A local investor bought a distressed office building near Chicago O'Hare International Airport for less than $30M, bucking industry trends that have seen most desperately looking to shed office assets.
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A group led by area investor Gene Staples scooped up the 302K SF International Tower office building at 8550 West Bryn Mawr Ave. from an entity affiliated with Bridge Investment Group, Crain's Chicago Business reports. Bridge lent $43.4M in 2019 to the previous owner, Chicago-based real estate firm Golub, and took over the property in 2022, per Crain’s.
The price is a stark drop-off from the $40.3M Golub paid for International Tower in 2014. The property’s attractiveness diminished last year when Advocate Aurora Health said it would vacate its five-floor call center space when its lease expires in October, according to Crain’s.
Not including Advocate, the building is 55% leased with roughly seven years of weighted average lease term, per Crain’s. Food service company Newly Weds Foods occupies the most space in the building at about 45K SF, Crain’s reported.
Nationwide, the office market is struggling to find a foothold. Overall availability stands at 24.4%, up 40 basis points from the first quarter, with available sublease space of 176.2M SF marking an all-time high, according to a Q2 state of the U.S. office market report by Savills Research & Data Services.
Local markets have seen their share of challenges as well. The suburban Chicago office market ended the second quarter with 109.7K SF of negative net absorption and a vacancy rate well above the national average, per JLL’s Q2 suburban office report. Business software company SAP led large suburban vacancies by leaving its 31K SF in Downers Grove, while Bimbo Bakeries vacated 27K SF in International Tower, per JLL.
Staples may be banking on a recent trend of office buildings near O’Hare outperforming the rest of the suburban market. Per JLL, the vacancy rate among office buildings close to the airport was 23.6%, significantly below the 28.9% average across all suburbs.
