Iconiq Capital paid $190 million for a new luxury apartment tower in Chicago’s Grant Park, marking the largest multifamily sale of the year.
Divesh Makan’s San Francisco-based investment firm bought Essex on the Park, a 479-unit development at 808 South Michigan Avenue from Chicago-based Oxford Capital and Quadrum Global, according to a report from Real Estate Alert cited by Crain’s.
The average rent at the 56-story tower dropped 12 percent in October from the fourth quarter of last year to $2,568 per month, according to Costar. The short-term rental company Sonder purchased 92 units in the building soon after it was completed last year.
The building’s sale comes at a time when commercial real estate deals have dropped off since the onset of the pandemic as investors remain uncertain about pricing and occupancy.
At the same time, Chicago’s rental market has surged in recent years, driven by a number of large companies — including Google and McDonald’s — opening local headquarters and flagships in the city.
Developers were increasingly converting condo developments into apartments in a process known as “condo deconversion.” But deconversions in Chicago have become tougher after the city passed a rule that requires 85 percent of a building’s condo owners to approve a bulk sale, up from 75 percent.
Nationally, landlords are starting to show some financial strains. About 6 million renters reported either missing, delaying or paying reduced rent during the second quarter of the year, according to a recent report from the Mortgage Bankers Association. [Crain’s] — Keith Larsen