AEW Capital Management Lists Mostly Vacant Chicago Office Asset

AEW Capital Management is testing the market by listing a mostly vacant office building in Chicago’s West Loop.

The Boston-based firm is seeking a buyer for the 516,000-square-foot high-rise at 525 West Van Buren Street, CoStar first reported. JLL’s Bruce Miller, Jaime Fink, Patrick Shields and Sam DiFrancesca are marketing the listing.

AEW acquired the 16-story building from New York-based Northwood Investors in 2019. The company purchased it for $135 million, which pencils out to $261 per square foot.

The building is 36 percent leased, a significant decline from the 91 percent it commanded in early 2019 when Silicon Valley-based freelancer platform Upwork leased 67,000 square feet in the building. The average weighted lease term for the property is 4.4 years.

AEW has invested over $12 million in upgrades aimed at attracting tenants. Despite modernizing the lobby and making additional improvements, filling the remaining space presents a challenge as businesses increasingly adopt hybrid work models and scale down office commitments.

Prospective buyers would inherit 296,000 square feet of available space.

Recent office transactions suggest the firm may face difficulty in securing a favorable sale price. Properties across the city have sold for substantial discounts compared to their pre-pandemic valuations, reflecting the broader struggles of the downtown office market.

Large buildings such as 600 West Chicago Avenue, 303 East Wacker Drive and 1 North State Street have collectively traded for $1.1 billion less than their previous sale prices, per Crain’s.

AEW’s wider Chicago holdings consist of two multifamily properties: the 190-unit JeffJack Apartment, at 601 West Jackson Boulevard in the West Loop, and the 230-unit Chestnut Tower Apartments, at 121 West Chestnut Street on the Near North Side.

The company previously owned The Jax, a 166-unit apartment building at 1220 West Jackson Boulevard. The apartment complex entered into a contract last year with Northbrook-based MZ Capital Partners for an undisclosed price.

— Andrew Terrell