Atel seeks buyer for River North office-to-residential play

After losing its last tenant, Atel Capital Group has put a River North office building up for sale and is pitching it as an opportunity for a residential conversion.

The San Francisco-based firm has hired Colliers International to market the three-story, 42,000-square-foot property at 225 West Superior Street, CoStar reported.

Rather than focusing on the vacant building itself, Colliers is marketing the property as a 14,000-square-foot development site, with a chance to replace the existing structure with a 13-story residential tower spanning 113,000 square feet and modern amenities such as a rooftop deck for residents.

Amid ongoing remote-work trends, developers are increasingly exploring alternative uses for their struggling office assets. Chicago Mayor Brandon Johnson recently signed off on four office-to-resi projects to revitalize the Loop and address affordable housing shortages, with $151 million in tax increment financing subsidies being requested from the City Council.

In River North, the proposed conversion aligns with the area’s retail-centric atmosphere and accessibility to public transportation. With proximity to the Chicago Transit Authority’s Brown and Purple Line train station, the site offers potential for transit-oriented development featuring less parking than may be needed in other multifamily properties.

Despite challenges such as rising interest rates and construction costs, apartment demand in prime Chicago neighborhoods like River North remains robust. 

“This is a live-work-play area where you have the art galleries, restaurants and nightlife of River North, and the train entrance is right in front of the building,” Colliers broker Alissa Adler told the outlet.

Atel has owned the Superior Street building since 2005, when it paid nearly $6.9 million for it. Its former tenant, GoHealth, recently vacated the site in a move to the Merchandise Mart as part of a consolidation effort.

Adler anticipates considerable interest in the property’s potential conversion, citing Chicago’s strong multifamily market. There’s also a chance a buyer would want to occupy the property as an office again itself, Adler said, but she suspects the demand for redevelopment will be higher.

—Quinn Donoghue 

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