Chicago's 'Big Red' Tower Heads to Market
A John Buck Co. partnership is preparing to shop a Chicago office tower it has been renovating and leasing up after the departure of its main tenant.
A marketing campaign for the 1.1 million-square-foot property, at 333 South Wabash Avenue in the East Loop, is slated to begin as soon as late September. It’s likely to attract bids in the vicinity of $375 million, or $341/sf. Known as “Big Red” for its brightly colored facade, the building formerly housed the headquarters of CNA Financial.
Chicago developer John Buck and its partner, Morgan Stanley, awarded the listing earlier this year to JLL, which has already conducted several tours ahead of the marketing launch.
A sale at the estimated value would be a grand slam for the duo. They acquired the property for just $108 million in 2016 from CNA, while simultaneously agreeing to build the global financial-services firm a new headquarters building at 151 North Franklin Street, in the West Loop.
The deal gave the John Buck team time to renovate the 1972-vintage tower at 333 South Wabash and backfill the 750,000 sf CNA ultimately vacated. The ongoing project includes a new lobby, an updated fitness center, day care center and tenant lounge, and the creation of an auditorium and conference center. A two-level, 30,000-sf food hall is slated to open on the bottom floors this year.
Northern Trust has agreed to lease 548,000 sf starting next year, when the renovations are slated to be complete. Market pros estimate the property will be about 90% leased when it changes hands.
In the surrounding East Loop submarket, Class-A space is 93% leased and none is under construction. The property is one block west of Grant Park, and within a few blocks of a commuter rail station and several bus stops. The surrounding area is dense with shops, restaurants and hotels.
Meanwhile, the John Buck partnership completed the new 807,000-sf building at 151 North Franklin last year. Known as CNA Center, it also houses offices for Facebook and law firm Hinshaw & Culbertson.
Sales of Chicago’s large office properties slowed this year, as investors tried to evaluate the potential of rising property taxes and a heavy construction pipeline on leasing and rents. But buyers have continued to line up for updated and well-leased properties equipped with the amenities necessary to compete for tenants.
In the most recent example, Commerz Real of Germany has agreed to pay approximately $175 million for Fulton West, a 290,000-sf building at 1330 West Fulton Street that local investor Sterling Bay completed about two years ago. It is 98% leased with a weighted average remaining lease term of more than 10 years. Eastdil Secured is brokering that sale.
Meanwhile, a joint venture headed by Chicago-based Golub & Co. has agreed to pay about $80 million for the leasehold interest in the landmark Burnham Center office building. It is 92% leased to a mix of tenants, including GrubHub, which is headquartered in the building. Cushman & Wakefield is brokering the sale of that 585,000-sf building, at 111 West Washington Street, on behalf of Alliance HSP of Bryn Mawr, Pa.