Commerz Real Pays $194M for Chicago Office Building

The investment management affiliate of a Germany-based financial institution has acquired The National, an historic 520,000-square-foot asset.
The National
The National

Commerz Real, a fully owned subsidiary and real estate investment manager of Germany-based Commerzbank AG, has acquired The National, an approximately 520,000-square-foot office building in Chicago, from Blue Star Properties, for roughly $196 million. The company purchased the 20-story building for its open-ended real estate fund hausInvest.

Located at 125 S. Clark St., in the heart of the central business district, the historic building was fully renovated in 2017 and repositioned with a multi-tenant concept.

“The National ticks a lot of boxes for us: excellent location, broad diversified tenant mix and additional rental upside due to two vacant floors and the reasonable rental levels in the building,” Henning Koch, Commerz Real’s global head of transactions, told Commercial Property Executive. “Given our long-term investment horizon, this property is ideal for us as it combines long-term stability with both near-term as well as long-term upside.”

A solid history

Originally known as the Edison Building when it was built in 1907, serving as the headquarters for Commonwealth Edison, it transitioned to its current name when Commercial National Bank took ownership of the building.

“The National and its amenity base is geared towards firms with a modern and creative workforce,” Koch said. “For those tenants, the excellent public transportation and the steady shift of the loop from a traditional business district to a vibrant ‘live work play environment’ through residential and hotel developments and conversions and the accompanying bars and restaurants are a huge appeal.”

Currently, the building is 88 percent occupied, leased to 28 companies with an average term of nearly eight years. Its tenant roster includes WeWork, Merkle and Shure. 

According to Koch, the company looks for excellent opportunities in top locations in metropolises around the globe, and The National fit that objective. “As many others, we do feel like we are in the later part of the current cycle and therefore are only very selectively buying in the major markets across the globe,” he said. “The U.S. is one of the most liquid markets and still provide quite interesting opportunities in line with our very selective investment criteria.”

While the building is in strong condition from its recent renovation, the company is planning to upgrade part of the building technology and fill the existing vacancies. Additionally, it is considering upgrading the lobby and roof terrace. “Our aim is not only to generate cash flow from our investments but also to increase the value of the property,” Koch said. “One way to achieve this is to invest into a building which still has some vacancies but excellent perspectives because of its location, type of usage or importance for the surrounding neighborhood. The National is such a piece of real estate.”

In May, Commerz Real acquired a 25-story, 390,000-square-foot Midtown Manhattan office tower fully leased by NYU Langone Medical Center for $332.5 million.

Image courtesy of Commerz Real