Podcast: Endless Possibilities from Low-Basis Real Estate

Location Cubed

In this episode of Weaver: Beyond the Numbers, Location Cubed, hosts Howard Altshuler and Selina McUmber discuss a notable Chicago property sale and the potential transformations it represents. Learn how these developments could reshape urban landscapes and redefine value in commercial real estate as opportunities emerge following historically low transactions.

Key Points:

• Low-basis transactions create opportunities for redevelopment and innovation.
• Adaptive reuse and new construction strategies are reshaping real estate projects.
• Mixed-use developments are increasingly appealing in urban centers like Chicago.

A prominent office building in downtown Chicago, 311 South Wacker, recently attracted attention for being under contract at just $70 million. This valuation is a dramatic drop from its $300 million purchase price in 2014. At 1.3 million square feet, the building represents a low-basis opportunity that could catalyze major redevelopment.

This transaction highlights a growing trend in real estate — the strategic reuse or redevelopment of underperforming properties. As Selina notes in the discussion, factors like demolition costs and zoning considerations must be weighed against the potential for larger-scale development. For example, plans for the Chicago property could expand its footprint to a 4-million-square-foot project, significantly reducing its basis per square foot. “Redevelopment opportunities begin with the right basis. Strategic planning and a vision for mixed-use projects are the keys to unlocking potential,” said Selina.

Howard points out that the success of such projects hinges on attracting tenants with modern amenities and prime locations. Mixed-use developments, which integrate residential, commercial and recreational spaces, are increasingly becoming the gold standard for urban renewal.

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