The value of Chicago’s most iconic skyscraper has taken a major hit, dropping 42 percent since 2018, according to a recent private appraisal tied to loan negotiations. Willis Tower, formerly known as the Sears Tower, is now valued at $1.03 billion — significantly down from its $1.78 billion valuation just seven years ago.
The new figure, which equates to about $229 per square foot, puts the appraisal far below the outstanding balance of the commercial mortgage-backed securities (CMBS) loan taken out by Blackstone, the tower’s owner. Despite this, the building’s performance and future potential were strong enough for special servicer KeyBank to approve a three-year extension of the loan’s maturity date to 2028, with two additional one-year extensions available.
Outlook Shows Signs of Recovery
Although the valuation dip is steep, the appraisal forecast is more optimistic, projecting that Willis Tower’s value could climb back to around $1.2 billion by 2027. The rebound is expected to be driven by recent leasing activity, increasing cash flow, and the impact of a sweeping $500 million renovation completed in 2022.
The renovation included upgrades to tenant amenities, improvements to the food court, and a revamp of the 103rd-floor Skydeck — a major tourist draw that pays homage to its role in the classic film Ferris Bueller’s Day Off. In 2023 alone, the tower recorded over 1.2 million visitors to the Skydeck and more than $113 million in net cash flow, up significantly from $43 million in 2020.
Blackstone's Strategy and Loan Terms
Blackstone, which bought Willis Tower in 2015 for $1.3 billion, refinanced it in 2018 and maintained the same interest rate structure with the recent loan extension. Notably, the firm was not required to pay down any principal during the extension process. However, should Blackstone pursue the one-year extensions beyond 2028, it will need to contribute $25 million in fresh equity for each year.
The agreement also includes a cap on the building’s all-purpose reserve account. Revenue exceeding a set threshold must now go toward paying down the loan principal on a quarterly basis. This structure was accepted by the lender in part due to current challenges in the office sector, which have made it difficult to find buyers for large properties like Willis Tower.
Occupancy and Leasing Momentum
Despite headwinds facing the national office market, Willis Tower has shown resilience. In the past 18 months, it has signed over 400,000 square feet in new leases, including an 84,000-square-foot deal with Adtalem Global Education. As of February, the building was 87 percent occupied — a notable improvement from its post-pandemic low of 83 percent in 2022.
A Long-Term Vision
Blackstone remains confident in the asset’s future. “Our recent extension to the loan term reflects our continued belief in the strength of Willis Tower,” a company spokesperson said. “We believe the building’s transformative renovation has positioned it for success.”
Once the tallest building in the world, the 110-story Willis Tower remains one of Chicago’s most recognized landmarks. While its financial performance reflects the broader challenges facing the commercial office market, its enduring appeal, tenant momentum, and strategic upgrades suggest the skyscraper may still have its best days ahead.