CHICAGO — Developer Sterling Bay has a deal to sell McDonald’s headquarters building for about $420 million, in what would be the highest-priced property sale of the year and a record price for the booming Fulton Market district.
An obscure investor from the Pittsburgh area, Normandy Properties, has a preliminary deal to buy the 575,000-square-foot office building at 110 N. Carpenter St., according to people familiar with the deal.
The sale has not been finalized, and it could still fall apart. An exact price could not be determined, but it is believed to be about $420 million. A deal would represent the highest-priced Chicago property sale since COVID-19 all but shut down the downtown economy starting in March.
The sale also would shatter the record for Fulton Market, which in recent years has gone from a meatpacking and food distribution hub to the busiest construction zone in the city. The area just west of the Kennedy Expressway is home to large corporate offices, hotels, residential towers, restaurants and stores.
To date, the highest-priced deal in the area is Sterling Bay’s $257 million sale of 1KFulton, the office building that is Google’s Midwest headquarters, in 2016, according to Cook County property records.
Normandy Properties is buying the McDonald’s building at a time when many investors are worried about the long-term outlook for office buildings, as many employees work from home and some companies look to downsize their space.
But 110 N. Carpenter is seen as a low-risk purchase because the fast-food giant has a lease for nearly the entire building until 2033. McDonald’s leases 490,000 square feet for corporate offices, the Hamburger University training facility and a ground-floor restaurant.
Other tenants include a Walgreens drugstore and the Politan Row food hall.
Sterling Bay bought the site from Oprah Winfrey, paying $30.5 million for the former Harpo Studios site in 2014.
The Chicago real estate firm and investment partner J.P. Morgan Asset Management are believed to have invested about $250 million redeveloping the property into the wide, nine-story building that McDonald’s relocated to from suburban Oak Brook in June 2018.
JLL Capital Markets brokers have been marketing the McDonald’s building for sale on behalf of Sterling Bay since late February, just before businesses began closing or scaling back downtown operations because of the virus.
At the time, Sterling Bay was believed to be seeking offers in the range of $450 million.
A representative of Normandy Properties could not be reached for comment, and there is little publicly available information about the firm’s real estate operations.
The company is affiliated with the high-net-worth Snyder family, heirs to late-1800s steel-industry baron William Penn Snyder Sr.
A Sterling Bay spokeswoman declined to comment.
The McDonald’s deal will be the largest office property sale in Chicago since 2018, when Sterling Bay paid $510 million for 600 West Chicago and $680 million for the two-tower Prudential Plaza complex.
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