Sterling Bay Seeks Buyer for 600 West Chicago Office Building

Sterling Bay wants to offload Groupon’s former headquarters in River North, more than five years after purchasing the property.

Andy Gloor’s firm has hired Eastdil Secured brokers to sell the 1.6 million-square-foot office building at 600 West Chicago Avenue, CoStar reported. The property is expected to hit the market soon.

Sterling Bay bought the eight-story building for $510 million in 2018, when it was almost fully leased and Groupon, its anchor tenant, was more financially stable. Now, with Groupon vacating its 290,000-square-foot space, along with the loss of other tenants, the property is 62 percent leased, down from the city average of about 76 percent.

It’s unclear how much Sterling Bay hopes to fetch in a sale, but most office properties in Chicago are selling for far less than when they last traded, and sometimes less than the loans tied to them. That will likely be the case for 600 West Chicago, as it’s valued below the $373.8 million loan that Morgan Stanley issued upon purchase, according to people familiar with the listing.

The city’s office sector has been in shambles since the pandemic ignited the remote-work era, driving up vacancies to new heights and leading to a slew of challenges for landlords. High interest rates and a tough lending climate have exacerbated those challenges.

In response to similar market conditions elsewhere, lenders have resorted to offering new loans at reduced interest rates to facilitate sales and mitigate losses on loans issued during more favorable economic climates.

Notably, R2’s recent purchase of the 41-story office tower at 150 North Michigan Avenue for $60 million — nearly half its 2017 sale price — was aided by seller financing from MetLife Investment Management, the outlet said.

Whether Morgan Stanley offers seller financing for 600 West Chicago remains to be seen.

—Quinn Donoghue