Mirae Global Investments, a South Korea-based investment management company, is seeking buyers for 225 West Wacker Drive, a 651,000-square-foot office tower at 225 West Wacker Drive in Chicago’s West Loop. The firm has tapped JLL to handle marketing for the Class A asset and is hoping to get about $265m, or $407 per square foot.
The property, which is 89% occupied, is expected to see substantial interest from domestic and offshore buyers. It has several unique attributes, most notably as a rare opportunity to snag a property on the Chicago River, local brokers told REFI.
Cushman & Wakefield recently moved its global headquarters to the top floors of the building, which includes PPM America as its largest and longest-term tenant. Other tenants on what’s seen as a high-quality rent roll include AEP Energy, Boston Consulting, and Crowe Horwath.
The building has the potential for a retail conversion of the north lobby, which faces the Chicago Riverwalk on West Wacker. The space could be transformed into a destination restaurant like Chicago Cut Steakhouse or Prime & Provisions. “There’s a deep demand on Riverwalk, and the bend in the river is thin on amenities,” the local player said.
Mirae acquired the tower in 2013 for $218m or $335 per square foot from J.P. Morgan Asset Management. The occupancy rate was 91% at the time, but major tenant Kaplan Higher Education vacated 77,000 square feet soon after the sale. The property is the company’s sole Chicago asset.
The office is one of six major listings that have emerged in Chicago over the past few weeks. “The first and fourth quarter of last year were relatively slow in terms of investment activity,” the local player said. “For the most part, deals are being marketed broadly because the market is liquid. While we’re seeing new developments in Chicago, relative to historic cycles it’s a limited amount – a significant amount of office product has been removed from the market and converted to multifamily and hospitality, creating a negative supply of Class C office space, with less than 5% vacancy. It’s a rising tide – when tenants get pushed out of office buildings, they have to go somewhere.”
Local players underscored the scarcity factor of the asset, noting that most of the owners in that part of the city tend to be in it for the long-term. Other office properties facing the river are owned by companies that tend to be long-term holders, including Ivanhoe Cambridge and Irvine. Local players added that 225 W. Wacker’s location is at the nexus of the West Loop and River North neighborhoods, close to the Merchandise Mart and the new Wolf Point West luxury apartment tower developed by Magellan and owned by Hines.
Two new office towers, the Riverside Investment & Development Company-owned 150 North Riverside and Hines-owned 444 West Lake Street, are the highest pre-leased at delivery properties in Chicago development history. Class A space in the West Loop is 92% occupied and the River North submarket is 96% occupied.