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CHICAGO-Broadway Partners, headquartered in New York City, has acquired 500 W. Monroe St. from Shorenstein Properties LLC, headquartered in San Francisco. The sales price for the 973,100-sf building was approximately $335 million, according to Real Capital Analytics data.

The cap rate for the purchase was between 5% and 5.5%, according to sources. Jones Lang LaSalle marketed the property and has been retained as the leasing agent, says Bruce Miller, manager director at Jones Lang LaSalle. Broadway Partners will manage the property.

The property was purchased through Broadway Partners Real Estate Fund III, a fund targeting value-add properties, according to a released statement from Broadway Partners. “The vacancy rate for class A buildings in the West Loop is rapidly declining and there is a shortage of high-quality space. At the same time, rent growth is strong, making the timing of this purchase ideal,” Broadway’s Midwest region director of acquisitions James Hennessy, says in a released statement. Representatives from Broadway declined to be interviewed.

The building, which was constructed in 1991, is attractive to acquire for several reasons, such as the granite finishes, views and the 1,330 car parking garage, Miller says. “It has the largest in-building parking garage in the city,” Miller says. Additionally, there is some pending vacancy at the top of the building, he says. “There is very little vacancy in the City of Chicago right now at tops of buildings, so that should rent at premium rates.”In November 2008, 131,000 sf on the top floors will become available when GATX moves to 227 W. Monroe, says Gary Kostecki with Jones Lang LaSalle.

Major tenants at 500 W. Monroe include General Electric Capital Corp., insurance company Marsh USA Inc. and the Federal Deposit Insurance Corp., Kostecki says. Some of the larger tenants that have lease terms that will be up for renewal relatively soon are currently paying lease rates below market, Miller says. The asking lease rates for the building range from $27 per sf to $32 per sf net, depending on the location in the building, Kostecki says. The building is within blocks of two major Metra commuter rail terminals. Some of the amenities in the building include concierge, a restaurant and a sundry store.

Shorenstein purchased the building from Tishman Speyer Properties LP in January 2002 for a reported $250 million. Shorenstein “had extended the terms of some of the tenants and felt that they had brought the asset to a point where, in today’s strong capital markets, now would be an optimal time to sell,” Miller says.

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