Trophy Chicago Office Asset Lands $153M Refi
- Feb 25, 2021
LaSalle Investment Management has received a $153 million refinancing package for 123 North Wacker, a 550,000-square-foot Class A office asset in downtown Chicago. JLL Capital Markets secured the five-year, floating-rate bridge loan for the borrower.
The note retires $136.7 million in acquisition financing taken in early 2017, according to CommercialEdge. The loan, held by New York Life, was slated to mature this month.
LaSalle acquired the 33-story Chicago office property for $146.5 million from Wells Fargo, which had taken ownership of the building following a foreclosure in mid-2016. Following that sale, the owner invested more than $33 million in capital improvements, renovating the lobby, updating elevator systems and adding an enclosable open-air lounge on the 30th floor. The property’s amenities include a fitness center, bicycle lockers, a conference center and more than 10,000 square feet of retail space at the ground floor. The building’s office roster has a diverse mix of 36 tenants, from the Chicago Bears to cloud storage provider Box.
Located at the corner of North Wacker Drive and West Randolph Street, the high-rise is in the heart of the Loop, a short distance from the Ogilvie train station and the metro’s extensive L network. The city’s iconic Willis Tower, which wrapped up a $500 million capital improvement project last year, is a quarter mile due south.
Into the wind
After a difficult year for the sector as a whole, Chicago’s office market is showing signs of stress. Office vacancy hit a 10-year high during the fourth quarter of 2020, according to a recent Colliers report, following steady negative absorption across all asset classes. While Class A office buildings are more likely to be resilient in the near term, shifts toward remote work will continue to impact office market fundamentals in Chicago and nationwide.
Office lending has not been immune to these changes. Due to the economic uncertainty and the volatility endemic to the sector, lenders have become more hesitant and are more heavily scrutinizing riskier commercial loans. However, optimism remains: In a recent Commercial Property Executive survey of top mortgage banking firms, 87.5 percent anticipated higher origination volumes this year compared to last.