Opal Holdings Fattens Bet On Suburban Office Markets

A New York firm just upped its bet on Chicago after already spending almost $650 million on three pieces of commercial real estate.

A partnership between the firm Opal Holdings and investor Katherine Cartagena just paid $73.3 million to buy the former OfficeMax headquarters in suburban Naperville, Crain’s reported, citing DuPage County records. The deal for the 354,000-square-foot building at 263 Shuman Avenue was followed by the parties splitting the building from the land; Opal paid an unknown sum for the leasehold on the property, a move that extended its office buying spree in the Chicago area.

Opal made deals last year to pick up the 50-story office tower at 35 West Wacker Drive in Chicago’s Loop for $415 million, and spent another $180 million on the Corporate 500 office campus in suburban Deerfield. Its purchase of the eight-story Highland Landmark II office building in suburban Downers Grove pushed its buying spree to a total of $650 million.

The firm is betting that a rebound is in store for Chicago’s office market by taking on property like the Naperville building left by OfficeMax in 2015, even as the pandemic raises questions about the future of office demand. New leasing activity in Chicago so far has been concentrated on the newest developments with rich amenities, while vacancies hang near record highs both downtown and in suburban markets.

Its optimism on the future suburban office market isn’t limited to Chicago. Opal spent $150 million on an Orange County, California office tower last year, too.

The Naperville building’s sale provides an exit from the building for a venture of Chicago-based Franklin Partners and Northbrook-based Bixby Bridge Capital that bought the building while it was vacant in 2018, taking out a $21.7 million loan to acquire the property, Crain’s reported. Its previous owner handed the keys back to its lender on a $49 million loan, Crain’s reported, making it unclear how much the Franklin and Bixby venture paid to buy it from the special servicer appointed to oversee the troubled loan.

[Crain’s] – Sam Lounsberry