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State Street Office Property Sells for $80 million

crains By RYAN ORI

A San Francisco real estate investor has paid $80 million for a State Street office building, betting it can find new tenants to fill a large vacancy. Shorenstein Properties today said it has acquired the 533,000-square-foot office portion of 1 N. State St., connected towers of 11 and 16 stories. The statement did not name a sale price, which someone familiar with the deal said is almost $80 million.

The sale does not include retail space on the bottom two floors of the building, which are owned separately.

The seller is Arlington, Va.-based FD Stonewater, which bought the property for $31.7 million in 2007, before the recession, according to Cook County property records.

The building’s office space is 45 percent vacancy, according to Shorenstein’s statement.

At more than double the previous owner’s purchase price, Shorenstein is demonstrating confidence in a downtown leasing market where vacancy fell to a 15-year low during the second quarter.

Shorenstein knows Chicago well, having previously owned iconic office properties including the John Hancock Center and Prudential Plaza. Last year, Shorenstein sold the former Apparel Center, now known as River North Point, to Blackstone Group for $378 million.

Jeffrey Toporek, an FD Stonewater principal, did not immediately return calls requesting comment on the sale.

The State Street building was constructed in phases between 1900 and 1912, according to the Shorenstein statement.

FD Stonewater spent more than $10 million over the past two years upgrading the building with a new roof deck, bike room and lobby renovation. Shorenstein plans additional upgrades and new amenities, according to the statement.

The largest tenants are the Noble Network of Charter Schools, the e-commerce office of Sears and co-working firm MakeOffices, all with more than 50,000 square feet.

Ori, Ryan. “State Street Office Property Sells for $80 Million.” Crain’s Chicago Business. Crain’s Chicago Business, 30 Aug. 2016. Web. 06 Dec. 2016.