Massive Streeterville rental complex hits market

1K-unit McClurg Court priced at roughly $200M, but demand for Downtown apartments has sunk

333 East Ontario Street and BentallGreenOak CEO Sonny Kalsi (Google Maps; BentallGreenOak)
333 East Ontario Street and BentallGreenOak CEO Sonny Kalsi (Google Maps; BentallGreenOak)

With occupancy rates at Downtown Chicago apartments falling sharply during the pandemic, the owner of one of the largest complexes in the city wants to sell.

An investment fund has hired Newmark to market McClurg Court, a 1,061-unit rental development in Streeterville, Crain’s reported, citing Real Estate Alert. The massive complex was expected to trade for over $200 million — roughly $189,000 a unit — according to the report.

Multi-Employer Property Trust Fund owns the two-tower development at 333 East Ontario Street. Toronto-based BentallGreenOak oversees the buildings and is an adviser. MEPT paid $126 million for McClurg Court in 2006. The report noted that BentallGreenOak has poured $35 million into improvements at the nearly 50-year-old complex.

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The decision to sell comes at a time when the Chicago apartment market has taken a big hit, in contrast to the suburbs, where demand remained strong. The third-quarter occupancy rate for Downtown rentals dipped to 87.1 percent from 93.8 percent in the third quarter of 2019. The latest number was the lowest figure in two decades, and has forced landlords to cut rents more than 20 percent year-over-year and offer more concessions.

Because MEPT owns the complex but not the dirt underneath, BentallGreenOak negotiated a longer ground lease on McClurg Court in 2019 — to 99 years from 45 years — after the complex failed to sell. [Crain’s] — Alexi Friedman