Sterling Bay is looking for a fat profit on a historic Wacker Drive office building three years after buying it as a turnaround project.
A joint venture of the fast-growing Chicago developer and New York-based real estate investor DRA Advisors is seeking $120 million for most of the 41-story LaSalle-Wacker Building at 121 W. Wacker Drive, according to a source familiar with the offering.
The venture has hired CBRE to market its 403,698-square-foot portion of the vintage tower, which includes office and retail components.
Sterling Bay paid $52.5 million in 2014 for a 360,000-square-foot office portion of the building, or about 87 percent of the property’s office space. The 441,034-square-foot building also includes a series of separately owned office condominiums.
Shortly after that purchase, Sterling Bay paid $6.7 million for 9,000 square feet of retail space at the base—adding to about 5,000 square feet owned by Sterling Bay subsidiary Four Corners Tavern Group—and also added more of the office space to its holdings.
Fixing up the historic tower and flipping it for far more than it paid is vintage Sterling Bay. The company is best known for its flurry of redevelopment projects in the West Loop, such the former Fulton Market Cold Storage building, which is now Google’s Midwest headquarters. Sterling Bay also has bought and redeveloped large downtown properties.
In the case of the 85-year-old LaSalle-Wacker Building, the developer spent roughly half of the initial purchase price on upgrades, according to a source. Those included a rooftop deck overlooking the Chicago River, a renovated lobby, a fitness center and a conferencing facility. The owners also changed the address from 225 N. LaSalle St. as a new amenity has popped up across the street along Wacker Drive: the city’s $150 million development of the riverwalk, which has been inundated with foot traffic just steps from the property’s front door.
Sterling Bay’s portion of the property is 90 percent leased to 81 tenants, and no tenant has more than 6 percent of the rentable space, according to a marketing flyer.
Selling the building comes with downtown office vacancy hitting a 2½-year high during the third quarter due to a flood of new space on the market. But demand for space in the central business district has been strong, allowing landlords to increase asking rents last quarter by nearly 2 percent over the second quarter to $38.77 per square foot.