Private equity group Blackstone will buy Chicago’s iconic Willis Tower for $1.3bn, the most ever paid for a US office building outside New York.
The tower, which at 1,450ft is the 12th-tallest building in the world, is a lucrative tourist attraction thanks to its Skydeck observation floor.
Blackstone, normally known for buying distressed retail and hotel portfolios available at a bargain basement prices, has paid almost $500m more than what New York investors Joseph Chetrit and Jospeh Moinian paid for the building in 2004.
However, the price comes in at around $340 per square foot, making it considerably cheaper than comparable properties sold in other major cities.
For example, the £726m ($1.2bn) sale of the Gherkin to Brazilian private investment firm Safra came in at a hefty $2,000 per sq ft, while the most expensive building sold in San Francisco last year, 50 Fremont Street, cost $640m or $780 per sq ft.
Blackstone’s head of real estate, Jonathan Gray, told MarketWatch the company was now aiming “to really make this more of a tourist attraction”. The same report suggests this will come in the form of a $150m investment.
The Willis Tower currently generates $25m per year from a total of 1.6m visitors. The Empire State Building’s superior revenue of $82m from 4.3m visitors offers a glimpse at further room for growth to Blackstone.
The iconic Chicago landmark was formerly known as the Sears Tower before London-based insurance brokers Willis Group acquired the naming rights in 2009 for 15 years as part of its lease of 140,000 sq ft of office space.