Chicago top commercial deals 2024

Chicago notched big-ticket sales across several commercial property types this year, and no one asset class dominated the market. The variety of transactions could point to a healthy CRE ecosystem. But a full pandemic recovery remains elusive as high interest rates dampened demand from buyers, and many sellers failed to recoup their initial investments.

Unlike last year, when multifamily sales dominated the top deals, the Chicago area saw significant transactions this year across the retail, hospitality, industrial and office sectors.

The overall dollar volume of Cook County’s top 10 commercial sales got a boost too. In 2022, the 10 biggest sales totaled $1.4 billion. This year, they totaled $1.8 billion, making a rebound to match the volume from 2021.

While the office market was plagued by foreclosures, one office sale cracked the city’s top 10 transactions.

The biggest deal of the year was the $508 million sale of the Sheraton Grand Riverwalk Hotel. Although the price is significant, a portion of it was set in stone years ago due to a 2017 legal settlement between the buyer and the seller. It also represents a dip in value from a prior $516 million appraisal.

The No. 2 sale on the list provides a better snapshot of Chicago’s current CRE darling: data centers. Australia-based HMC Capital paid warehouse giant Prologis $440 million for a property that the firm is in the process of converting to a data center. Although $440 million traded hands in December, HMC has committed another $272 million to Prologis when the project is complete.

Here are more details on the 10 biggest commercial transactions recorded in Cook County this year or otherwise confirmed by The Real Deal’s reporting.

Sheraton Grand Riverwalk Hotel | $508 million

New York-based Tishman Realty sold the 1,218-key Sheraton Grand Chicago Riverwalk hotel for $508 million to Marriott, after the seller exercised an option for the deal under the terms of a 2017 legal settlement, according to an SEC filing.

Although it was the priciest deal of the year, Tishman’s decision to pull the trigger on its option to sell the property in the Streeterville neighborhood served as an acknowledgement of its sliding value. The property, at 301 East North Water Street, was developed by Tishman and opened in 1992. It was appraised at $516 million in 2017, according to Morningstar Credit.

Tishman and Marriott agreed to a $300 million portion of the sale in 2017 to settle a lawsuit Tishman brought against the hotel brand. The dispute stemmed from Marriott’s $13 billion takeover of Starwood Hotels in 2016, which included the Sheraton brand. Tishman alleged that the deal would mean the Sheraton would be in direct competition with nearby Marriott properties and violate a contract.

This year, Marriott paid $200 million for a ground lease at the property, also owned by Tishman, and made good on its 2017 commitment to pay $308 million for the building.

800 Devon Avenue, Elk Grove Village | $440 million

Seizing on the growth potential of artificial intelligence and cloud storage, Australian firm HMC Capital bought a warehouse in Elk Grove Village from Prologis for $440 million, with another $272 million on the line for the seller’s work to convert it into a data center.

HMC’s total commitment will be $712 million. Once Prologis’ redevelopment of the site into a data center is complete, it will provide two more payments of over $100 million each, a prospectus from HMC shows.

Prologis is converting the 189,000-square-foot warehouse at 800 Devon Avenue into a data center along with partner Skybox Data Centers. They agreed to complete the redevelopment before HMC Capital steps in to run it. When completed, it will cover 176,000 square feet.

The project’s massive valuation is another example of the increasing demand for data centers as cloud computing and artificial intelligence needs rise across the globe.

Bally’s Casino | $250 million

Bally’s Casino found a financial partner to complete its $250 million land acquisition this year for its new location in Chicago’s River West neighborhood.

Gaming and Leisure Properties bought the land underlying the casino development from New York-based Blue Owl Capital, which previously bought the 30-acre site from Bally’s as part of a sale-leaseback arrangement.

The $1.3 billion casino development is replacing the Chicago Tribune’s former sprawling office and printing plant known as The Freedom Center. Demolition at the development site, at 777 West Chicago Avenue, began in August.

Bally’s is operating a casino at a temporary location at the Medinah Temple building at 600 North Wabash Avenue in River North.

The company got a license to build and operate Chicago’s first casino after a competition that included a field of big players. Its proposal also calls for an exhibition hall, a 500-room hotel, a 3,000-seat theater and 10 restaurants.

Concerns about the project grew this year, when word of Bally’s trouble financing the project surfaced. High interest rates and Bally’s other debts weighed on the casino plans with even Mayor Brandon Johnson expressing some skepticism mid-year.

But things turned around in July when the company scored $940 million in financing for the development from real estate investment trust Gaming and Leisure Properties, which will also yield revenue from the sale-leaseback deal.

1326 South Michigan Avenue | $144 million

The buyer of Chicago’s largest multifamily deal landed on the list twice. California-based FPA Multifamily’s purchase of a 47-story luxury apartment building at 1326 South Michigan Avenue for $144 million was part of a spree of deals in the area by the buyer.

The 500-unit property, now called Arrive Michigan Avenue, was sold by CIM Group, likely at a loss. CIM, along with Murphy Real Estate Services, had originally constructed the tower for $171 million. Completed in 2019, the building remains one of the city’s prominent residential structures.

