Beacon Capital Partners Lists Indebted Chicago Office Tower

A LaSalle Street tower is hitting the market, but Chicago’s office market isn’t exactly dealing strong hands.

Beacon Capital Partners listed its 40-story office tower at 190 South LaSalle Street at a challenging moment for Chicago’s office sector, Crain’s reported.

The property, known as the U.S. Bank Building, is facing potential tenant losses and mounting financial pressure. The price wasn’t disclosed.

Beacon acquired the nearly 800,000-square-foot tower in late 2019 for $230 million ($288 per square foot) and is selling at a time when Loop office buildings are trading at significant discounts. A $167.5 million mortgage ($209 per square foot) from U.S. Bank also weighs it down — a balance that now likely exceeds the property’s market value amid rising vacancies and declining demand.

Two of the building’s largest tenants, Neuberger Berman and Bain & Company, are expected to exit by 2027 and 2028, respectively.

The looming vacancies add to the building’s uncertainty despite its anchor tenant U.S. Bank’s signing through 2030. The weighted average lease term across tenants is just over four years, according to marketing materials.

The sale offer comes after Beacon’s loss on 303 East Wacker Drive, which sold in December for about $63 million, a steep drop from the $182 million Beacon paid in 2018. Another blow came with a foreclosure lawsuit at 330 North Wabash Avenue, where Beacon faces claims over a $372 million loan after its appraisal dropped 62 percent last month from issuance four years ago.

Beacon recently invested $13.7 million in renovating 190 South LaSalle, upgrading the lobby, fitness center and conference spaces in hopes of attracting tenants.

The building, developed in 1987 and designed by Philip Johnson, is one of the few LaSalle Street properties to undergo significant recent updates. That list includes 135 South LaSalle Street, for which the city doled out $98 million in TIF subsidies to Riverside Investment & Development, DL3 Realty and AmTrust RE to convert vacant office space into 386 residential units last fall.

Several nearby towers have fallen into foreclosure, like New York-based landlord Feil Organization’s 10 South LaSalle Street. Feil was hit with a foreclosure suit by Wilmington Trust in January over contractors’ unpaid mechanics liens.

— Judah Duke