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Sam Zell Puts His Last Chicago Office Asset On The Market

National Office
600 West Chicago - Groupon's HQ

Sam Zell's Equity Commonwealth is nearing a deal to sell 600 West Chicago Ave., best known as Groupon's headquarters, to Sterling Bay for $500M, Crain's Chicago Business reports. The deal would be the second-highest Chicago office trade of 2017, behind Sterling Bay's $680M acquisition of Prudential Plaza in July.

Zell has a reputation as a real estate contrarian, and has spent the past three years disposing of office assets when other investors are seeking to acquire buildings. 

The sale will leave Equity Commonwealth with one remaining office asset in Chicago, and Zell is seeking a buyer for that. Equity Commonwealth placed Triangle Plaza, near O'Hare International Airport, on the market in September. Equity Commonwealth started 2015 with a portfolio of 156 assets; it now owns only 20 buildings. Equity Commonwealth is sitting on $2.1B in cash and CEO David Helfand said the plan is to take that money and find dislocation in the market where it can create value.

Sterling Bay has been in acquisition mode for most of the year, and has touted Lincoln Yards, its redevelopment of the Finkl steel site, as a candidate for Amazon's second headquarters if Chicago wins the bidding war. Acquiring 600 West Chicago gives Sterling Bay a high-performing asset close to Chicago's downtown core and the firm's Fulton Market headquarters, and an asset that is one of the great adaptive reuse success stories in Chicago real estate history. A former Montgomery Ward catalog warehouse, the 1.7M SF building is now a loft office building in high demand, with e-commerce giant Groupon as an anchor tenant. The building is across the river from another highly touted possible Amazon HQ2 site, Riverside Investment & Development's 700 West Chicago Avenue.

Equity Commonwealth paid $390M for 600 West Chicago in 2011.