Bigtime real estate funds are shopping West Loop apartment towers in Chicago at a time when high-end multifamily sales are lagging.
LaSalle Investment Management, PGIM Real Estate and Origin Investments are all seeking buyers for their respective West Loop properties at 180 North Jefferson, 765 West Adams and a corner of Monroe and Aberdeen streets.
The listings hit the market as Chicago’s large apartment sales as of late — including another West Loop deal from Waterton to Frank Campise’s locally based firm JAB Real Estate — end with significant discounts from their previous purchase prices.
Yet all three properties are about 95 percent occupied and market insiders are optimistic about Chicago’s nation-leading rent growth and the West Loop’s popularity, even as developers are working on adding several massive projects to the area’s multifamily supply.
“There’s no question that higher interest rates are a headwind in terms of value, but what has definitely been a tailwind for Chicago is the performance of these assets,” said Newmark’s Chuck Johanns, whose team is marketing PGIM’s Arkadia on Adams.
A source familiar with LaSalle’s 274-unit property at 180 North Jefferson said it may be difficult for the landlord to sell the building for more than it paid for it in 2016. LaSalle bought the property for $96 million in 2016 with a $48 million loan from JPMorgan. The landlord later refinanced with State Farm Life Insurance for $45 million in 2018, and paid off that loan in 2023. The property isn’t carrying any debt right now, according to public records.
Representatives of LaSalle and the CBRE brokers hired to market the Jefferson Street property, John Jaeger, Justin Puppi, Jason Zyck and Danny Zebowski, did not respond to requests for comment.
High-end multifamily sales have slowed in Chicago mainly due to rising interest rates. Industry insiders say institutional investors have been historically hesitant to invest in Chicago but are even less likely to do so in the current rate environment.
Meanwhile, buildings at lower price points may sell more easily because of strong rental demand and interest from local players.
The overall rental market in Chicago is resilient relative to other major U.S. cities. Halfway through 2023, Chicago led the nation in rent growth, as prices jumped 3.6 percent year-over-year, tripling the national average.
The success of the rental market is also reflected in high occupancy rates. Several current West Loop listings boast occupancy rates at or above 95 percent.
Another West Loop apartment complex currently for sale could have enough positive attributes to overcome the difficult debt landscape.
Origin Investments is selling the 120-unit asset at 1050 West Monroe Street and 33 South Aberdeen Street. The mix of 25 three-bedroom apartments, 92 two-bedroom apartments and three one-bedroom apartments leaves room for more rent growth among the larger units, a broker familiar with the property said. It’s also smaller in terms of the number of units than other West Loop buildings currently on the market, making it more feasible for potential buyers to land a financing package at today’s higher interest rates.
Origin will still have to clear a high bar to make a profit on the sale, as the firm bought it for nearly $66 million in 2020.
Kevin Girard, Mark Stern and Zachary Kaufman with JLL are assigned to the listing.
Among current West Loop listings, the Monroe Aberdeen property may be an anomaly. Another notable listing in the area is a highrise with more similarities to 180 North Jefferson. PGIM is selling the 350-unit high rise at 765 West Adams known as Arkadia West Loop. The company paid off a $108 million loan for the property in 2022, and it is also being offered for sale without a mortgage debt tied to it.
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