Buyers shell out big for rare Chicago multifamily properties

Buyers are shelling out for rare multifamily properties in Chicago, with highest per-unit prices, above asking.

A brick walkup building of 12 apartment units at 1201 West Addison Street in Wrigleyville sold for $6.23 million, which calculates to $518,750 per unit, marking the highest price-per-unit sale in the area since 2019. Local real estate agency JAB Real Estate sold the property within 97 percent of the original listing price to an undisclosed local investor.

“Rarely do you see properties like this come up with this level of renovation,” said Jim Darrow, principal at Essex Realty who represented the local seller JAB Real Estate. It’s mostly two, three, and four-unit buildings that trade frequently in Wrigleyville, the North Side community’s densely-packed neighborhood with sports bars, pubs, and home to the Chicago Cubs.

Multifamily transaction volume reached $2.8 billion in Chicago in the 12 months ended in November, a 92 percent increase compared with the previous year, according to Yardi Matrix. When properties have the number of units that are most sought-after and in prime locations, buyers are spending more, betting on the future strength of demand for Chicago’s rental properties.

Another multifamily property of 100 units in suburban Arlington Heights, 25 miles northwest of the city’s downtown, sold for $10.4 million. The buyer for Dryden Apartments at 1-21 North Dryden Place and 15 South Dryden Place was local real estate investment firm Bear Peak Capital, which plans to create a joint venture with Pangea Properties to renovate the Class B property with new cabinets, vinyl flooring, and updated common space.

“Prior to the pandemic, the majority of the tenants who came to check out a Class B property wanted to see the cheapest units,” said Iman Jalali, principal of Bear Peak Capital.
“But that trend shifted to wanting to see the nicest and renovated units,’’ he said.

It was the property’s scale and location that was the most attractive for Bear Peak Capital, which owns 720 apartment units in the Chicago suburbs. The possibility of the Chicago Bears coming to Arlington Heights was “icing on the cake,” he said. Jalali added that he saw value in Arlington Heights, a transit-oriented and lively neighborhood in suburban Chicago that younger families are turning to.

Suburban properties in the 100- and 200-unit range are in high demand, whereas institutional buyers prefer much larger trades, said Brian Karmowski, managing director at Essex Realty Group, who represented the buyer. Situated in the northwest corridor of Chicago, the property was a “sweet spot” for investors looking for scale and good financing options.

“It [The property] was only on the market for three weeks,” said Karmowski. “It was overwhelming. In that time, we had at least 30 property tours and 15 offers with the final sale price $400,000 over the list price,” he said.

Larger multifamily property deals include a 403-unit apartment building in Lombards that New York investment management service firm Torchlight Investors paid $104 million in January, the priciest apartment sale in DuPage County this year. Chicago investor Tricap Residential Group and Wolcott Group listed the 550-unit Hoffman Estates in suburban Hoffman Estates, which paid $60 million for the complex in 2019.

Dwell at Naperville, a 400-unit property, sold for $122.5 million was last year’s largest multifamily deal in the suburbs in 2021.