CHICAGO—China long-ago displaced Japan as Asia's most vibrant economy, and the impact was felt in Chicago's downtown real estate market, where Chinese investors began completing significant purchases, but the Japanese disappeared.
That all changed this week with the acquisition of a huge chunk of office property located within 203 N. LaSalle by the Sumitomo Corp. of Americas, a subsidiary of the Japan-based Sumitomo Corp.
The acquisition comprises 581,107-square-feet on the 13th through 27th floors in the 27-story mixed-use building. Chicago-based Avison Young principal Suzanne Martinez led the brokerage team that represented SCOA in the sale. In addition, SCOA has designated Avison as the exclusive listing agent for the acquired space. The transaction did not include the retail space on the first and second floors or the ten levels of parking.
“In one way, the really big news here is this is the first major acquisition by a Japanese investor in almost ten years,” Martinez tells GlobeSt.com. “But in another way it's just a continuation of the trend of large foreign investors finding elevated prices on the coasts, and deciding to take a closer look at Chicago.”
Sumitomo and Avison have a big task ahead, as anchor tenant DLA Piper, one of the city's best-known law firms, has decided to leave the 260,000-square-feet it occupies at 203 N. LaSalle St. for a smaller space in Hines Interests' River Point tower, now under construction at 444 W. Lake St. in the West Loop. But Martinez says Sumitomo looks on the law firm's 2017 exit as an opportunity.
“They are very well-capitalized, and are really focused on acquiring value-driven assets that can be repositioned,” she says. The 29-year-old property “has been off the radar of a lot of tenants because it has not been available,” due to high occupancy. Therefore, with this addition to its portfolio, the company now has the chance to put its stamp on an important Chicago property. “That's absolutely something Sumitomo looks for.”
Sumitomo intends to make substantial improvements to the lobby and elevators and install amenities such as a fitness center for tenants.
Avison and the new owners do have three years to prepare for DLA Piper's departure, and Martinez does not sound fazed. The building's location just over the bridge from the River North neighborhood and the burgeoning high-tech scene, she points out, along with its direct access to mass transit and the underground pedestrian walkway, has lately focused more attention on this small section of LaSalle St.
“It's beginning to have the same cachet that Wacker Drive has,” she says. “And we think 203 N. LaSalle could eventually have a major tech component. Still, the access to the pedway and the courthouse can't be overlooked, so I would not rule out bringing in other law firms.”
The seller was a joint-venture partnership consisting of M&J Wilkow, which has held ownership in the building since its completion, and HCI Capital AG, which has shared in the ownership since 2005. M&J Wilkow will continue to manage the building.
Eric Myers, Brad Despot and Michael Curran from Avison will serve as the exclusive leasing agents for the office tower.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
