A trio of downtown multifamily buildings hit the market in a test of investor appetite for Chicago apartments at a time when rents are high and interest rates are surging.
Newmark brokers are seeking buyers for Next on the Near North Side, the Seneca in Streeterville and Emme in the West Loop, Crain’s reported. All together, the buildings have 795 residential units.
The offering comes as the market experiences conflicting effects of two important factors for the multifamily market that are shifting at the same time: interest rates and rents. When costs of debt rise, sellers normally take a hit as buyers have to adjust how much they can pay for real estate when they need to pay the bank more for a loan. Oppositely, when rents rise as fast as they have in Chicago this year, having hit record highs in the second quarter, property values usually jump in tandem.
“Multifamily is doing good and will only do better as the year goes on,” Toney Morton, chief financial officer at Independence, Ohio-based Redwood Living Inc., previously said. “Residential living is the alternative to buying a home, and even homeowners, especially seniors, are transitioning more to multifamily complexes as their lifestyles change.”
Built in 1924, the 286-unit Seneca, owned by Vanbarton Group, is the oldest of the three buildings, and was bought for $75 million in December 2014. The 199-unit Emme, owned by Portland, Oregon-based Green Cities, opened in 2017 and is the newest. All three listings will demonstrate the desire for downtown apartments.
Chicago-based Fifield owns the 28-story residential building Next, at 347 West Chestnut Street, that Newmark was also hired to sell.
“There are a lot of variables at play,” Green Cities Managing Partner Kelly Saito told the outlet. “You have a lot of uncertainty around the economy and interest rates.”
Three multifamily buildings in downtown have sold for more than $100 million so far this year. Most recently, Canadian investor Morguard spent $133 million on the 350-unit Echelon Chicago building in the Fulton River District.
Similar properties already on the market include the 245-unit 3Eleven in River North, the 363-unit Spoke in River West, the 500-unit Paragon in the South Loop and the 240-unit Xavier on the Near North Side.
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