CHICAGO-A bidder for the one million sf of office and retail space at the John Hancock Center tells that it had offered $5 million more than was accepted by owner Shorenstein Properties LLC in an agreement approved Friday. Zaya S. Younan, chairman and chief executive officer of Younan Properties Inc., says his Los Angeles-based firm was one of the bidders for the Hancock space at 875 N. Michigan Ave., offering $390 million. Instead, Shorenstein took a bid from a large institutional investor for $385 million.

“We offered more money than Goldman Sachs & Co.’s Whitehall Fund,” Younan says, “but we were told Friday that we didn’t get the deal. We know they offered attractive terms, such as requiring no due diligence, fast closing and all cash.”

Other bidders reportedly included Tishman Speyer, the John Buck Co. and Beitler Real Estate Corp., though none of the firms returned calls regarding the deal. A Shorenstein spokesman also would not confirm the deal, but did say a sale is close to happening. Goldman Sachs did not return calls for comment. Officials with locally based Golub Co., which reportedly would manage and lease the property, also did not return calls. New York-based Eastdil Secured, which usually does not comment on its transactions, handled the brokerage on behalf of Shorenstein.

The sale is still attractive, at roughly $350 per sf. The deal includes the 888,458-sf office portion of the John Hancock Center as well as 152,897 sf of retail space there. The building, the third tallest in Chicago, also has 700 condominiums, which were not included in the sale.

Younan says the sale should have gone to an entrepreneur company like his own. “It’s a complex asset with a lot of moving parts. We’re very agile, a major institutional firm is much slower to move. We’ll have to see how effective they are,” he says.

Younan says the Hancock is a good buy, because it’s such a well-mixed property. “The retail is well occupied, the broadcast and parking are stabilized, and the entertainment portion, the Hancock Observatory, is doing well. The only unstable portion is the office part, at 30% vacant. The property underwrote well, adding it all together it’s only 20% vacant,” he says.

The idea of adding a hotel, which Sachs has reportedly considered, is not one that his company would have pursued, Younan says. “You’ve got 40 floors of condos, you’re going to see a lot of restrictions and difficulties in adding a hotel. They’d have to convert some of the office space,” he says.

Younan says his firm, which purchased the 30-story, 630,000-sf 200 N. LaSalle tower here in early November for $100 million, will continue to pursue properties in Chicago. “It’s a very good market, we’re pleased to see institutions moving so aggressively into the city. It’s in the early stages of recovery, and should be going through a full recovery in the next three to five years. Rent rates will go up, vacancy should drop.”

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