A 26-story office tower just down the street from Google’s future Chicago office has gone up for sale nearly two years after the high-vacancy property was handed back to its lender, hitting the market after a burst of recent deals in the Loop business district.
JLL brokers have been hired to find a buyer for the tower at 2 N. LaSalle St., a 713,425-square-foot tower that is half-empty, according to a brochure.
It is hitting the market years into historically low demand for office space in major U.S. city centers, a trend that has hit the central part of the Loop particularly hard.
But properties on and around the longtime financial center of LaSalle Street have shown recent signs of life, including Google’s ongoing redevelopment of the Thompson Center.
Known in real estate circles as the “Google effect,” the dynamic refers to how Google’s presence can materially boost office demand, rents and investment in a market, often reshaping entire neighborhoods rather than just one building.
JLL is presenting 2 N. LaSalle as an opportunity to buy a property near the momentum being created by Google, with the upper half of the tower — typically higher-rent space with better views — available to new tenants.
The seller is Torchlight Loan Services, the special servicer on a commercial mortgage-backed securities loan on the property that matured in 2023.
The previous owners, Chicago-based Hearn and New York-based Fortress Investment Group, handed the property over to its lender in 2024. That deal was a deed in lieu of foreclosure, a form of voluntary surrender that replaces a formal foreclosure process.
It’s unclear how much Torchlight is expecting in a sale on behalf of the bondholders in the CMBS debt. The firm did not immediately respond to a request for comment from CoStar News.
Torchlight is unlikely to find a buyer to cover anywhere close to full value of the nearly $138 million remaining loan balance, based on sale prices for similar properties in recent years.
Yet there have been signs that investors are returning to the market for larger deals, after years of slow sales volume because of remote work trends, high borrowing costs and a pullback in office deals by institutional investors.
Canada’s Onni Group recently paid $125 million for the 50-story tower at 161 N. Clark St., across from the Thompson Center, and Menashe Properties has struck a nearly $60 million deal to buy the 38-story tower at 180 N. LaSalle St. If that deal is completed as expected, it will be the third bet on a Loop recovery by the Portland, Oregon-based firm since 2023.
Several smaller buildings also have traded hands recently as office investments or residential conversions.
Conversions of some older properties and a virtual stop on new construction in recent years have led some well-positioned properties to land new leases or secure long-term renewals.
Not far away, law firm Vedder recently signed a 12-year extension on its approximately 163,000-square-foot lease.
As recently reported by CoStar News, investment research firm Morningstar is in talks to lease a large block of space in the 1.2 million-square-foot, Helmut Jahn-designed building that Google plans to own and occupy.
As some dealmaking resumes to the market, other distressed properties still face a long road back to relevance.
In the case of the late-1970s structure at LaSalle and Madison streets, JLL points to the location near Google’s highly watched project, City Hall and courtrooms. More than $10 million was invested by the previous owners on areas such as move-in-ready speculative suites, amenities and a lobby renovation, according to the JLL materials.
The city of Chicago leases 319,346 square feet until mid-2035, according to JLL. The building is home to 1,200 city employees, and the space includes conference rooms, a mock trial room and training center, according to the brochure.
The building is available at a massive discount to replacement cost, JLL said, with the opportunity to boost revenue by landing tenants for upper floors.
For the record
The seller is represented by JLL brokers Jaime Fink, Bruce Miller, Sam DiFrancesca and John Mason.