Old Orchard Towers under contract

(Crain’s) — Old Orchard Towers, a prominent Skokie office complex once headquarters to drugmaker G. D. Searle & Co., is under contract to be sold to Chicago-based Zeller Realty Corp. for about $65 million.

The deal, a sign that some large transactions are moving forward despite the credit crunch that’s slowed the sale of commercial real estate nationwide, could close by year-end, according to a source familiar with the matter.

The property includes a 350,000-square-foot, two-tower complex at 5202-5250 Old Orchard Road along the Edens Expressway as well as an adjacent 2.5-acre parcel that could be developed. A price of $65 million would equate to a healthy valuation of about $186 per square foot.

The sale would cap off a remarkable turnaround for the complex, which was sold three years ago after Searle was acquired by Pfizer Inc. The building, which was vacant at the time, sold for $16 million to a joint venture of Los Angeles-based Lowe Enterprises and GE Commercial Finance Real Estate. Lowe in a press release January 2005 said the venture planned to spend about $8.1 million on renovations to the complex.

Lowe and GE hired Cushman & Wakefield Inc. in September to sell the buildings, which are now about 75% leased. The largest tenants include National-Louis University and the health care research and consulting firm Sg2.

Robert Six, a senior vice-president with Zeller who heads up property acquisition in the Chicago area, declines to comment. Paul Lundstedt, an executive director with Cushman who is handling the sale, and a Lowe spokeswoman couldn’t be reached for comment.

Zeller was founded in 1981 by Paul Zeller, a former top executive with Chicago-based John Buck Co. The company owns or manages 15 office buildings in four Midwest states: Illinois, Minnesota, Wisconsin and Indiana, according to the firm’s Web site.

Zeller owns two buildings in downtown Chicago. It bought 500 N. Michigan Ave. in November last year for $49 million. Zeller also owns 401 N. Michigan Ave., which Broadway Real Estate Partners LLC agreed to buy from Zeller several months ago for about $200 million, though that deal hasn’t closed.

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