Chicago's Big Deal
Originally designed by renowned architect Louis Sullivan in 1899, the Sullivan Center offices will be sold for $175 million by New York-headquartered firms KKR and Madison Capital to New York-based investor 601W Cos. The 15-story building in the Chicago Loop does not include the ground-floor retail space, which is owned separately. KKR and Madison Capital will make a 17-percent return on investment on their $267 million purchase of the entire building in April 2016. The two companies already sold the retail portion of the Sullivan Center for nearly $147 million in August 2016 to Acadia Realty Trust, a Rye, N.Y.-based real estate investment trust. Currently, the 833,000 sf of office space is almost fully leased.
Cleveland Office Attracts More Out-of-State Investors
Due to improving market conditions, out-of-state buyers have flocked to Cleveland, including Hertz, Shelbourne, and Somera Road. These investors are seeking higher yields than available on the coasts, relatively low barriers to entry, and positive underlying fundamentals.
- Sales volumes have increased steadily since 2010 and are approaching pre-recession levels.
- In the past two years, office investment sales in Cleveland totaled more than $550 million.
- New owners plan to improve the buildings' amenities and charge higher rents.