Despite concerns about COVID-19’s effect on demand for office space, a New York developer said Thursday it has purchased the 45-story building at 333 S. Wabash Ave., sometimes called “Big Red,” for $376 million.
SHVO, a firm led by Michael Shvo, said it formed a partnership with Deutsche Finance America to buy the building. The sellers were the John Buck Co. and Morgan Stanley.
It’s the first purchase in Chicago and a somewhat uncharacteristic deal for Shvo, who is better known for luxury residential properties. He said the office building is a fit addition to the company’s “super prime core properties. We look forward to not just maintaining ‘Big Red’s’ stature but elevating it in the years to come.”
Buck and partners acquired the former headquarters of CNA in 2016 for $108 million. Buck built a new tower for the insurance firm at 151 N. Franklin St. and renovated 333 S. Wabash to make it more desirable to a range of tenants. The additions included a food hall, child care facilities and a fitness center.
CNA retained some space on Wabash. Other tenants include Northern Trust and the Chicago Housing Authority. Designed by Graham, Anderson, Probst & White, the distinctive building was completed in 1973.
Buying a 1.2 million-square-foot office building could be a risky prospect, as many in real estate are afraid the coronavirus could cause a permanent shift toward working from home, with companies having less need for offices. Others believe people will quickly revert to pre-pandemic habits if there is a vaccine or effective treatment.
The property “is a landmark building of unmatched quality and offers our investors the security of long-term, in-place cash flow from investment-grade tenants,” said Jason Lucas, managing partner of Deutsche Finance America.