Texas developer Hines plans to buy a redeveloped office building in Goose Island, making its third acquisition in the North Center neighborhood where it has spent more than $130 million.
Hines is under contract to buy the 157,450-square-foot property at 1315 North Branch Street for $47 million from Chicago developer R2, according to Crain’s, citing sources familiar with the deal. R2 took out a $29.6 million construction loan from CIBC Bank in 2020 to develop the factory into modern office space.
The pending sale reflects investors’ appetite for renovated office buildings as they lure new tenants. Rents for trophy buildings rose 6.3 percent to $59.26 per square last year from pre-pandemic levels of 2019, according to Avison Young. Class B rents averaged a 0.25 percent increase annually since the pandemic.
(R2)
The two-story building is fully occupied by tenants including CB2, Lakeshore Beverage and Elite Staffing, with an average of more than seven years of remaining lease commitments.
The sale will generate a gain for R2 after it paid just under $13 million for the property in 2015, Cook County property records show. While R2 took out a construction loan two years ago, the full development cost is unknown.
Hines also bought WGN-TV’s studio at 2501 West Bradley Place for $30.5 million from R2 in November. The property is across the street from the Bradley Business Center, for which Hines paid about $100 million. Zoned for as much as 1.6 million square feet, it gives Hines an option to expand the campus to WGN or use the property as a last-mile distribution center for retailers that are willing to pay high rents for facilities to store and distribute products.
Hines, known for building downtown high rises, is part of a joint venture developing the 60-story Salesforce Tower at 333 West Wolf Point Plaza. The project, which broke ground in 2020 after securing a $500 million-plus construction loan, is set to complete construction at the end of this year.
[Crain’s] – Connie Kim