The New York-based private-equity giant is hunting for a buyer that sees a bright future for suburban office buildings despite an ongoing trend of companies embracing the rise of remote work and cutting back their footprints. The suburbs have lost 3 million square feet of office tenants since the beginning of the COVID-19 pandemic, driving up the vacancy rate to a record high 27%, according to data from Jones Lang LaSalle.
Pointe O’Hare is emptier than average at just 66% leased, according to the flyer, which frames the 270,512-square-foot property as an opportunity to leverage recent building upgrades and lease up the remaining available space. Cushman said Blackstone has invested $8.5 million in the building since acquiring it in 2015 as part of a $3.3 billion portfolio acquisition from GE Capital Real Estate, including building out move-in ready office suites and updating its fitness center, conference center and 988-stall parking garage.
Blackstone has also backfilled part of a big vacancy left behind by Fifth Third Bank, which picked up four floors in the building as part of its acquisition of MB Financial in 2019. MB had previously taken over that office block through its 2014 acquisition of Cole Taylor Bank.
Cushman plays up a “clear path to stabilization” for the 21-year-old property if a buyer could fill a pair of vacant contiguous floors totaling 52,000 square feet, noting that would add 20 percentage points to the building’s occupancy. Other tenants in the building include an arm of the Air Line Pilots Association that represents United Airlines pilots as well as credit card processing company TransNational Payments, according to the flyer. More than two-thirds of the building’s 18 tenants are from the financial, insurance and real estate services sectors.
A Blackstone spokesman did not respond to a request for comment.
Other real estate firms have wagered on the post-COVID recovery of suburban office buildings despite record-high vacancy and the cloudy outlook for the office sector overall. New York-based Group RMC recently paid close to $100 million for a series of office buildings in Downers Grove that had all been substantially updated by their previous owners. And in a more ambitious play, New York-based Sovereign Partners paid $24 million in January for the renovated—but mostly-vacant—27-story former Gallagher headquarters at 2 Pierce Place in Itasca.
Sales of suburban office properties nationwide rose 63% year over year in the first quarter, according to data from research firm MSCI Real Assets.
Blackstone has sold other local properties from its GE Capital portfolio deal, including its 2018 sales of the 1.1 million-square-foot Westbrook Corporate Center in Westchester for $131 million and the 8-story building at 1111 W. 22nd St. in Oak Brook for nearly $42 million.
Blackstone’s remaining suburban office portfolio pales in comparison to its most prominent downtown property, Willis Tower. The firm is scheduled to hold a ribbon-cutting event this week to show off its more than $500 million overhaul of the city’s tallest tower, a project it began in 2017 after buying the property for $1.3 billion two years earlier.
Cushman & Wakefield brokers Dan Deuter and Paul Lundstedt are marketing Pointe O’Hare on behalf of Blackstone.