The loft office property at 435 N. LaSalle sold for $17 million—52 percent more than the ownership venture put into it.
Investing in the strong River North loft office market has paid off well for a local investor group, which cashed out of a building on LaSalle Street for a hefty gain.
A venture including Chicago trader Michael Palumbo and Skokie-based Elmdale Partners sold a 50,000-square-foot brick office building at 435 N. LaSalle St. for $17 million to an East Coast investor, according to a statement from the venture. That’s 52 percent more than what Palumbo and Elmdale put into the property.
Brick-and-timber loft office buildings have become fashionable investments in recent years amid a booming downtown office market, even attracting large investors like Goldman Sachs that overlooked the sector in the past. The trend has generated big sale prices and fat returns for investors like Palumbo and Elmdale.
The investors paid $8.2 million in 2015 for 435 N. LaSalle. They spent $3 million renovating it, according to a spokeswoman, bringing their total cost to $11.2 million. They financed the project with $5.6 million in debt and refinanced it with a $12 million loan in October 2018, allowing them to pull millions of dollars out of the property.
The Palumbo-Elmdale venture sold the building to Vista Property Group, which has offices in New York and New Jersey. Vista already owns multiple properties in Chicago, including some in River North, Fulton Market and Ukrainian Village. Last year it paid $10.3 million for a retail space at 1000 W. Washington Blvd., across the street from McDonald’s new headquarters.
Built in 1906, 435 N. LaSalle is 93 percent leased to four tenants, including tech firm Aeris and bath and home design firm Hydrology, according to a marketing flyer from Cushman & Wakefield, the broker that sold the property.
Even after paying $17 million, Vista could boost the building’s value further. Under current zoning, Vista could build two more floors on top of it, which could add 17,000 square feet of rentable space or allow for a rooftop deck.
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Credit to: Crain’s Chicago Business