Chicago investor completes condo deconversion flip with $28M Lakeview sale

A $28 million sale of a Lakeview multifamily building just two blocks from Wrigley Field shows why there is still momentum behind Chicago’s condo deconversion wave.

The off-market purchase by local investor Bill Silverstein’s Beal Properties of the 80-unit building at 944 West Grace Street in the North Side neighborhood completes a three-year hold for the seller, an affiliate of another Chicago investor, Mo2 Properties.

Starting in late 2018, Mo2 bought 67 of the units, which were individually owned one-bedroom, one-bathroom condos at the time, in a series of transactions that ended in February 2019 for a total of $17 million, or about $253,000 per unit, public records show.

The sale just brokered by Interra Realty valued each unit at $350,000, representing a 38 percent rise since Mo2’s bulk purchase that turned the property back into rentals from owner-occupied condos.

The wide margin goes a long way to explain why Chicago multifamily players have turned to condo buildings to expand their rental portfolios since 2015. That’s when a wave of condo deconversions to assemble individually owned units on a property under a new, single owner that operates it like a standard apartment asset started sweeping through the city.

The deals require formal votes of at least 85 percent of a building’s ownership to approve — a threshold that, when reached, strips ownership from even those unwilling to sell. Their rise has been fueled by rising rents and a competitive market for apartment buildings, plus poor recoveries of condo values since their prices crashed in the Great Recession.

“The market for Chicago multifamily assets remains strong, with buyers favoring well-located, core investments,” Interra Realty’s Joe Smazal, who represented both the buyer and seller in the recent deal, said in a statement. “Properties in the area surrounding Wrigley Field have benefitted from continued development that has brought numerous retail and restaurant offerings to the neighborhood, which also offers easy access to public transit and the lakefront.”

The Lakeview property, built in 1986, was fully leased at the time of sale. The new owner plans to make exterior improvements to the property and rebrand it as The Nines on Grace.

In addition to its proximity to Wrigley, the Grace Street building is about two blocks from the Sheridan red line L station and less than a mile from lakefront amenities including the Sydney R. Marovitz Golf Course and Belmont Harbor.