Former Chicago real estate investor Tim Callahan and New York’s Oak Hill Advisors paid $210 million for a controlling stake in a 55-story tower on North Wacker drive that values it at more than $1 billion.
It’s one of the largest transactions for an office building in Chicago, according to Crain’s. While the deal for 110 N. Wacker Drive was initially reported by the Wall Street Journal, Callahan’s participation hasn’t been revealed until now.
The Callahan-Oak Hill joint venture bought the equity stake from Houston developer Howard Hughes. Willis Tower is the only Chicago skyscraper with a higher valuation, at $1.3 billion when it was sold to private equity firm Blackstone in 2015.
The purchase comes at a precarious time for Chicago’s office market, a sector still slow to recover from the pandemic and a shift to remote work. It underscores demand for office properties with views and amenities, even as the pandemic turns longtime work practices topsy-turvy. Chicago office buildings that have updated amenities in popular locations like Fulton Market are finding new tenants relatively quickly, while older buildings are struggling.
“The last few years have changed tenant expectations of what an office should be,” Callahan said in a statement. “Our plan is to achieve a new standard with service, amenities and exclusive offerings that you would experience at the finest hotels.”
The 1.5 million-square-foot tower opened in 2020. It’s more than 82 percent leased to long-term tenants, according to Crain’s. Its anchor tenant is Bank of America, which leases more than 500,000 square feet and it has a 45-foot lobby, dining options and a secondary air-filtration system that was added after the pandemic. CBRE will oversee leasing and management of the property.
Howard Hughes listed the building for sale earlier last year after deciding to unload nonessential assets.
Callahan’s firm sold its stakes in Chicago office buildings in 2018. Prior to starting his own firm in 2007, Callahan was CEO of Sam Zell’s Equity Office Properties Trust from 1996 to 2002 and then oversaw Trizec Properties. His time at Trizec ended in 2006, when the company was sold to Blackstone for $8.9 billion.
[Crain’s] — Miranda Davis