A West Loop student-housing complex is about to test the commercial market.
Berkadia has been hired by OC Ventures to sell the Letterman, a 482-bed property at 410 South Morgan Street near the University of Illinois Chicago, Crain’s reported. The building is 112 years old and has been listed on the National Register of Historic Places.
OC Ventures bought the property for $51 million in 2019, but whether the firm gets a return on its investment remains to be seen, as the pandemic, rising interest rates and other economic factors have taken some bites out of commercial real estate values.
However, the growing student body at UIC provides a bright spot for potential investors, especially with remote learning fading. The school set a record this past year with a freshman class of 4,244 students, the outlet reported.
Plus, the Letterman is 97 percent leased, and rents are low, meaning a buyer could view the property as a lucrative long-term investment given the school’s steady growth.
Chicago-based real estate firms are getting in on the student housing craze in California, too.
Last year, a joint venture of Marc Lifshin’s development firm Core Spaces and investment firm Harrison Street paid $21.5 million in January for about a third of an acre across from University of California Berkeley, where the city has approved a 232-bed, 87-unit student housing project, meaning the partnership paid more than $247,000 per unit to take control of the site. That surpassed the previous record price for the area by 26 percent, according to CBRE.
The 410 South Morgan building isn’t OC Ventures’ first crack at a student-housing endeavor. In August 2022, the firm paid $33 million for X Chicago, a 99-unit, 167-bed property at 710 West 14th Street, one block away from UIC’s south campus.
— Quinn Donoghue
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