The firm that invested more than $1 billion redeveloping Chicago's massive Old Post Office into modern offices is working on a deal to buy a 16-story building just across the street.
New York-based 601W Cos. is in talks to buy the high-vacancy tower at 525 W. Van Buren St. at a steep discount to its previous value, according to people familiar with the situation.
The deal is preliminary and still could fall apart during a challenging market for office property sales, but if the deal is completed, it would add to 601W's long list of office investments in the city.
An exact price could not be determined, but it is expected to be in the low to mid-$30 million range. That is a huge discount from the $135 million that AEW Capital Management paid for it during a strong leasing market in 2015.
Boston-based AEW put the 516,385-square-foot tower on the market for sale early this year, with the expectation that it would sell at a big loss. The 23-year-old building was just 66% vacant at the time, with a weighted average lease term of 4.4 years, according to a JLL brochure.
The listing is the latest example of office properties locally and nationally shedding significant value amid historically low demand for corporate space.
In another Chicago acquisition involving 601W a few months ago, the 30-story tower at 303 E. Wacker Drive sold for less than half its previous sale price.
AEW and 601W did not respond to CoStar News' requests for comment regarding the 525 W. Van Buren deal.
601W is a longtime investor in Chicago office properties, starting with the purchase of the nearby, 18-story tower at 550 W. Jackson Blvd. two decades ago. The firm's investments in Chicago have included high-profile properties such as the 83-story Aon Center and the two-tower Prudential Plaza complex, which it sold in 2018.
Just across the street to the east of the tower it is buying at Van Buren and Canal streets, 601W bought the vacant, dilapidated former post office at 433 W. Van Buren and spent nearly $1.3 billion converting it to modern offices for big tenants such as Uber, PepsiCo, Walgreens, Cboe Global Markets, Cisco Systems and Ferrara Candy.
An $830 million loan on the Old Post Office taken out by 601W in late 2021 was one of the largest refinancing deals ever for a building in the city. The ultrawide building is now more than 99% leased, according to CoStar data.
In another investment near the Old Post Office, 601W is seeking office and data storage tenants for a vacant building that it owns at 801 S. Canal.
For the record
JLL brokers Jaime Fink, Bruce Miller, Patrick Shields and Sam DiFrancesca are handling the 525 W. Van Buren St. sale.