Here are Chicago’s top commercial real estate deals of 2023

Multifamily and industrial dominate over struggling office market

Here’s Chicago’s Priciest Commercial Sales of 2023 — From left: 727 West Madison Street with Zara's Amancio Ortega, 3333 Beverly Road in Hoffman Estates with Compass Data Center CEO Chris Crosby, 340 East North Water Street with CBRE’s John Jaeger, 3233 South King Drive with Antheus' Eli Ungar (Google Maps, Getty, Transformco Properties, Apartments, LinkedIn)

Emma Whalen

Dec 26, 2023, 7:05 AM

Multifamily properties dominated Chicago’s commercial real estate market in 2023, snagging seven out of the largest 10 sales of the year. Two industrial properties and one luxury hotel also made the list.

Notably, not a single office deal cracked the top ten commercial sales in Chicago for the year as the asset class continued to struggle in the wake of the pandemic. No office sales in the Loop occurred for more than $50 million.

This year mimicked market conditions in 2022 but fell short of reaching the same total amount of money changing hands as rising interest rates presented obstacles for big deals. Top transactions in 2022 ranged from $104 million to a $600 million multifamily portfolio sale. This year, those figures ranged from $81 million to $232 million, with fewer sales topping $100 million.

Chicago’s top transaction in 2023 took place in the buzzy West Loop. One of Chicago’s most iconic apartment buildings, the oval-shaped tower at 727 West Madison, sold for $232 million.

It wasn’t all bad news for offices. The West Loop served as a bright spot in the Chicago market overall in 2023. Although it was a rare site of increased office building development, none of those transactions made the top ten sales for the year.

Here are more details on the top 10 biggest commercial transactions that were recorded in Cook County in 2023 or otherwise confirmed by The Real Deal’s reporting. They total more than $1.4 billion, down 22 percent from last year’s top 10 total of $1.8 billion.

727 West Madison | $232 million

Joining in on the West Loop real estate frenzy, Pontegadea, the family office of billionaire Zara founder Amancio Ortega, paid almost $232 million for one of Chicago’s most recognizable apartment towers. The oval-shaped multifamily tower at 727 West Madison Street is Chicago’s tallest building west of the Kennedy Expressway.

A joint venture of Ares Management and Skokie-based F&F Realty sold the 492-unit, 45-story luxury apartment property in August. It remained the top sale in Chicago for the remainder of the year.

The seller secured a $177 million loan on the property in late 2022, suggesting that the building’s value rose significantly since it was built for $141 million in 2019, according to Chicago construction permit data. The deal highlighted the increased interest in residential development near trendy Fulton Market.

Sears Headquarters | $194 million

Data center development sites proved to be a hot commodity in 2023. In July, Compass Datacenters bought Sears’ Chicago-area headquarters for $194 million, with plans to demolish the current 2.4 million square-foot network of interconnected buildings on the 194-acre site.

They will be replaced with high-powered data centers used for cloud storage.

The move was part of a broader trend of companies nationwide seizing on low demand for traditional office campuses and replacing them with data centers and similar properties, such as industrial warehouses.

The Sears sale was led by Colliers International brokers Suzanne Serino, Anne Dempsey, Jason Simon, and Dougal Jeppe on behalf of the seller.

The department store chain has been downsizing since its move away from Chicago’s tallest building, the Sears Tower, (now called Willis Tower) in 1992.

North Water Apartments | $173 million

A 400-unit Streeterville apartment building known as North Water Apartments changed hands in June. Miami-based Crescent Heights bought the property from Invesco for $173 million.

The deal excluded the bottom 14 floors of the 50-story building, which are home to a 400-room Loews Hotel.

CBRE’s John Jaeger, Justin Puppi and Pete Marino represented Invesco.

Crescent Heights bought the building for less than Invesco paid for the tower in January 2016. Invesco paid a record-breaking $240.3 million for the property which netted out to $604,000 per unit. Crescent Heights bought it for a little less than $435,000 per unit.

Lake Meadows Apartments | $161 million

When it was built in the 1950s, Lake Meadows Apartments was the biggest privately financed urban redevelopment project in the country.

Draper & Kramer sold the sprawling Bronzeville apartment complex to New Jersey-based Antheus Capital in June. The nine-building, 1,869-unit Lake Meadows span 75 acres from 31st to 35th streets between Lake Shore and Martin Luther King drives.

Antheus has been expanding its Chicago portfolio. Since 2007, it has acquired over 5,000 units on the South Side. Its holdings include the 1,031-unit Regents Park, 330-unit Shoreland Apartments and 250-unit Solstice on the Park.

JLL Capital Markets represented the seller. The team was led by Managing Directors Kevin Girard and Mark Stern and Director Zach Kaufman.

