The sale will be felt by landlords in downtown offices, especially those who bought properties before the public health crisis spurred the rise of remote work and now as they grapple with rising interest rates. It shows a serious case of financial distress that financial transactions. While new downtown rental offices have increased in recent months, vacancy rates remain at record highs as companies seek to shrink their office footprints and offload space in the subleasing market. .
That background has created bargain deals for buyers like Ferbman. Jacksonville is opening his second downtown office in the past 13 months, after last fall he bought his 25-story building at 100 N. LaSalle St. for $16.4 million. Purchased. That’s half of his 2016 building sale price.
Ferbman owned several Loop office buildings from 2014 to 2018, leased them up and sold them, and now owns 600 W. Jacksonvilles. it is half empty, Down from 62% occupancy when Stockbridge purchased. This sets up a leasing challenge that we believe can be met even after paying a low price to buy the building, increasing the flexibility of lease terms and putting more capital into things like office construction. make it possible. Allowances and additions to moveable office suites introduced by Stockbridge.
“With our reset base, we hope to capture some of that demand with a cool, well-located space for tenants who are finding it more difficult to work remotely. We want to,” said Ferbman. “While he wants to be close to Union Station, Ogilvy, and a freeway exit, Fulton can catch tenants who continue to migrate west because they don’t want to pay the fare to go to the market. I believe we can.”
Another key to his paper, Ferbman says, is that small businesses find it easier than large companies to bring employees back to the office on a regular basis. 100,000 and 200,000 square foot users (buildings). ”
Jacksonville tenants now include Lead Construction and OKW Architects, as well as coworking provider Workbox. Workbox took over his share office in the building after the New York-based coworking giant abandoned his space in early 2018. Pandemic. This was a headache for Stockbridge. sued Industrious in late 2020 The coworking company claims it owes $4 million in leases through 2030. The case is pending in Cook County Circuit Court.
A spokeswoman for Industrias declined to comment. Stockbridge did not respond to a request for comment.
Vintage brick and timber office buildings with modern updates like the 600 W. Jackson were popular before the pandemic among tech tenants and institutional investors like Stockbridge, boosting their value. I was. It is still unclear whether such old buildings are widely coveted today, with some companies looking for newer buildings with more modern facilities and more efficient air filtration systems. Offices can also appeal to tenants who want to have control over their floors but don’t need as much space after adapting to the rise of remote work.
In a West Loop loft office deal earlier this year, a California cybersecurity firm paid just under $21 million for the 94,000-square-foot building. 564 W. Randolph Street, That’s well below the $28 million expected when it hit the market pre-pandemic.
In another recent listing testing investor sentiment toward loft offices, New York investors Alvarez & Marsal hired Jones Lang LaSalle’s Chicago office to fully open a 62,000-square-foot space at 303 E. Erie St. on the River. We sold a leased vintage office building. North.
600 W. Jackson was Stockbridge’s only Chicago office asset, according to MSCI Real Assets. Stockbridge has focused on industrial real estate in the Chicago area for the past several years as a joint venture partner in a series of local warehouse purchases totaling approximately $200 million.
Ferbman’s local portfolio includes several suburban offices, including buildings in Naperville, Elk Grove Village and Northbrook.
Tom Sitz, David Knapp, and Cody Hundertmark of Cushman & Wakefield’s Chicago office pitched the 600 W. Jackson to Stockbridge.