Each week, The Elevator Speech summarizes news related to some of the key industry trends, buildings, deals and dealmakers that shaped headlines. Below are articles that caught our attention the week of October 14.
No Property Tax Increase in 2014 County Budget
Cook County Board President Toni Preckwinkle has announced that her $3.2 billion 2014 budget will not include increases in property taxes, other taxes or any existing fees. The 2014 budget will focus on the healthcare and criminal justice systems along with technology upgrades for the county.
Record Setter Strikes Back
KBS Realty Advisors LLC has agreed to pay almost $300 per square foot for Citigroup Center, a 1.5 million-square-foot building located at 500 W. Madison St. The $435 million price tag is the highest amount paid for a Chicago office tower since July 2010, when KBS paid $503 per square foot for the 1.3 million-square-foot building at 300 N. LaSalle St. That deal, which cost KBS $655 million, remains a Chicago record for amount paid per square foot.
KBS’s acquisition of Citigroup Center is the sixth pending or completed downtown office sale of more than $200 million in 2013, which equals the total number of transactions completed in 2011 and 2012 combined.
Transwestern’s Q3 Report
Transwestern and its research affiliate, Delta Associates, reported this week that the metro Chicago office market experienced mixed performance in the third quarter, with the Chicago’s central business district (CBD) outperforming the suburbs.
Chicago’s CBD overall vacancy rate declined to 11.6% in the third quarter of 2013, which is a slight improvement from the 11.7% reported at mid-year, but this is an increase from the 11.4% reported one year ago.
Transwestern anticipates that vacancy rates will decline through the fourth quarter of 2013 and into 2014 due to predictions of steady job growth and interest from potential tenants who may want to take advantage of relatively low rental rates.
Tishman Speyer Sells off Two Towers
Tishman Speyer Properties L.P. is selling two downtown towers that it acquired in 2007 in what was part of largest real estate deal in Chicago history – a $1.72 billion purchase of the former downtown assets of Equity Office Properties Trust.
In January 2013, Tishman Speyer put 161 N. Clark St. on the market. This building, best known as the former headquarters of Chicago Title & Trust Co., sold on October 10 for $331.3 million to a South Korean fund advised by Los Angeles-based CBRE Global Investors. The second tower, 1 N. Franklin St., has been sold to New York-based MetLife Inc. for nearly $190 million. MetLife will also be financing the 161 N. Clark purchase with a $185.3 million loan.
Once the deal is finalized on 1 N. Franklin deal, Tishman Speyer will have earned about $776 million by selling off assets from the Equity Office portfolio, which suffered from the recession of 2007 – 2009.
Hotel Burnham Part of Portfolio Up for Sale
CWCapital Asset Management LLC, a loan servicer, has put the Hotel Burnham and five other Chicago-area properties up for sale in an attempt to recover losses after seizing them in the midst of the real estate crash.
CWCapital has put together a $2.6 billion portfolio comprised of the 122-room Hotel Burnham, a 172,000-square-foot-shopping center in west suburban St. Charles and four office buildings in Chicago, Schaumburg and Evanston. By putting this portfolio on the market, CWCapital has become yet another example of a lender capitalizing on the recuperating commercial real estate market by selling properties that ran into loan trouble after the recession.
What CRE or Chicago news headlines from the past week captured your interest? Leave us a comment and let us know.