A California real estate firm that has invested more than $2 billion on trophy office towers in Chicago since 2010 is now mulling its first sale in the city.
Irvine Co. has hired Eastdil Secured brokers to evaluate the firm’s options for the 51-story tower at 1 N. Wacker Drive, which could include a potential sale.
If the tower does formally go on the market, it would test the limits of pricing for high-end offerings in Chicago and other major cities after years of deals mostly driven by maturing loans or other financial pressures.
One North Wacker is at the high end of the city’s office market, and the 1.4 million-square-foot tower is nearly 92% leased, according to CoStar data. The tower was completed in 2001.
In a statement from Bryan Rosenberg, a Chicago-based managing director at Eastdil, the brokerage confirmed it is working with Newport Beach, California-based Irvine to evaluate options for the 1 N. Wacker investment. The statement emphasized that the property has not formally been put on the market for sale.
A retreat by Donald Bren’s firm could be a setback for the still-recovering downtown Chicago office market, since he is known as a long-time holder of properties and previously has never given any indications of looking to scale back in Chicago.
Irvine’s exploration of a potential sale of 1 N. Wacker, previously reported by Crain’s Chicago Business, comes after Irvine’s recent selloff of a six-property office portfolio in San Diego. That selling spree ended with the $120 million sale of the 34-story tower at 600 W. Broadway, San Diego’s tallest building, late last year.
It’s unclear yet whether Irvine will sell any of its Chicago buildings or whether its engagement with Eastdil is exploratory after years of flux in the U.S. office market.
Irvine did not immediately respond to a request for comment from CoStar News.
During about a five-year period, Irvine invested just over $2 billion to acquire three of Chicago’s top office towers. Since then, Irvine has made extensive investments to improve those properties and replace tenants that have moved out to remain at the top of the city’s office leasing landscape.
Irvine bought the tower at 1 N. Wacker from Hines in two separate transactions, in 2011 and 2015, that totaled almost $539 million, according to CoStar data and Cook County property records. Irvine also paid $625 million for the 48-story tower at 71 S. Wacker Drive in 2010 and $850 million for the 60-story tower at 300 N. LaSalle St. in 2014.
Bren, the firm’s chairman, has a net worth of $19.2 billion, according to Forbes. He is known for buying properties that his firm would be comfortable owning potentially for decades.
Aside from the acquisition costs in Chicago, Irvine has invested extensively in improvements — particularly after losing two huge tenants, Kirkland & Ellis and Boston Consulting Group, at 300 N. LaSalle.
Irvine made another massive investment in that property when it paid off the $475 million commercial mortgage-backed securities loan when it matured in 2024, without new debt to replace it. The investor also made upgrades to riverfront outdoor spaces and other amenities to help bring in new tenants, including the recent opening of CBRE’s new Chicago office.
At 1 N. Wacker, Irvine has a $353 million CMBS loan that doesn’t mature until 2031, according to CoStar data. The fixed-rate loan has a now-below-market interest rate of 2.71%.
Tenants at 1 N. Wacker include PwC, Barnes & Thornburg, Fitch Ratings and UBS.