Before Chicago’s Old Post Office opened its doors to tenants last fall, the former massive mail terminal had sat empty for two decades since it was decommissioned in 1997.
New York-based 601W Companies acquired the 2.3 million-square-foot Downtown property from eccentric British millionaire Bill Davies for $130 million in 2016, and embarked on an $800 million overhaul that included adding a green roof and replacing 2,200 windows. Walgreens signed on as the first major tenant in 2018, and was soon followed by other high-profile names like Uber, Pepsico and Cisco.
Shortly before opening, 601W secured a hefty refinancing for the property that included $473 million up front, and future commitments of $383 million more to continue the redevelopment. The senior mortgage provided by JPMorgan Chase was securitized into several CMBS transactions, and related loan documents provide an inside look at the nine-story complex’s rent roll.
As of last fall, the Old Post Office was 81 percent leased to 19 tenants, with the five largest tenants accounting for half of the total rentable space and two-thirds of annual base rent.
Average base rent at the building comes out to $30.37 per square foot, with the smaller tenants paying rent in the high $20s on average. As the first anchor tenant and the largest tenant, respectively, Walgreens and Uber enjoy slight discounts in base rent compared to the rest of the top five.
Uber’s 10-year, 460,000-square-foot lease takes up one-fifth of the property, followed by fellow household names Walgreens and Pepsi. The fourth largest tenant, the Chicago Board Options Exchange, is the largest options exchange in the country. Telecommunications conglomerate Cisco rounds out the top five.
Other tenants at the property include confectioner Ferrara Candy, data-driven marketing firm 84.51, food delivery company HomeChef, and the Federal Home Loan Bank of Chicago.
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Chicago’s once booming office market is just trying to hang on
The coronavirus pandemic has presented a host of new challenges to Chicago’s once-booming office market. In April, Uber temporarily paused construction on its space at the Old Post Office, which is to serve as headquarters for its logistics business known as Uber Freight. The company now expects to move in next year instead of this fall. Last month, 601W opened a 3.5-acre park on the complex’s rooftop, although most tenants are still working from home.
Led by managing members Michael Silberberg and Mark Karasick, 601 W has been an active player in Chicago’s office market for years. The company also owns the 83-story Aon Center, which it bought for $713 million in 2015.