Tech firm’s full-building apartment lease enables early sale of Bond’s Inspire

A renter with tech industry ties is taking over an entire Chicago building — except that, unlike Google, it’s leasing apartments.

An unidentified “tech partner” leased all 105 market-rate apartments for five years in developer Rob Bond’s Inspire West Town project at 670 North May Street, next to the Kennedy Expressway, according to a marketing brochure. The move gives his firm, Bond Cos., a chance to pursue an early sale of the property while its construction nears completion.

Bond Cos. hired CBRE Chicago multifamily brokers John Jaeger and Justin Puppi to market the property for sale. The brokers declined to comment, citing a confidentiality agreement, and the development firm didn’t return requests for comment. Google, whose proximity to its Fulton Market offices to Inspire was highlighted in the CBRE listing, isn’t involved with the property, a person familiar with the company’s Chicago real estate plans said.

A marketing brochure says rental income is guaranteed for the next five years at the 113-unit property. All that remains to be leased are eight affordable units and 1,400 square feet of ground-floor retail space.

While a sale price wasn’t disclosed in the marketing material, it said average market rents for units similar to Inspire’s range between $2,030 a month for one of seven 430-square-foot market-rate studios and $4,580 for one of its two three-bedroom, two-bathroom units. It also has 42 one-bedroom, one-bathroom units with average rents of $2,400 and two-bedroom, two-bathroom apartments for $3,300, the brochure said. Those are the units that are leased.

The tech partner has agreed to pay above-market rents starting in the first month of the rental agreement, and will reimburse the property owner for utilities even when the units are vacant, the listing said. The property owner will also still be able to collect revenue from parking and fees for pets.

Some Chicago multifamily buildings have gotten a boost in value from similar setups, when a rental operator leased an entire building from a landlord and then rented units on a short-term basis. An 11-story, 30-unit South Loop landmark operated by short-term rental company Sonder was sold by Chicago developer LG Group earlier this year for $16.9 million.

That short-term model wasn’t the key that unlocked Inspire West Town’s big lease, however. The CBRE listing said all leases struck by the unidentified tech company will be for at least 12 months and backstopped by the ability to pay for each third-party tenant approved for a lease by the firm.

The brochure said the large lease eliminates concentration risk for a potential buyer, meaning lenders will have lower odds of a large loss stemming from an acquisition loan against the property.

The tech group behind the master lease will take on the costs of advertising, leasing and concessions. After the initial five-year agreement, if the deal isn’t renewed, the firm will return no more than 20 units per month to the property owner over a yearlong wind-down period.

Bond built Inspire after finishing a larger 363-unit apartment building across the Kennedy Expressway at 733 North Carpenter Street. Completed in 2017, it struggled initially as downtown went through an apartment slump.

The developer bet that downtown multifamily would bounce back once a vaccine arrived, pushing ahead with Inspire in November 2020. Bond Cos. obtained $14 million in equity financing and a construction loan of $25.6 million from Wintrust Bank to finance Inspire’s construction.

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