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Allstate sold a 10-story office building located in Chicago’s Loop at millions of dollars below what they had originally purchased the property for, in a loss reflecting the prevailing difficulties in the commercial office market.
CoStar reports that the sale at 29 N. Wacker Drive was for just over $11 million, a sizeable loss compared to the $29.7 million the insurance company purchased it for in 2022.
The decision to offload traditional office properties at a reduced price was influenced by high interest rates and diminishing property office property values faced by several large metro areas across the U.S.
Central Business Districts (CBDs) in large U.S. cities including San Francisco, Manhattan, Chicago, and Washington D.C. are experiencing dramatic downturns. From 2019 through 2023, downtown office values in the United States have fallen by $557 billion in CBDs across the U.S., according to a report published by Bloomberg.
The Chicago property was also never fully occupied by Allstate employees. At the time of purchase, it’s reported that the property was considered for multiple uses — including as an investment, consolidation of Chicago offices, or even a new headquarters. Instead, CoStar reveals the insurance company continued operations from its space near its former campus in Glenview, Illinois, and downtown Chicago offices at River Point Tower and the Merchandise Mart.
The broader implications of this sale, and similar sales, are part of the ongoing struggle office market facing weaker demand and tighter lending conditions — all of which are contributing to fears of large-scale mortgage defaults.
Local investor Sanjay Gandhi, who acquired 29 N. Wacker Drive, has not disclosed future plans for the Chicago building.
However, similar office building purchases have been made in other large cities like New York and have been repurposed for other uses. One notable 12-story Beaux-Arts office property, which was once owned by American investor John Jacob Astor, sold for $82 million dollars to flexible workspace provider Jay Suites in a deal that shows vacant buildings are also being turned over to coworking spaces.
