In an unusual burst in value for a downtown property, two Chicago firms that bought the former headquarters of Cboe Global Markets in the Loop business district last year have flipped it to a Virginia-based developer of data centers — for more than three times the previous sale price.
The sale is the latest example of soaring demand for space to store data, and for properties that developers can lease out to tenants.
Affiliates of Mike Reschke’s Prime Group and Quintin Primo’s Capri Investment Group sold this week the six-story building at 400 S. LaSalle St. for $40 million, according to online property records.
That is a huge increase from the $12 million that the joint venture paid for the options exchange company’s vacant former headquarters in July 2024.
The buyer, Arlington, Virginia-based Legacy Investing, plans to convert the property into a 33-megawatt data storage facility that will go online late next year, said co-founder and Managing Partner Daniel English.
The Chicago firms previously said they were buying the wide, cavernous building with plans to convert it to a data center.
By simply increasing power to the building and doing other preliminary work on the data project, the Chicago firms significantly increased the value, English said.
“They played a critical role in assuring that the building has enough power,” English said. “There is a shortage of power throughout the country right now. It’s a great partnership with Prime where they were able to create value, and now we’re able to create the next stage of value.”
Prime and Capri did not immediately respond to requests for comment from CoStar News.
Legacy owns data storage, logistics and life science research properties throughout the country.
New uses for office space
The sale by Prime and Capri is a rare example of downtown office properties selling at premium in Chicago and other large cities in recent years amid historically low demand, increased borrowing costs and other factors.
Many investors, including the two Chicago firms, have sought out bargains on outdated office space to overhaul for new tenants or convert to new uses, such as apartments.
In one high-profile project, Prime and Capri are in the process of gutting the Helmut Jahn-designed James R. Thompson Center, which was owned for decades by the state of Illinois. Google plans to buy the glassy building in the heart of the Loop for a huge new Chicago office.
Demand for data storage has soared in recent years with the rise of artificial intelligence and the continued need for cloud storage. Some projects around the country have grown to multibillion-dollar projects that need massive amounts of power.
Developers could invest $1 trillion in North American data centers between now and 2030 after overall vacancy reached an all-time low, according to a recent JLL report.
Chip maker Nvidia recently committed to invest $100 billion in ChatGPT parent OpenAI to fund a massive expansion of data centers.
By those standards, the downtown Chicago project is relatively modest.
But English said there remains high demand for smaller urban facilities that need low latency, or a short response time, for uses such as high-speed trading, video streaming, video gaming and future uses such as self-driving cars.
“Most people think of data centers happening in farm fields out in the middle of nowhere,” English said. “But urban locations are wonderful because of their proximity to power and connectivity.
“Just like Amazon last-mile delivery, data centers take less time to deliver when they’re close.”
Work already has begun on speculation, or without tenant commitments, on the Chicago project. English said it will be turnkey project, or one with equipment already installed and ready to be plugged into by tenants.
Minneapolis data center project
Legacy’s previous data center developments include buying a wide office building at 1001 S. Third Ave. in Minneapolis and switching part of the property to data storage, with the corporate headquarters of Sleep Number Corp. in the rest of the space.
English declined to say how much the Chicago project is expected to cost, but similar projects run into hundreds of millions of dollars.
Cboe decided to sell the building at the southern end of the city’s longtime financial district after shifting its headquarters to the Old Post Office in 2019 and moving the open-outcry trading floor to the Chicago Board of Trade Building in 2022.
Prime and Capri bought the property with the belief that the property’s wide, column-free floors, high ceilings and structural capacity to support the weight of servers and other equipment made the property suitable for data storage.
Cboe previously had a data center in the building.
“This building is very heavily wired from its time as a trading platform,” English said. “It’s an opportunity to take a property that has been vacant for years and convert it to a modern data center. This is a great downtown asset that will be ready for service by the end of next year.”