C
alifornia investor Andrew Brog has expanded his Chicago portfolio with the purchase of a distressed 16-story office building at 550 West Washington Boulevard for $18.5 million in cash, or about $50 per square foot. The price represents a significant discount from its 2013 sale price of $111 million ($300 per square foot) when it was nearly fully leased. Brog Properties secured the 372,400-square-foot building through JLL brokers.

    The purchase highlights the challenges faced by office landlords in Chicago's central business district, including a 25.8% vacancy rate and reduced investor interest due to remote work trends and elevated interest rates. However, Brog views this as an opportunity for long-term gains, citing his debt-free purchase which provides flexibility that many other landlords lack.

    Brog also purchased a 10-story office building at 216 West Jackson Boulevard in April for $2.5 million, an 89% discount from its 2012 sale price. He plans to invest in building improvements to attract tenants and has stated that his plan is to do "turnkey deals" with the existing infrastructure and location.

    Other distressed landlords in downtown Chicago are also selling at a loss rather than reinvesting, including Shorenstein Partners which recently sold a 16-story office building for $13 million (an 84% drop from its 2016 purchase price) and CBRE Investment Management which sold a 41-story tower to R2 Companies for $60 million (half its 2017 value).