Canadian pension funds continue US office pullback amid weak demand and rising vacancies
Canadian pension fund Caisse de Dépôt et Placement du Québec (CDPQ) is moving to sell a major Chicago office tower at a steep discount, reflecting ongoing struggles in the US office market and signaling broader Canadian pullback from American real estate.
CDPQ’s real estate arm, Ivanhoé Cambridge, has hired Jones Lang LaSalle Inc. (JLL) to market the 31-story property at 125 S. Wacker Drive, Bloomberg reported, citing sources familiar with the matter. The building, constructed in 1974 and renovated in recent years, is currently 63% occupied.
Market expectations suggest bids will come in around $60 million, sharply below the roughly $145 million Ivanhoé and its partner, Callahan Capital Properties, paid for the tower in 2017, down nearly 59%. Public records show the building carries no debt.
Canadians pull back
Canadian pension funds are reducing exposure to US office properties, often at losses. In 2023, the Canada Pension Plan Investment Board (CPPIB) sold its 29% stake in Manhattan’s 360 Park Avenue South for just $1 to its partner, BXP Inc., which assumed CPPIB’s portion of the debt.
Tensions between the Trump administration and Canada’s newly elected Prime Minister Mark Carney could lead more Canadian investors to offload US assets, even at discounted prices, as political uncertainty adds to market stress.
Read next: What Carney's election win means for housing and mortgages in Canada
The sale also highlights deeper challenges in Chicago’s office sector. The city’s central business district posted an office vacancy rate nearing 24% in the first quarter, according to JLL, with remote work trends and the pandemic’s long tail continuing to sap demand.
While many properties along Wacker Drive are newer and better-leased, 125 S. Wacker sits in a more vulnerable part of the market. Across the street, the iconic Willis Tower, purchased by Blackstone Inc. in 2015 for $1.3 billion, recently had its loan extended by three years as owners look to navigate the rocky market conditions.
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