Colorado-based investor Real Capital Solutions closed on the largest Chicago office acquisition in almost four years, paying $132.5M for the nearly 748K SF office tower at 401 N. Michigan Ave.

The 35-story Magnificent Mile building is about 87% leased and recently underwent $17M in renovations to its lobby, amenities and tenant experience.

The deal eliminated all equity in the property from the seller, a venture of Walton Street Capital, Crain's Chicago Business reported. It also likely resulted in a haircut for ING, the lender that provided Walton Street with a $160M loan on the building when it was refinanced in 2019, according to the outlet.

“The acquisition of 401 N. Michigan represents a rare opportunity to secure a top-performing, institutional office tower in an irreplaceable riverfront location,” Real Capital Solutions Chief Acquisitions Officer Adam Abeln said in a press release.

“This investment reflects our confidence in Chicago’s well-established core market with deep talent, strong corporate demand and limited new supply, where well-located Class A assets continue to benefit from the flight to quality,” he added.

Abeln declined to disclose how much capital RCS planned to spend on additional property improvements but told Bisnow that the "investment will be meaningful and focused on further enhancing an already best-in-class building."

The deal is the largest since the Howard Hughes Corp. sold 100% of its equity interest in 110 N. Wacker to Callahan Capital Partners and Oak Hill Advisors for $210M in March 2022. That deal gave the tower an implied value of more than $1B.

RCS plans to address near-term building capital needs and take advantage of recent renovations to continue leasing momentum.

The American Dental Association signed a deal in July 2024 to relocate its headquarters from 211 E. Chicago Ave. to 401 N. Michigan Ave. after 60 years. The company agreed to occupy the top three floors of the building and a portion of the 32nd floor, or 70K SF, as of the first quarter of 2025.

Ablen told Bisnow the building has executed more than 275K SF of gross leasing activity since 2023, resulting in about 70K SF of net leasing. He noted that because the building has remained well leased without a dominant anchor tenant, there has been limited opportunity for meaningful net absorption.

Instead, leasing wins have come from re-leasing existing tenants and selectively adding new ones.

Class-A buildings continue to outperform their more dated peers. Top-shelf assets had a vacancy rate of 20% in Q4, compared to 30.5% for Class-B properties, according to Colliers. The brokerage anticipates vacancy rates to decline in quality Class-A buildings over the upcoming few quarters.

JLL’s Bruce Miller, Jaime Fink and John Mason brokered the deal.

UPDATE, JAN. 15, 4:35 P.M. ET: This story has been updated with additional comments from RCS.