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Chicago

Wacker Drive office building back on market after failed $310M deal

JLL is marketing the 61 percent leased building at 311 South Wacker

Zeller's Paul Zeller with 311 South Wacker Drive (Zeller Realty Group, Getty)
Zeller's Paul Zeller with 311 South Wacker Drive (Zeller Realty Group, Getty)

A 65-story Chicago office building is back on the market after a $310 million deal for it failed to close earlier this year.

The property’s owner, a venture of Chicago-based Zeller Realty Group and Chinese investor Cindat Capital Management, hired JLL to market the building at 311 South Wacker Drive, CoStar reported.

Virginia-based real estate firm Firenze Group earlier this year reportedly neared a $310 million deal to buy the 1.3 million-square foot tower, yet that deal blew up, and it’s unclear why.

Zeller and Cindat paid $302 million for the building in 2014 and then invested another $78 million in the building through renovations and leases, according to a report last year by Real Estate Alert written when it hit the market.

The sellers upgraded the fitness center, added a tenant lounge and conference center and signed several new, small tenants in their first year of ownership. Zeller and Cindat refinanced the building in 2018 with a $215 million loan from Morgan Stanley, according to published reports.

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The previous Firenze deal would have marked a loss for the sellers, who had initially hoped to sell the property for close to $360 million.

Tenants vacated more than 120,000 square feet in the property even before the pandemic for new offices in Fulton Market and near Union Station. The 32-year-old Wacker drive building was less than 75 percent leased at the time of the pending Firenze deal, down from 86 percent just before the pandemic. The building is now 61 percent leased, the JLL marketing brochure said, plus higher interest rates for borrowers compared to earlier this year are putting even more downward pressure on pricing than was present during the Zeller venture’s previous attempt to sell.

According to JLL’s marketing flyer, the offering is a chance to buy at a substantial discount from the average $365 price per square foot on Wacker Drive deals since 2015.

Hodges Ward Elliott previously marketed the building when the Firenze Group deal fell through.

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— Victoria Pruitt

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