A 35-story office tower at the southern tip of the Magnificent Mile has sold for more than $132 million, the highest-priced Chicago office deal in nearly four years.
Real Capital Solutions announced that it has completed its deal for the building along the Chicago River at 401 N. Michigan Ave.
The deal adds to a lengthy list of office properties in Chicago and other large cities that have sold for less than the value of the debt, often for small fractions of the previous sale price. But the relatively high price is the latest sign that downtown Chicago office values may be recovering some of the massive value lost after the arrival of COVID-19 in early 2020.
The Louisville, Colorado-based firm’s plans to buy the tower first emerged in October.
In a statement, Real Capital Solutions said it paid $132.5 million for the property that is 87% leased. It described the price as a nearly 78% discount to replacement cost.
It is the highest-priced office sale in Chicago since March 2022, when Callahan Partners and Oak Hill Advisors bought the controlling interest in the new Bank of America Tower in a deal that valued the 55-story tower at 110 N. Wacker Drive at more than $1 billion.
Those firms recently refinanced the trophy tower with a $700 million loan.
Other recently completed Chicago office deals include the leasehold interest in Boeing’s former headquarters at 100 N. Riverside Plaza selling for $22 million and the 16-story tower at 525 W. Van Buren St. selling for $35 million.
Real Capital Solutions’ deal on Michigan Avenue came after the firm backed off other potential office purchases in Chicago in recent years, including one for the 40-story tower at 190 S. LaSalle St. that has since sold to a different buyer for $55 million.
Several office sales in Chicago have fallen through because of higher borrowing costs, lenders pulling back on office deals and sluggish leasing demand.
That includes the tower at 401 N. Michigan, which was put back on the market earlier this year after a late-2024 deal to sell it to a Saudi firm, the Olayan Group, fell through.
In a statement, Real Capital Solutions said it liked the investment because of its diverse roster of tenants, 275,000 square feet of leases signed in the 747,522-square-foot building since 2023, and $17 million in recent renovations made by the previous owner.
“The acquisition of 401 N. Michigan represents a rare opportunity to secure a top-performing, institutional office tower in an irreplaceable riverfront location,” Adam Abeln, chief acquisitions officer for Real Capital Solutions, said in the statement. “This investment reflects our confidence in Chicago’s well-established core market with deep talent, strong corporate demand and limited new supply, where well-located Class A assets continue to benefit from the flight to quality.”
The sale price was at a discount to the value of a $160 million loan that Chicago billionaire Neil Bluhm’s Walton Street Capital took out on the property in 2019. The lender was ING.
Walton Street bought the property for $360 million in a 2017 deal that included an adjacent Apple flagship store on the Pioneer Court plaza. Walton Street refinanced the office tower, which was completed in 1965, after selling the retail building for $90 million.
For the record
The seller was represented by JLL brokers Bruce Miller, Jaime Fink and John Mason.