Want Double-Digit Office Returns? Try Conversions.
While IRR senior managing director Eric Enloe is seeing the strongest potential for double-digit returns in value-add office deals (there's no way you'll find them in trophy office, with staggering pricing like 300 N LaSalle's $850M sale to Irvine Co), turnaround plays aren't without risk and will take significant capital investment. Another viable option is conversion, especially older Loop office buildings becoming hotels like The Prime Group's Residence Inn by Marriott project at 11 S LaSalle. The cash-flow potential is there, and taking office supply off the market will help reduce the CBD's high teens vacancy rate, Eric says.