Cole Real Estate Investments announced this week that it had acquired the headquarters for The Hillshire Brands Company in Chicago for $97.5 million. The sale of the 230,000-square-foot building at 400 S. Jefferson Street is the highest price per square foot for a Chicago office building since the beginning of 2012 according to a Crain's Chicago Business article. Terms of the deal and representatives of the entities in the transaction were not disclosed.
"The Cole philosophy for single-tenant acquisitions remains consistent: we look for high-quality, income producing commercial real estate in strong markets, leased to creditworthy tenants under long-term leases," Boyd Messmann, Cole's senior vice president of office and industrial acquisitions, told Commercial Property Executive. "The Hillshire Farms headquarters property fits our criteria."
Sterling Bay Companies reportedly bought the empty 233,869-sq.-ft. building in 2012 for $10 million, and spent about $50 million to build-out the property for the Sara Lee spinoff firm. All of the infrastructure and building components were completely redone with Hillshire's build-out of the property, and windows were added on all four exposures, expanding the amount of natural light.
"The risk on a 230,000-square-foot building is not that great, but they hit a home run," said J. Paul Beitler, a veteran developer of Chicago office towers who is not involved in the deal. "This one happened to work out extremely well. For every one of these there are 10 that don't. My hat's off to them. They had a vision that no one else had, they executed on their vision, and they absolutely hit a home run. Their investors are going to make a lot of money."
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