An investor purchased a distressed office building across the street from the Willis Tower for an 89% discount compared to the property’s value a little over a decade ago, one of the most dramatic examples to date of a downtown Chicago office building bleeding value.
A venture of locally based Igor Gabal snagged leasehold interest in the property for $4M, a $34M drop from the building’s appraised value of $38M when it sold in 2012, according to Crain’s Chicago Business. The 12-story building at 300 W. Adams St. sold for slightly less than $16 per SF, a depressing data point for owners trying to offload distressed office buildings.
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A Morgan Stanley-managed entity sold the building after seizing the 240K SF office asset in 2021 by way of a deed-in-lieu-of-foreclosure, according to Cook County property records cited by Crain’s. The building’s previous owner, a venture of Pennsylvania-based Alliance HP, took out a $25M loan on the property, which Morgan Stanley packaged with other loans and sold to CMBS investors, Crain’s reported.
This marks the second office purchase in the mostly moribund Loop over the last several months. Menashe Properties spent $45M in September on a 29-story office tower at 230 W. Monroe St.
The building at 230 W. Monroe St. also saw a stark drop-off in value since it was last on the market in 2014 and sold to Accesso Partners for $122M, according to public records.
The 300 W. Adams St. property generated almost $1.7M in net operating income in 2022, less than half the amount it generated in 2019, according to data Crain’s acquired. It is about 50% leased.
Gabal, an immigrant from Ukraine who owned hundreds of apartment buildings before selling them off in 2012, told Crain’s the low price tag and lack of debt on the asset would help secure creative leasing deals.
“The product that I'm going to be offering to the market is going to be smaller spaces, people that need to relocate and reduce the size of their offices — I will have a home for them,” Gabal said.
The city designated the 96-year-old building as a landmark in 2009.
