Notre Dame University Surrenders Chicago Office Building

The University of Notre Dame has surrendered ownership of Chicago’s Railway Exchange Building following a deed in lieu of foreclosure.

New York Life Insurance took control of the 379,000-square-foot office property after extended financial struggles caused by declining occupancy and high operating costs, CoStar News reported.

A Notre Dame venture acquired a stake in the Railway Exchange Building in 2006 and became its sole owner in 2015 after buying out minority investor Hamilton Partners. That same year, the university refinanced the property with a $47.5 million loan from Connecticut General Life Insurance.

The 18-story building at 224 South Michigan Avenue was 97 percent leased when Notre Dame took out the loan, but recent tenant losses have reduced the occupancy to approximately 67 percent, lower than the downtown office market average of 74 percent, CoStar Group reported.

The 121-year-old building was once home to Motorola Solutions’ sales office after it moved from Schaumburg in 2012. Current tenants include architecture firms Skidmore Owings & Merrill and Goettsch Partners.

The university’s decision to hand the key back to New York Life follows a broader trend of financial distress in Chicago’s downtown office market. Remote work and high borrowing costs have led to weakened demand for office space, causing property values to drop and forcing owners into foreclosure or deed in lieu transactions.

New York Life Insurance also recently seized the Inland Steel Building at 30 West Monroe Street. That 251,000-square-foot Loop property was previously owned by Capital Properties, which refinanced it in 2016 after purchasing it in 2007 for $57 million.

— Andrew Terrell