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CHICAGO-Fifield Cos. has sold the new USG Building for $178 million, a record price for a building in the West Loop area, and plans to put up another million sf of office space for $350 million in two buildings in the area by 2011. The 18-story, 479,000-sf office USG Building, 95% leased, was sold to Frankfurt, Germany-based real estate fund manager SEB Immobilien-Investment GmbH. As part of the deal, the purchaser receives credits for free rent and tenant incentives of about $12 million.

The average lease rate in the USG Building is $23.50, and every lease is at least more than $20 net, says Fifield officials. The USG Corp. occupies 70% of the facility, located at 550 W. Adams. Three new leases, totaling more than 75,000 sf, recently closed at the building, including law firm Lewis, Brisbois, Bisgaard and Smith LLP agreed to lease 20,195 sf and consulting agency WhittmanHart signing a lease for about 28,000 sf.

Rick Blum, principal and executive vice president of finance for Fifield, tells GlobeSt.com that the sale exceeded expectations for the property. “When we first underwrote the deal 2-3 years ago, the cap rate was at an entirely different environment. The cap rate for this sale is approximately 6.3%,” he says.

He says there’s a number of reasons for a good sale price for the property. “In the past 10 years, the West Loop has seen a transition from back offices to a demand for corporate headquarters, a true class A office market. The area had been dominated by older riverside building, where most of the new construction stopped in the late 1980s. Since 1998, the area has seen a resurgence in class A office, spawned by the proximity to the Metra station (on Adams Street),” Blum says.

Blum tells GlobeSt.com that the company’s site for two new office towers, one at 400,000 sf and one at 600,000 sf at 601/625 W. Monroe , is one of the best remaining sites left in the West Loop. “We’re actively pursuing a number of potential anchor tenants who have 2009-11 delivery requirements,” he says. Construction could begin by late 2007-early 2008, Blum says.

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