Sam Zell’s North Side Apartment Redevelopment Hits Market

A north side apartment complex owned for decades by the late Sam Zell is up for grabs, potentially attracting a swarm of investors as favorable loan terms are on the table.

JLL brokers are seeking a buyer for the 292-unit Cobbler Square Lofts, at 1350 North Wells Street, in Old Town, playing it up as an opportunity to assume long-term, low-interest-rate debt and potentially increase the unit count to up the property’s value, CoStar reported.

Despite strong rental demand in Chicago, high interest rates and tough lending standards have stymied multifamily sales since last year. Thus, the offering will test investor appetite for assets in the relatively strong multifamily sector, without the burden of high borrowing costs.

The complex carries a $51 million loan from Wells Fargo with a 3.8 percent interest rate and a 2034 maturity date, according to marketing materials. The loan amount comes to less than $175,000 per unit.

Built as a Dr. Scholl’s shoe factory, it was converted into lofts by Zell’s ownership entity in the 1980s. The exact entity is unclear, but Cook County property records show a refinancing in April 2019 that was linked to his Chicago office and sponsored by a longtime executive from Zell’s Equity Group Investments.

Zell, 82, died a little over a year ago.

Cobble Square Lofts comprises three- to five-story structures and includes over 19,000 square feet of retail space. It’s 94 percent leased, with average rents at $2,095 per unit. The area’s vibrant nightlife, restaurants and shops have driven strong residential demand.

The listing suggests significant upside for potential buyers through unit renovations, rent increases and the possible construction of a five-story, 26-unit expansion atop the existing parking garage, pending city approval.

Chicago’s North Side saw a notable multifamily play last month, when local investor David Gassman sold a 17-building portfolio, totalling more than 300 units, to eight buyers for $72.4 million, or more than $241,000 per unit.

The largest multifamily deal of the year in Chicago is FPA Multifamily’s $144 million purchase of the 500-unit Paragon Chicago tower in South Loop.

—Quinn Donoghue