property Trust’s purchase of Minneapolis’ Wells Fargo Tower by nearly $100M.

Tenants leased 96% of 225 West Wacker when marketing began, but occupancy will drop to 70% in 2021 after several tenants move out, according to Cushman & Wakefield, which has its headquarters in the building and represented Mirae in the sale. Mirae bought 225 West Wacker in 2013 from J.P. Morgan Asset Management for $218M.

Continue reading this story with a free account

Log in or register
Sign up for more articles like this
Subscribe to Bisnow's Chicago Newsletters
Related Stories

Law Firms Drive Boston Office Rents To Record Highs

3 Houston Office Properties, Vacant To Nearly Full, Change Hands

Deutsche Hypo Finances Zadelhoff's Amsterdam Offices With €75M Loan

Workers At 6 Chicago Hotels Go On Strike Ahead Of Chicago Marathon

SFF Realty Partners Extends Spending Spree With $82M Acquisition In Downtown San Jose

Years Later, Millions In Chicago Housing Projects Remain Unbuilt

Drawbridge Realty Acquires 180K SF Office Building In Sunnyvale For $219M

Downtown Los Angeles Retail, Office Hub The Bloc Up For Sale

Distress Divide: How Private vs. Institutional Investors Are Thinking About D.C. Office

Interest Rate Hike Douses Outlook For Atlanta Developers

Chicago Office Deals Feature More Scrutiny, Added Tenant Protections

Tishman Speyer Retakes Chrysler Building, Plans $235M Renovation