OfficeAnnouncedacquisition

Citadel Center

131 South Dearborn Street, Chicago, IL·Feb 28, 2026, 9:40 PM

Deal Size

$448.0M

Cap Rate

Est. 6.50%

$/SF

—

Size

1.6M SF

Occupancy

55%

Market SignalBearish (moderate/10)

The Citadel Center deal presents significant risks due to its high vacancy rate of 45% and the lack of disclosed cap rate, which makes it challenging to assess the property's income potential. The property's occupancy is only 55%, indicating substantial lease-up risk. Additionally, the buyer, Kohan Retail Investment Group, is known for acquiring distressed assets, suggesting this is a high-risk, opportunistic investment. The market conditions in the Chicago Loop, characterized by high office vacancy rates, further exacerbate the risk profile of this investment.

Buyer Strategy

Kohan Retail Investment Group is pursuing an opportunistic strategy, focusing on distressed assets with potential for turnaround. Their track record in acquiring troubled properties suggests a high-risk tolerance.

Seller Motivation

The sellers, TPG Angelo Gordon and Hines, are likely disposing of the asset due to distress and the need to offload underperforming properties, possibly as part of a portfolio rebalancing strategy.

Market Signal

This deal signals ongoing distress in the Chicago office market, particularly in the Loop. The significant discount and high vacancy rates reflect broader challenges in the office sector post-COVID. The involvement of a buyer known for distressed acquisitions highlights the risk-averse sentiment among traditional institutional investors.

Financing

Loan

$448.0M

Parties

Buyer

Kohan Retail Investment Group

SellerTPG Angelo Gordon and Hines →

Broker

Eastdil Secured

Location Analysis

Primary Market

JPMorgan ChaseBain & CompanyFinancial servicesConsulting

The Chicago Loop is a primary market with stable population growth and a strong economic base. However, the office market is currently facing challenges with high vacancy rates and a shift in tenant preferences post-COVID.

The property competes with other high-vacancy office spaces in the Loop. Recent transactions, such as Kohan's acquisition of 311 South Wacker Drive, indicate a trend of distressed asset purchases at significant discounts.

There is no specific new development threat mentioned in the sources. However, the existing high vacancy rates suggest an oversupply in the market.

Rent Growth

Given the high vacancy rates and current market conditions, rent growth is expected to be sluggish. The potential for rent increases is limited unless significant lease-up occurs.

Value-Add

There is potential for value-add through lease-up and possibly repositioning the asset. Offering naming rights and a private entrance could attract large tenants, but execution risk remains high.

Tenant Assessment

Mixed

WALT

The weighted average lease term is 6.4 years, with major tenants like Bain & Company and JPMorgan Chase providing some stability. However, the high vacancy rate poses a challenge.

Rollover Risk

With 45% vacancy, there is significant rollover risk. The ability to attract and retain tenants will be crucial to mitigate this risk.

Concentration

The tenant mix includes major firms like Bain & Company and JPMorgan Chase, but the overall tenant base is not diversified enough to mitigate vacancy risk.

Risk Factors

High vacancy rate of 45%

High

Implement aggressive leasing strategies, offer competitive lease terms, and consider alternative uses for vacant space to attract tenants.

Market Comparables

401 N. Michigan Ave.

Chicago · Office · acquisition

$132.5M6.50% cap