Akara Partners to Convert River North Apartments to Condos

What a difference a tight supply makes.

The recent rising tide of condo de-conversions in Chicago appears to be turning at entry level, with a 43-unit River North building that’s set to go from rental to for-sale a prime example, Crain’s reported.

The move to turn The Hensley apartment building at 707 North Wells Street into the Chateau on Wells aims to fill a gap on the entry level of the market. Plans call for the units to be priced from $400,000 to $1 million, said Rajen Shastri, CEO of Akara Partners, the owner of the 11-story building.

Sales of condos priced over $1 million are slow in Chicago’s downtown, where effects of crime and rising interest rates have spooked some potential buyers, combining to tamp down a trend of empty nesters opting for city living.

But Shastri sees strength in lower price points, which can attract younger buyers who work downtown.

“It’s that under-a-million market, where there’s no new product coming to the market,” he told the outlet.

The move on Wells street comes on the heels of developer Crescent Heights’ decision last month to switch the former Lakeshore Athletic Club at 850 North Lake Shore Drive to condos from apartments.

The River North submarket, where the Chateau on Wells is located, is notching about 25 condo sales per month at less than $1 million, and 96 are on the market. That comes to a four-month supply of inventory compared with a 15-month supply at more than $1 million.

Shastri said the data on inventory was one factor that led him to consider going condo.

Another is weakened demand for apartment investments, owing largely to difficulties in obtaining financing, with interest rates up several points from the long era of cheap money.

Shastri said his building in River North fits the bill for a conversion to condos in large part because it was built to compete with condos, with units that average 1,150 square feet.

Renters in the building have received notices of the pending conversion.