Commercial real estate deal in Chicago closes for $425M

The skyline of downtown Chicago is one of the most recognizable in the country. Therefore, when one of the buildings that makes up that skyline came up for sale, it was bound to attract attention. Citigroup Center located at 500 West Madison in downtown's West Loop possesses superb views, easy access to public transportation and other amenities that made it appealing to the commercial real estate market.

In fact, KBS REIT III was willing to pay top dollar to acquire the building. The company paid an unprecedented $425 million for the building, making it the company's largest purchase to date. Throughout the next few years, KBS REIT III plans to spend nearly $66.4 million to renovate and update the property.

KBS REIT III is betting on the fact that the West Loop is in a state of urban renewal. As more businesses strive to offer employees better options for their daily commute, Citigroup Center could emerge as one of the most commuter friendly places to work in Chicago. The building hovers at the epicenter of the city's transit system.

There is risk in every commercial real estate transaction, and KBS REIT III is a company willing to take that risk. As the economy continues to improve and purchasing commercial properties increases again, more companies may follow KBS REIT III's lead. A purchase such as this requires a good deal of planning, negotiation and documentation. With the proper research and knowledge of the ins and outs of such a purchase, the risks could be minimized.

Source: cpexecutive.com, KBS REIT III Closes Chicago's 500 West Madison for $425M, Keith Loria, Dec. 19, 2013

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