Investor Buys Citadel's Ex-HQ at Discount
Value-add investor Kohan Retail has acquired Citadel's former Loop headquarters, marking its third distressed Chicago office deal in less than a year. The purchase at a steep discount highlights a growing trend of investors targeting well-located but underperforming trophy assets for repositioning or conversion.
The 37-story tower at 131 South Dearborn Street was sold by a joint venture of TPG Angelo Gordon and Hines. The sellers refinanced the property in late 2020 with $448 million in debt. At the time of the sale listing in September 2025, the 1.5 million-square-foot building was only 56% leased, significantly below the downtown average of 73%. Kohan Retail Investment Group, a firm historically known for acquiring distressed shopping malls, has recently expanded its portfolio into office properties. This acquisition marks their third Chicago office tower purchase in under a year, bringing their total holdings in the city to over 3.7 million square feet of largely high-vacancy space. The firm previously acquired 311 South Wacker Drive for $45 million and took control of 33 West Monroe Street after buying its $60 million mortgage at a discount. The broader Chicago office market continues to face headwinds, with the overall vacancy rate reaching 25.5%. However, the rate for prime, Class A space is a tighter 15.9%, and a limited construction pipeline is expected to further constrain the supply of premium properties. This flight-to-quality trend benefits well-located, amenitized buildings while older, commodity assets face longer lease-up periods and pressure on pricing. For investors, the Midwest multifamily market shows strong fundamentals, with cities like Chicago experiencing robust rent growth and stable occupancy rates. Chicago's multifamily rent is projected to grow by 3% in 2026, supported by the lowest new construction pipeline among major U.S. markets. Average cap rates for Chicago multifamily properties are normalizing around 6%, creating a more active transaction market. Aspiring real estate professionals transitioning from other industries should focus on developing a specific skillset. Key competencies valued by investment firms include financial analysis, such as understanding cash flow and IRR calculations, market research, and strong negotiation skills. Building a professional network and gaining practical experience, even on a small scale, are critical steps before leaving a current role. To stay current, professionals follow several key industry publications. Crain's Chicago Business and its "Chicago Real Estate Daily" offer in-depth local coverage. National outlets with strong Midwest focuses include Bisnow, GlobeSt, and Connect CRE, which provide news on transactions and market trends across the region.
