A $343 million loan on a 40-story office tower at One South Wacker Drive has gone into default, marking another challenge for Chicago's commercial real estate market. 601W Companies, which bought the property in 2018 for roughly $310 million, missed the maturity deadline on June 9. The 1.2 million-square-foot building sits in the West Loop, two blocks from Willis Tower, and is currently 73% occupied.

Blackstone Mortgage Trust originated the debt in 2018, packaging $159 million into a commercial mortgage-backed security. The loan represents less than 2% of the firm's portfolio but has been on its watchlist since 2022. Mark Karasick and Michael Silberberg lead 601W, which also owns the Aon Center and Old Post Office in Chicago.

Despite Chicago's ongoing office market struggles, including a 27% downtown vacancy rate, 601W continues investing in the city. The firm recently acquired 175 W Jackson for $41 million—87% below its pre-pandemic value. Remote work and crime concerns initially hammered property values, though crime rates have since improved. The defaulting loan highlights persistent headwinds facing downtown office landlords nationwide.

For Blackstone Mortgage Trust, the default signals continued stress in secondary office markets even as major landlords attempt to reposition assets. With Chicago ranking third nationally for office return rates, recovery remains uneven across submarkets.