Tall & Urban News

Kohan Retail Investment Group, known for acquiring distressed malls, has purchased one of Chicago’s tallest skyscrapers, the 65-story office tower at 311 S. Wacker Drive, for approximately US$45 million—about 85 percent less than its 2014 sale price of US$302 million. This drastic loss in value highlights the severe impact of the pandemic and remote work trends on downtown office real estate.

The 1.3 million-square-foot (120,773-square-meter) building, once 86 percent leased, faces high vacancy rates with its largest tenant, Smith Gambrell & Russell law firm, relocating. Previous owners invested over US$38 million in renovations and refinanced with US$295 million in debt in 2018, but the pandemic’s effects led to a collapse in value, wiping out equity for investors and lenders, including Morgan Stanley and TIAA CREF.

Kohan CEO Mike Kohan confirmed the purchase but declined to disclose details on financing, except that a US$20 million loan was secured from Hakimian Capital. Kohan plans to maintain the high-rise as office space, leveraging the low acquisition cost to offer attractive rents and fill vacancies without converting the building to other uses.

While downtown office vacancies remain historically high, Kohan remains optimistic about leasing opportunities, citing his firm’s experience managing distressed properties. The acquisition underscores the challenges and uncertainties facing the urban office market but also presents potential for recovery through strategic leasing and investment.

Learn more about this story at Crain's Chicago Business.