In an ongoing search for buyers for its Tribune Tower condominiums, Chicago developer Golub and partner CIM Group have decided to liquidate their large Gold Coast condominiums.
Golub and Los Angeles-based CIM have hired CBRE’s Chicago office to sell Chestnut Place, a 280-unit skyscraper on the corner of Chestnut and State streets. They’re joining the growing flock of landlords testing the rising downtown multifamily investment market. Highest ever rent However, it has been weakened by rising interest rates.
This backflow will determine how much investors are willing to pay for Chestnut Place, or whether the 30-story building will sell. Golub and CIM recapitalized the building In a 2017 transaction, the property was valued at $108 million (about $382,000 per unit), according to New York-based research firm Real Capital Analytics.
Prices for downtown apartments have gone up over the next few years, but it’s hard to know what the current price will be as rising interest rates push up borrowing costs for investors. Concerns over crime and rising property taxes in Chicago have also not affected Chicago’s image among investors.
With so few buildings traded this year, there are few data points showing the value of large properties these days. Canadian investment firm Morgard paid for downtown’s largest deal completed in 2022 $133 million August saw the construction of Echelon Chicago, a 350-unit tower in the Fulton River area.
A group of local investors recently pulled out of an even bigger deal for Alta Roosevelt, the South Loop’s 496-unit tower that the venture agreed to buy for $180 million. A new buyer, Chicago-based Waterton, stepped up, But at a price as low as $170 million. Other high-rise apartments were put up for sale and were quietly pulled off the market after a few months.
Market still volatile Landlords haven’t stopped trying. Several large buildings have hit the market in recent weeks, including the 363-unit building Spork in River West. 3 eleven, The Seneca, a 245-unit skyscraper in River North and a 286-unit property in Streeterville.
Golub and CIM have teamed up on several projects in Chicago. Tribune Tower Redevelopment Arguably the best known here. After converting an old building on North Michigan Avenue into condominiums, he sold 104 of the 162 homes, or about 64 percent, according to Cook County real estate records and Redfin.
Representatives for Golub and CIM did not respond to requests for comment. CBRE officials declined to comment.
Built in 1982, Chestnut Place has a prime location in an affluent neighborhood near CTA stops, restaurants, and shops. The 8 W. Chestnut St. building is 98.2% occupied and the average apartment rent is $2,327 per month, or $3.03 per square foot, according to a CBRE brochure.
Golub and CIM spent approximately $6.5 million on refurbishing the building. They “polished the jewels”, completed renovations on all units, modernized the building’s elevators and hallways, replaced most of the AC/PTAC units, upgraded living and safety, and completely restored the garage. did,” he said in a CBRE brochure.
They also increased rents significantly, boosting building income. According to CBRE, “trade-out” rent increases — the amount new apartment tenants are paying their previous tenants — have averaged 22% this year.
Contributed by Dennis Rodkin of Crain.