CHICAGO—Another renovated suburban office complex has changed hands, one of several to do so recently as properties that once struggled now fill up with tenants and attract investor interest. CT Acquisitions, LLC, a partnership between Philadelphia-based Rubenstein Partners and Chicago-based GlenStar, has acquired Continental Towers, a 911,341-square-foot campus located in Rolling Meadows, IL, for $121.5 million.

That's a stunning turnaround for a property that was less than 50% occupied in 2013 when GlenStar and its previous partner Walton Street Capital bought it for just $58 million. After a $30 million renovation effort, GlenStar dropped the vacancy below 10% by signing a flurry of leases with new tenants such as Verizon and Panasonic. But even after a half-decade of success, the company was not ready to quit the complex.

“We still feel like there is work to do, as well as many opportunities,” Michael Klein, a GlenStar principal, tells GlobeSt.com. The new JV earmarked $20 million for additional renovations, and the upcoming efforts will build on what the company did in the last five years. The lobbies, café and amenity spaces will receive further upgrades, and the restroom and corridor renovations will continue.

GlenStar has helped lead the transformation of the suburban class A market, and this latest deal is not the first time it decided to stay on as a partner after a major sale. The company and PGIM Real Estate just sold the 834,893-square-foot Presidents Plaza, a pair of class A office buildings at 8600 and 8700 W. Bryn Mawr Ave. near O'Hare Airport, for $147 million to a partnership between itself and New York City-based Angelo, Gordon & Co. GlenStar and PGIM had spent $15 million on renovations and brought the occupancy up to 92.4%.

Such transformations are part of a national trend. CBDs across the country have garnered a great amount of much-deserved attention as companies and new residents and flood into urban cores, but well-located class A properties in the suburbs have also been standout performers.

“The suburban properties which do the best are typically larger assets that are well-capitalized and amenitized,” Klein says. Essentially, a select group of suburban landlords have been able to create office complexes that provide amenities similar to those found in downtown trophy buildings, and both tenants and investors see the value.

Walton Street ran the sale of Continental towers, Klein adds, while GlenStar provided guidance to investors that came in to look over the property. At some point in the process, Rubenstein asked if GlenStar was willing to form a partnership. What made the idea work for GlenStar was that the two firms agreed on how the capital plan would work going forward. And for Rubenstein, the property was a perfect fit.

“This is what they target,” Klein says. “They're looking to buy top-quality assets in high-performing submarkets, assets that are considered market leaders.” In 2016, for example, the company bought Parkland Crossing, a 1.2 million square foot office park in suburban Indianapolis, for $162.9 million from developer Duke Realty Corp.

Continental Towers does have an upcoming vacancy. Komatsu America Corp. will leave roughly 100,000 square feet and move its headquarters to Triangle Plaza in the O'Hare submarket. Klein says that gives the new ownership a three-year runway to attract another top-quality tenant to Rolling Meadows. “For us, that's an opportunity.”

Instant Insights /

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