Office developer picks up site of failed River North condo project

North Wells Capital paid $16M to acquire the parking lot at 300 West Huron Street

North Wells Capital CEO Jim Fox and the empty lot at 300 West Huron Street
North Wells Capital CEO Jim Fox and the empty lot at 300 West Huron Street

A River North office developer acquired a parking lot at the intersection of Huron and Orleans streets, property once eyed for a condo development that was never realized.

North Wells Capital, the asset management arm of developer Urban Innovations, paid $15.8 million last week to acquire the nearly 32,500-square-foot lot at 300-324 West Huron Street from Centaur Construction, according to Cook County property records.

Chicago-based JFJ Development unveiled plans in 2015 to build a 24-story condo building on the lot, and secured a zoning change for the project the following year. But the plan fizzled, opening an opportunity for North Wells to add the site to its cluster of properties in the area, CEO Jim Fox said.

“Based on the strategic importance of that lot to our portfolio, we decided to throw our lot in the ring,” Fox told The Real Deal on Friday, adding that his company has no specific plans for the site.

North Wells has owned the parking lot across the street at 301 West Huron Street since 1998, when it bought the property from developer Belgravia Group. North Wells plans a new 162,000-square-foot office building with ground-floor retail on the site, Fox said. But the firm is waiting to line up an anchor office tenant before it moves forward with the project.

In 2017, North Wells paid $12.8 million to buy a seven-story loft office building and adjacent parking lot at 308 West Erie Street. The firm hopes to build a five-story expansion of the building on the vacant space, Fox said.

In total, North Wells owns 10 low-rise office buildings north of Hubbard Street and west of Wells Street in River North.

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The company is banking on an unanswered need for new work space in the neighborhood, where Fox said office developers have not caught up to an exploding crop of new apartments. And although the 3.6 million square feet of new office space due to open Downtown this year has fueled worries of oversupply, River North has maintained high rents and low vacancies thanks to its unique allure to tech companies.

“We think there’s a lack of product that’s pushed a lot of tech tenants who love River North to go to Fulton Market, because River North just hasn’t been able to accommodate their growth,” Fox said.

New offices could be a more viable use for the Huron site than condos, as much of the activity in the condo market in recent years has been units being deconverted back to rentals.

Condo developers have had an especially hard time generating enough interest from prospective buyers to start new buildings, Belgravia CEO Alan Lev said. And the prospect of the next mayor raising taxes on high-end properties is likely to add even more headwinds for builders who have yet to break ground.

“The for sale-market is getting tougher— we still aren’t even breaking through 1,000 [new] units a year,” Lev said. “The costs are getting really high, and it’s going to become even more challenging to make new projects work on paper.”

Greystone Real Estate Advisors brokered the sale on behalf of Centaur Construction.

A representative of JFJ Development did not immediately respond to a request for comment.