NARE Buys State Street Office Building at Steep Discount

North American Real Estate has purchased a downtown retail and office building at a steep discount, shedding light on the depreciation of commercial assets in Chicago.

The Chicago-based investor acquired the five-story building at 100-112 South State Street from a venture of New York-based developer Tishman Realty and an affiliate of France-based financial services firm AXA Group, CoStar reported. Cushman & Wakefield brokers Michael Marks, Evan Halkias and David Matheis represented the sellers.

While the sale price was not disclosed, NARE principal Savas Er confirmed that it was well below the $35 million that Tishman and AXA paid for it in 2015.

Commercial properties selling for less than their last trade has become the norm in Chicago. Rising interest rates, the remote-work era, an increase of online shopping and banking uncertainties have wreaked havoc on the city’s office and retail markets.

Another State Street building sold in October for about 23 percent less than the last time it traded, in 2016, further demonstrating the plummeting property values in once-vibrant nooks of downtown Chicago.

NARE’s acquisition was made at a “good discount from pre-pandemic levels,” Er told the outlet.

The lower level is fully leased to Champs Sports and Capital One Café, and both have more than nine years left on their leases. However, the upper floors previously occupied by WeWork became vacant after the coworking giant’s exit and subsequent bankruptcy.

NARE also has owned the vacant, neighboring building at 114 South State Street since 2019. Er highlighted the strategic significance of acquiring the adjacent property, as NARE aims to expand its footprint and enhance investment positioning on this renowned shopping avenue, famously referred to as “that great street” by Frank Sinatra.

The Tishman-AXA venture extensively renovated the 69,000-square-foot property after buying it in 2015, converting the lower two floors to retail.

—Quinn Donoghue