Steep Discount Attracts Buyer for Shorenstein’s Chicago Tower

A deeply-discounted Loop office tower has caught the attention of a Florida-based investment firm looking to benefit from the challenges of Chicago’s commercial real estate market.

Triple Double Real Estate is in advanced discussions to acquire the 16-story office building at 1 North State Street for $13 million, or about $23 per square foot, Crain’s reported, citing people familiar with the matter. JLL’s Jaime Fink, Bruce Miller and John Mason are managing the sale.

If the deal goes through, the 112-year-old office building, which spans 560,700 square feet, will have lost 84 percent of its value since Shorenstein Properties acquired it in 2016 for $80 million, or about $142 per square foot.

The property would also join a growing list of downtown office buildings sold at deep discounts, including properties at 230 West Monroe Street, 105 West Adams Street, 150 North Michigan Avenue, 216 West Jackson Boulevard and 19 South LaSalle Street. With office buildings across downtown Chicago facing soaring vacancy rates and waning demand, the potential sale would mark yet another sign of the city’s office market woes.

Triple Double would face a significant challenge in revitalizing the property, which is just 41 percent leased — down from 80 percent before the pandemic. But that is in the wheelhouse ofTriple Double, led by CEO Avi Greenbaum.

The firm has a track record of purchasing undervalued properties, overhauling them with major renovations and then implementing aggressive leasing strategies aimed at attracting tenants. For the State Street office tower, this could involve substantial capital outlays to fill the building’s vacant offices.

Shorenstein invested $36.5 million in upgrades during its ownership, adding a rooftop deck, fitness center and climbing wall. However, those efforts were not enough to overcome the challenges brought on by remote-work trends.

The deal is being closely watched as a potential boost for State Street, an area of downtown that has been hit hard by retail vacancies and declining office demand. While the office portion of the building has struggled, the retail portion — owned separately by a New York investment group — also has woes, including a $50 million foreclosure lawsuit.

— Andrew Terrell