A group led by Bank of America has provided developer John O’Donnell of O’Donnell Investment Co. with a $296m loan for the construction of a 53-story riverfront office tower in Chicago, Illinois.
Bank of America partnered with German bank Helaba and British-owned American bank RBS Citizens. The financing takes the form of a four-year, floating rate loan, Real Estate Capital has first learned.
The loan reflects growing confidence in The Windy City’s recovering office market, as newer office buildings start to take the place of an aging building stock.
“Many of the pre-World War II buildings are obsolete and many of them are undergoing adaptive reuse from office to hotel or residential,” O’Donnell told REC. “We are experiencing the phenomenon where larger companies are downsizing their square footage per employee and the newer buildings can accommodate that much better.”
The $500m Goettsch Partners-designed high-rise at 150 North Riverside will offer 1.2m sq ft of office space and a 1.5-acre green roof, among other amenities.
Financial company William Blair & Co. is on board as an anchor tenant after signing a deal earlier this year for 318,000 sq ft in the building. And a second tenant, alternative investment firm Victory Park Capital, has agreed to 25,000 sq ft. O’Donnell said a range of other finance, law and private equity firms have shown interest.
Gary Magnuson, head of commercial real estate finance at RBS Citizens called Chicago an “important market for us” in a statement to Crain’s Chicago, which noted that, along with rising rents, Chicago’s office vacancy rate dipped to its lowest level in five years earlier this year.
Data from CBRE shows that year-on-year vacancies dipped in the second quarter from 14.9% to 14.1% – the lowest rate since the second quarter of 2009.
O’Donnell broke ground on the tower in July and expects its completion sometime during the last quarter of 2016.