Developers across Chicago have turned condo buildings into apartments in recent years to take advantage of a booming multifamily market, as the condo market slumps. Crescent Heights is taking the opposite route.
The Miami-based firm plans to convert the 19-story, 198-unit property at 850 North Lake Shore Drive into condominiums, Crain’s reported.
Crescent Heights bought the Gold Coast building two months ago for $80 million ($404,000 per unit) down significantly from its last trade of $140 million ($707,000 per unit) in 2016. The steep discount is what makes the conversion financially feasible, said Crescent Heights partner Jason Buchberg.
Condo conversions to apartments have been prevalent in Chicago for a decade. Notable examples include the South Loop’s River City and Edgewater’s Granville Tower. Crescent Heights is taking a contrarian stance, undeterred by the downtown condo market’s prolonged slump.
Apartment tenants were informed of the switch and given the first right to purchase their units or enter a prolonged lease period, as mandated by law. The condos will range from studios priced at $240,000 to three-bedrooms starting at $1.17 million David Wolf’s firm Wolf Development was assigned with with arranging the condo sales.
Minimal renovation is needed, since the units were rehabbed in 2014, allowing for gradual sales as tenants vacate.
Crescent Heights’ decision was driven by the property’s prime location and the opportunity to price units below the norm for luxury condos, which could appeal to suburban empty nesters and bargain hunters.
Built in 1927 as the Lake Shore Athletic Club, the North Shore building has undergone transformations over the years, but it “should have been condos,” all long, Buchberg said.
Crescent Heights had considered the conversion in the early 2000s, after its longtime owner Northwestern University stopped using it as a dorm. But a different developer acquired it and opted for luxury-priced senior housing before switching to luxury rentals.
—Quinn Donoghue
Read more
Commercial
Chicago
Crescent Heights pays $80M for discounted Lake Shore Drive apartments
Commercial
Chicago
Crescent Heights to part with development site near Fulton Market