CHICAGO—As reported yesterday in GlobeSt.com, a triple net ground lease located at 137 S. State St. just sold for $7.1 million and at a record low cap rate of 3.1%, an all-time low for comparable ground lease sales. And Jason St. John, managing partner, Greenstone Partners, which procured and represented the buyer, tells GlobeSt.com that the transaction was unique in several ways.

“First and foremost, there are not a ton of these ground leases in Chicago,” especially on major retail thoroughfares such as State St., which he characterizes as the second best stretch of retail in the Midwest, eclipsed only by Michigan Ave. several blocks away. The property is also one of the few assets located on a high street in a core city like Chicago that will sell for less than $10 million. “They definitely do not trade very often.”

And, as noted previously, the building itself includes a 50,530 square-foot cooling plant operated by building owner Enwave Energy Corp. that serves more than 100 commercial buildings throughout the Loop via an underground network of pipes. A CVS Pharmacy occupies the ground floor.

“This is about as stable an investment that you can purchase,” he adds, and as a ground lease the owner has little or no responsibility. The buyer was a very high net worth investor based in Silicon Valley and considers this investment as an opportunity to preserve part of his wealth for generations. “It's for his children and perhaps even for his grandchildren.”

“There are a lot of East Coast and West Coast buyers coming to us” about Chicago properties, he says. Foreign buyers are also taking looks at properties in the city. Greenstone is currently helping investors from many countries including South Korea, Argentina and Canada.