Harbor Buys Burnham Center Tower for $79M

CHICAGO-An affiliate of Harbor Group International LLC of Norfolk, VA has purchased the historic 22-story Burnham Center, 111 W. Washington St., for $79.5 million. The 512,354-sf office building was purchased from TIC Properties LLC, which had purchased the building in 2005 for $71.9 million from Zeller Realty Group and ING.

The center, listed on the National Register of Historic Places, was constructed in 1914 and was one of the last buildings designed by famed Chicago architect Daniel Burnham. Harbor Group says it purchased the property because it is trying to strengthen its Chicago presence. “We made a strategic decision to really actively and aggressively pursue some CBD [Central Business District] office investments in Chicago,” says Richard Litton Jr., president of Harbor. Harbor was also seeking different types of buildings from those previously purchased. Last September, Harbor Group entered the Chicago market with the purchase of the 512,354-sf 300 S. Wacker Dr., and, in February, Harbor Group purchased the 713,030-sf Two North LaSalle for $152.7 million.

The Burnham Center “caters to a very unique set of tenants and we think a stable set of tenants,” Litton says. The property is currently 94% leased with 127 tenants, including many law firms. The asking rates for the building are about $21 per sf gross for the lower floors and $23 per sf gross for the upper floors, Litton says. CB Richard Ellis will continue as leasing agent and manager of the property.

The building is also somewhat unique in that the lower six floors of the building have very large floor plates while the remaining floors have “small suite spaces.” The smaller spaces “have stayed very well leased through the different owners of the building” but the same cannot be said for the lower floors. There are four tenants for the lower six floors with 123 tenants in the rest of the building. Tenants on the lower floors include Cook County with nearly 65,000 sf, Cole Taylor Bank with 38,000 sf and Nationwide with about 13,500 sf. OWPP architectural and engineering firm, with almost 72,000 sf, is the only major tenant occupying the upper floors.

Litton tells GlobeSt.com that he believes the reason the bottom floors have not had the same high occupancy rates as the upper floors is partly because of former ownership. “Previous owners have not been willing to spend money, invest the capital and offer the leasing packages that are necessary to get leases,” he says. Harbor will “bring a significant amount of capital to the deal” to use for tenant improvement allowance packages to lease the lower floors.

Between signing a contract for the property in October and closing on the property March 1, Harbor International signed a lease “in excess of 50,000 sf” to an undisclosed tenant that will occupy the lower floors, Litton tells GlobeSt.com. The building had been 83% occupied, but the new lease brings the building up to 94%, he says.