Hines Fund Snaps Up 1.4MSF Chicago Office Property for $540M
- Apr 04, 2008
A subsidiary of Hines U.S. Core Office Fund L.P., an investment vehicle of international real state firm Hines, has just taken the 1.4 million-square-foot One North Wacker office property off the hands of a German investment fund operating under the guidance of RREEF. With a sale price of $540 million, the Class A building commanded approximately $386 per square foot.One North Wacker, which the seller owned since 2002, was developed in 2001 by the John Buck Co., and sits in the central business district’s coveted West Loop submarket. The 51-story tower, designed by architectural firm Goettsch Partners, is presently 98 percent leased to a roster of tenants that includes Citadel, PricewaterhouseCoopers and UBS. A two-level parking facility accommodating 230 vehicles, a 9,000-square-foot conference center and a health club are also part of the property. Additionally, One North Wacker was just awarded LEED certification by the U.S. Green Building Council in February. Hines will now handle both management and leasing activity at the building.Chicago’s office market is fairing quite well, particularly where premier properties are concerned. The average vacancy rate for Class A buildings is 8 percent, according to Jones Lang LaSalle’s Skyline Review, and is expected to hold steady through the year. However, the economic downturn, the credit crunch and new deliveries may send the vacancy rate up to 11 percent by late 2009.Hines is no stranger to the Windy City, having made its entrée into the market in 1981 with the construction of Three First National Plaza. The company’s owned and managed assets in the Chicago area now total over 12 million square feet. For the Core Fund, the purchase of One North Wacker leaves the investment vehicle with interests in 25 office properties totaling 14.9 million square feet across the country. Real estate services firm Eastdil Secured represented the seller in the One North Wacker transaction, while Hines stood in for Core Fund.