Local multifamily-focused developer DAC is getting close to breaking ground on its planned 26-story high-rise hotel project in the South Loop after picking up the development site for $7.5 million.
The firm bought the property at 424 South Wabash Avenue — which is a parking lot set to be turned into a tower with a stated development cost of $87 million, according to DAC’s website — in a deal that closed in September and was recorded by Cook County last month. The seller was a trust whose beneficiaries are unclear from public records.
DAC, whose president is Daniel Rezko, has been planning to build the tower for more than a year, according to published reports. The property will be managed by short-term rental owner Sonder, which operates five other locations in and near downtown Chicago.
The company rents fully furnished rooms, suites and apartments to travelers and tenants on short-term stays. Although Sonder in June cut 20 percent of its staff, with its stock shares down more than 80 percent since the company was publicly listed in early 2022. There hasn’t yet been any indication the company’s recent staffing pullback and stock performance could impact the DAC development effort. DAC didn’t return a request for comment.
Along with the 270-key hotel, DAC’s plans for the 210,000-square-foot building will include 13,000 square feet of retail and office space. Chicago’s Pappageorge Haymes Partners is the DAC project’s architect.
Plans for the project became public in June 2021, when DAC indicated the project could break ground as soon as March 2022. However, a construction loan hasn’t yet been recorded on the property in public records. Building permits haven’t been issued either, though the city’s permit tracker database shows the firm’s application has been moving through the system.
The firm has a development portfolio of more than $650 million. Other projects it has in the works near downtown Chicago are a 288-unit apartment complex at 1217 West Washington Boulevard in the West Loop, which received a foundation permit last week, a 154-unit luxury apartment building at 630 South Wabash Avenue in the South Loop and a 200-unit and 28,000-square-foot mixed-use development project in River North.
Other recent development site sales in the South Loop include multifamily builder CMK Companies’ purchase of a $5.5 million vacant parcel in the 1600 block of South Wabash, where a building of at least 100,000 square feet could be built without seeking any zoning changes from the city.
As for Sonder’s outlook with short-term stays in Chicago at DAC’s project, the area’s hotel market is on the road to recovery. The Chicago area’s occupancy rate neared 60 percent in the first six months of 2022, according to a report from Marcus & Millichap. That’s still down from about 70 percent in 2018 and 2019 before they dropped below 50 percent when the pandemic hit in 2020.
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