Glenstar, Halloran Investing $30 Million in Chicago Tower

A 41-story office tower on the Chicago River is the city’s latest revival project.

Michael Klein’s Glenstar and Minnesota investor Patrick Halloran plan to invest $30 million in renovations to the tower, at 200 South Wacker Drive, which they bought in December, Crain’s reported.

The venture bought a $151 million non-performing loan from the Bank of China and took control of the building via a deed-in-lieu of foreclosure. The purchase price was not disclosed, but sources suggest it was just under $90 per square foot, approximately $68 million.

JLL’s Jaime Fink, Bruce Miller and Sean Ryan marketed the listing, which was 72 leased over the summer with a weighted average lease term of 4.7 years.

The acquisition comes amid a wave of distressed property sales in Chicago, with office buildings trading at steep discounts following the pandemic’s impact on demand. Other Chicago office properties that have sold for discounted prices include buildings at 1 North State Street, 600 West Chicago Avenue, 70 West Madison Street and 303 East Wacker Drive.

The 762,000-square-foot 200 South Wacker was previously owned by Manulife Financial, which purchased the building for nearly $215 million ($282 per square foot) in 2013. However, market conditions and the impact of the pandemic caused its value to decline.

Glenstar and Halloran are betting on the building’s prime location and the long-term potential of the office sector. Their $30 million renovation plan will focus on modernizing office suites, enhancing common areas and upgrading tenant amenities.

The building’s location is a significant advantage. Office towers along the Chicago River have fared better in terms of vacancy, with a rate of 13.9 percent, compared to the overall downtown market, which has a 21.4 percent vacancy rate for Class A buildings, according to Eastdil Secured.

— Andrew Terrell