One of Chicago’s tallest skyscrapers has been sold for $45 million, a fraction of what the previous owners paid, ending a yearslong effort to find a buyer for the high-vacancy, 65-story office property.
Long Island firm Kohan Retail Investment Group completed the purchase late last week of the tower at 311 S. Wacker Drive, founder Mike Kohan confirmed.
CoStar News first reported in May that the firm had a deal to buy the city’s ninth-tallest skyscraper, but the price was not known at the time.
It’s yet to be seen whether a new owner at a much lower cost basis can breathe new life into the 961-foot-tall tower known for a crowned top that lights up at night.
The Wacker Drive building is next door to the city’s tallest skyscraper, the 1,451-foot-tall Willis Tower.
Kohan declined to comment on the price that people familiar with the deal said was $45 million. That is a far cry from the more than $302 million that Chicago’s Zeller Realty Group and Chinese investment partner Cindat Capital Management paid during soaring values in 2014.
Kohan also declined to comment to CoStar News regarding plans for the approximately 1.3 million-square-foot tower. He told Crain’s Chicago Business that he plans to focus on leasing up large blocks of vacant office space rather than pursuing a partial or full conversion to other uses such as residential or hotel as other potential buyers had considered.
Great Neck, New York-based Kohan primarily has focused on distressed shopping centers, but historically low pricing in recent years has lured new investors into the office sector. That includes a recent deal by Kohan and other investors to buy a 25-story tower at 345 Seventh Ave. in Manhattan for $85 million, according to media reports, with plans for a residential conversion.
The seller in that deal was another Great Neck-based firm known for retail investing, Namdar Realty Group. Several months ago, Namdar bought the 57-story office tower at 70 W. Madison St. in Chicago at a massive discount to previous valuations.
The sale of 311 S. Wacker also was costly to a group of lenders including Morgan Stanley, which provided a $215 million senior loan during a 2018 refinancing of the tower by Zeller and Cindat.
Morgan Stanley declined to comment. Zeller and Cindat did not immediately respond to requests for comment from CoStar News.
Because of the building’s financial challenges, as well as other hurdles such as higher borrowing costs and pullbacks by lenders on office properties, previous efforts to sell 311 S. Wacker fell short.
Firenze Group, based in the Washington, D.C., area, attempted to buy it for about $300 million in early 2022 before that deal fell apart. More recently, local developers John Murphy and Jerry Kostelny backed off a $70 million deal after they were unable to negotiate a lower price because of the continued loss of tenants.
Designed by Kohn Pederson Fox, the tower was completed in 1990. It was developed by Lincoln Property when Kostelny was an executive there.
Kostelny and Murphy have been working with developer Hines in recent years to develop sites alongside the tower at 301 and 321 S. Wacker where Lincoln long ago planned to build additional towers.
In one long-shot scenario, the developers explored the idea of buying and tearing down 311 S. Wacker to clear the way for a new, multitower development.
For the record
The sellers were represented by JLL brokers Jaime Fink, Bruce Miller, Patrick Shields and Sam DiFrancesca.