Suburban Chicago Office Property Sells for Massive Discount

Woodcrest Capital bought a distressed Lincolnshire office complex at a stunningly steep 95 percent discount last week.

The $6.2 million sale of 4 Overlook Point, which equates to about $7 per-square-foot, is a tiny fraction of the $148 million Phoenix-based Vereit paid for the complex in 2012, public records show. San Diego-based Realty Income later acquired the property in 2021 through a merger with Vereit.

The purchase could signal the next phase of pandemic recovery for the Chicago area office market.

The 818,600-square-foot complex was marketed as a redevelopment play but Woodcrest plans to continue operating it as an office, said Michael Roy, Woodcrest’s head of property management. The low sticker price should allow the landlord to offer a steep discount on rent, he added.

“Maybe in the market, you’ve seen one year of free rent. Well what if we give you five years of free rent? And maybe market rent is $15 a foot. Well what if we can give you $8 a square foot?” Roy said. “We are in the unique position to offer what I think will be the best deal in the Chicago market in decades.”

Some Class B and C properties in the suburbs have hit rock bottom but Class A buildings have begun to bounce back. When some struggling Class A buildings, like the Lincolnshire property, have their values drop low enough, redevelopment plays or extra low rents are possible routes to a turnaround.

Woodcrest, which is based in Fort Worth, is looking for a large tenant to take over all or most of the complex but is also open to a mix of tenants, Roy said.

“We can go for the very big users like United Airlines or the federal government,” he said.

Although industrial redevelopments of similarly depressed office properties in the Chicago suburbs are already underway, Lincolnshire town administrators have been involved with planning efforts for 4 Overlook Point and ruled out some industrial uses. When the property was listed, they envisioned a mix of housing, restaurants, and entertainment. A data center, grocery store or car dealership are also possibilities.

Woodcrest has been in contact with town administrators about the purchase and proposed retail opportunities along the highway access road adjacent to the property, Roy said.

The complex appeared to have reached the point of no return last year when Realty Income listed it with CBRE.

At the time, insurance giant Aon and an affiliate occupied the entire north suburban complex but its lease is set to expire within the year. Aon opted to move its suburban workplace into the Bannockburn Corporate Center building owned by Sentinel Net Lease, and was last eyeing a space of only around 40,000-square-feet in the property.

Tech company Alight Solutions, which was acquired by Aon in 2010, ditched its 200,000-square-foot space at 4 Overlook Point in 2023, scaling back its operation by 90 percent in a move to downtown Chicago.

Although CBRE’s Tom Svoboda, Mike Smith and Matthew Ishikawa were initially hired to list the property, the deal closed after it was marketed via auction by Marcus & Millichap’s John Abuja, Philip Kates and Adam Sklaver.

Editor’s note: This article has been updated to include comments from Woodcrest Capital and clarify the agents involved in the sale.