333 West Wacker Drive | $125 million

In June, Beacon Capital Partners made the largest office purchase in downtown Chicago in years at a massive discount from its last trade.

The Boston-based firm paid $125 million for the 36-story riverfront tower at 333 West Wacker Drive. The price comes to $144 per square foot for the 867,600-square-foot building.

The seller was the AFL-CIO Building Investment Trust, which bought the tower for $320.5 million in 2015.

The building’s staggering drop in value reflects the beleaguered state of Chicago’s office sector, which continues to get hammered by remote-work trends and high interest rates. The city’s office vacancy rate topped 25 percent for the first time ever in the first quarter, according to CBRE. The occupancy rate hadn’t changed much by the end of the year.

Despite the depreciation, the $125 million price point marks the most expensive office sale in Chicago since early 2022, when investor Tim Callahan and New York’s Oak Hill Advisors paid $210 million for a stake in the 55-story tower at 110 North Wacker Drive.

St. Regis bulk sale | $117 million

GD Holdings doubled down on its presence in Chicago’s 101-story lakefront St. Regis tower this year.

An affiliate of the firm tied to the Mexican garments company Grupo Denim paid Chicago-based developer Magellan $117 million for dozens of condo units that had yet to be purchased by individual buyers within the skyscraper.

GD acquired 84 condos out of the 393 that Magellan built within the property. It has been the site of some of Chicago’s most high-profile home purchases in recent years, including a more than $20 million sale to a Mexican mining billionaire for a 71st-floor unit.

Denver-based GD Holdings also owns the hotel portion of the building. The firm partnered Miami-based Gencom in 2023 to pay about $134 million for the 192-room St. Regis hotel in the Jeanne Gang-designed skyscraper at 363 East Wacker Drive.

Reserve at Hoffman Estates | $102 million

A California investment firm went on a buying spree in Chicagoland this year and landed on the list of priciest sales with one of its suburban acquisitions.

An affiliate of San Francisco-based investor FPA Multifamily bought a 642-unit complex in the northwest suburbs of Chicago, known as the Reserve at Hoffman Estates for $102 million.

It was purchased at $159,000 per unit from Intercapital Group, a Houston-based real estate investment manager.

The deal, closed on July 10, was below the complex’s previous sale price of $104 million, or $162,000 per unit, in 2018.

FPA financed the purchase by assuming an existing $80.1 million Fannie Mae loan, which carries an interest rate of 4.52 percent and matures in four years. This arrangement likely helped FPA secure favorable financing terms amid a high-interest-rate environment that has dampened commercial property sales.

Parker Fulton Market | $93 million

James Letchinger teamed up with bigtime former Blackstone executive John Schreiber to buy The Parker Fulton Market at a discounted price.

Letchinger’s Chicago-based firm JDL got involved in the deal with Schreiber’s Lake Forest-based family office Centaur Capital Partners to further its relationship with Blackstone Real Estate Advisor co-founder Schreiber, according to people familiar with the matter. JDL, which was the developer of premier residential towers One Chicago and No. 9 Walton, will manage Parker Fulton Market.

The sellers, a venture of J.P. Morgan Asset Management and Atlantic Residential, are taking a haircut on the deal from the $111 million they paid for the 29-story building in 2017. Schreiber and Letchinger paid $93 million for the 227-unit property which is located at 730 West Couch Place.

Woodfield Village Green | $93 million

A suburban retail center traded hands for $93 million in August. Seattle-based commercial real estate investment firm Bridge33 bought Woodfield Village Green at 1446 East Golf Road in Schaumburg from Beachwood, Ohio-based real estate investment firm Site Centers.

The 420,700-square-foot shopping center is occupied by over two dozen tenants including Trader Joes, Bloomingdale’s Outlet, Nordstrom Rack and Michaels.

It is located in a prominent retail corridor along Golf Road that is also home to the Woodfield Mall, The Streets of Woodfield and an IKEA.

Retail sales were somewhat slow in 2024 but five indoor shopping mall redevelopments took steps forward, with and without local government subsidies or involvement.

Willow Crossing Apartments | $89 million

Continuing suburban Chicago’s hot streak, a local investor paid a pretty penny for an apartment complex in Elk Grove Village.

R.I.G. Capital bought the 579-unit Willow Crossing at 1031 Charlela Lane for $89.3 million, or about $154,200 per unit.

The seller, J.P. Morgan Asset Management, paid $80 million ($138,100 per unit) in 2018, although it’s unclear how much the firm spent on improvements.

Despite high interest rates hindering commercial property sales across the metro, suburban apartment properties continue to attract investor interest due to strong rental demand. Net monthly rents for suburban apartments rose by 4 percent year-over-year in the first quarter of 2024 to $2.06 per square foot, according to Integra Realty Resources.

The Willow Crossing deal came shortly after the sale of a 272-unit apartment complex in Aurora, which traded for roughly 40 percent more than its previous sale price.