Blackstone industrial portfolio | $137 million

Blackstone bought a combined $137 million-worth of industrial properties near Chicago’s O’Hare airport during a busy time for the city’s industrial market.

In October, the company purchased four different properties ranging from $18 million to $56.5 million from CenterPoint Properties, an Oak Brook-based firm.

It was an active year for the industrial sector, which had received a boost from pandemic-driven demand for distribution centers and warehouses. The amount of industrial space entering the market in the third quarter — 12.8 million square feet — was the highest since 1999, according to data from JLL.

Blackstone has purchased property from CenterPoint before. In 2021, the firm bought a $151 million portfolio from CenterPoint that included properties in Bensenville, Itasca, Elmhurst, McCook, Northlake and Glendale Heights. That followed an even bigger deal in 2020 when Blackstone spent about $400 million to nab 27 properties in the suburbs of Chicago and Wisconsin.

The St. Regis Hotel | $134 million

One of Chicago’s largest hotel sales ever fetched a near-record price-per-room this year.

A joint venture of Miami-based Gencom and Denver-based GD Holdings bought the St. Regis Hotel for about $134 million from developer Magellan Development Group, just ahead of the hotel’s opening in May. Chicago-based Magellan retains an ownership interest.

The deal netted out to about $700,000 per room. The buyers acquired the property with a $76 million loan from Varde Partners in a deal arranged by JLL, with no mezzanine debt.

It was one of the few luxury hotels to open in downtown Chicago in the last decade. Located at 363 East Wacker Drive, the 101-story tower contains luxury condos throughout the rest of the tower, with the hotel occupying the first 11 floors.

The St. Regis is a luxury label owned and managed by Marriott International.

Union West Apartments | $128 million

Tishman Speyer made a late-year entry onto the Windy City’s biggest deals list with its purchase of a 357-unit West Loop multifamily property at 939 West Washington Boulevard that closed late this month.

The New York-based landlord previously only owned offices in Chicago, but jumped behind the West Loop’s strong housing momentum, paying $128 million to make its local housing play.

The seller was a joint venture led by Orlando-based Zom Living that developed the two-building, 15-story asset, completing it in 2019 before listing it for sale this June. It financed the construction with a $93 million construction loan issued in 2019.

Lincoln Park Plaza Apartments | $119 million

A 256-unit mixed-income apartment complex changed hands in March, when Daryl Carter’s firm Avanath bought it. The property includes 147 affordable units.

Avanath, which specializes in affordable housing properties, bought the complex at 600 West Diversey Parkway for $119 million from an affiliate of BJB Partners.

Avanath’s other Chicago holdings include the 156-unit Scotland Yard in Uptown, and the 582-unit Acclaim at Hinsdale Lake in Willowbrook. It also owns the 180-unit Country Wood complex in Naperville and the 59-unit Affinity on North in Chicago’s Old Town neighborhood, with its holdings totaling more than 1,300 apartments in Illinois.

Addison & Clark | $100 million

One of the biggest commercial deals in Chicago this year was also a big loss for UBS Group.

Developers M&R Development and Bucksbaum Retail Properties increased their ownership stake in the apartment and retail complex known as Addison & Clark through a refinancing deal, while their Swiss partner on the project, UBS Group, lost most of its equity in the property.

M&R and Bucksbaum, along with an affiliate of The Dinerstein Cos., paid $100 million for the property at 1025 West Addison Street in April. That was far less than the $180 million it cost to build the complex.

UBS’s debt vehicle paid back the $97 million loan it put toward the project, though most of the equity was wiped out through the deal.

M&R and Buckshaum originally had a 20 percent ownership stake in the project. It’s unknown how much their shares increased under the new deal. The new ownership group borrowed more than $65 million from Nationwide Life Insurance, resulting in a smaller loan at a higher interest rate compared to the previous debt.

Alta Grand Central | $82 million

Chicago-based firm Waterton made a big investment in the South Loop in October.

The company snagged the 346-unit Alta Grand Central apartment complex at 221 West Harrison Street for $81.9 million or $235,000 per unit. The year prior, Waterton bought a different South Loop complex for $170 million. It was one of the largest residential transactions of 2022.

The $81 million sale of Alta Grand Central appeared to be a gain for sellers D2 Realty and Wood Partners. The owners took out a $65.7 million construction loan to help fund the development that opened in 2020, and it refinanced the asset with a $64 million mortgage in the following year.

It was listed in May 2023. Newmark brokers Liz Gagliardi and Chuck Johanns marketed the property on behalf of the sellers.

The Alta Grand Central deal barely edged an $81 million purchase by Rai Sahi’s Morguard North American Residential of the 240-unit Xavier Apartments at 625 West Division Street to round out the top 10.

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