Chicago’s busiest buyer of loft offices is adding a late-1800s property near Fulton Market to its collection, at a price far less than it sold for two decades ago.
R2 has a contract to buy the nine-story building at 600 W. Fulton for about $18 million, according to people familiar with the situation.
The deal has not been completed and still could fall apart. If R2 finalizes the deal as expected, it will add to that firm’s recent run of deals for loft office and flex buildings at big discounts to previous valuations.
With the property expected to sell for much less than the value of the loan, the owners and lender last August hired Cushman & Wakefield brokers to seek a buyer at a discount to the loan value, a common theme in the U.S. office sector in recent years.
Though many investors throughout the country are shying away from office investments, R2 has scooped up several buildings in and around Chicago’s River North and Fulton Market. The company has previously said that trends of downsizing office tenants and conversions of loft buildings to apartments will boost demand for loft offices that are in good financial standing.
Over the past year and a half, R2 has assembled a loft portfolio that collectively is the equivalent of a traditional office high-rise in the Loop business district.
The building at 600 W. Fulton, along the border of the Loop business district and fast-growing Fulton Market, hasn’t changed hands since December 2006, when it sold for $31.7 million.
The longtime owners, Parkside Realty and local businessman Randy Rissman, refinanced the property with a $27 million loan from National Lincoln Life Insurance in 2016. That loan is set to mature in November, according to Cook County property records.
Crain’s Chicago Business previously reported that an Italian consumer goods company, Milan-based Bolton Group, had a deal to buy the building with plans to occupy part of the space for a Chicago office.
But that deal fell apart, clearing the way for R2 to step in as the buyer, according to people familiar with the situation.
Parkside, Lincoln National and Bolton Group did not respond to requests for comment from CoStar News. R2 declined to comment.
Cushman & Wakefield marketed the loan to potential buyers, with the expectation that the buyer would then formally seize control of the high-vacancy building.
The brick structure began as a Sears, Roebuck & Co. warehouse. It was converted to loft offices in 1982.
Busy Chicago investor
R2 is a longtime investor in several types of properties, including loft offices, in Chicago and other cities.
The company’s recent acquisitions include a $14 million purchase of a vacant building nearby at 550 W. Randolph St. It bought the building in a partnership with bicycle parts maker SRAM, which will occupy about half of the seven-story building in a headquarters move from just west in Fulton Market.
In smaller deals this year, R2 bought a five-story building at 225 W. Illinois St. in River North and a three-story flex building west of Fulton Market at 2130 to 2140 W. Fulton.
Other acquisitions since late 2024 include River North buildings at 730 N. Franklin St., 225 W. Ohio St. and 303 W. Erie St.
R2 also owns larger office properties such as the 41-story tower at 150 N. Michigan Ave. overlooking Millennium Park.
For the record
The sellers are represented by Cushman & Wakefield brokers Cody Hundertmark and Tom Sitz.