The “Great Reset” ongoing in post-pandemic office markets seems to also be playing out with increasing velocity in the multifamily segment of Chicago’s real estate landscape, where a West Coast investor’s latest deal pushed it past $350 million spent on 1,600 units over the past year or so.
Greg Fowler’s San Francisco-based firm, FPA Multifamily, paid $60 million for the 270-unit Emerson Apartments in Oak Park, Crain’s reported, a price that comes to around $220,000 per unit. The complex is nearly 95 percent rented, according to CoStar Group, with average rents of around $2,500 per month.
The property at 1135 Westgate Street adds to a skein of Chicago-area deals by FPA in the past four years. The investor has long been a buyer of Chicago-area apartment buildings, and its recent acquisition spree started in the heart of the city and has worked its way out.
It acquired a 286-unit property in the Streeterville district of downtown for $55 million in June of 2023, and got a 558-unit complex in Westmont three months later for $96 million, then added a 500-unit building in the South Loop for $144 million in April of this year before following up with this month’s deal in Oak Park. The entire portfolio works out to an average of about $220,000 per unit.
Miami-based Lennar’s multifamily unit was the seller. The deal came less than a year after Lennar co-CEO Stuart Miller said the company would look into a sell-off of the firm’s portfolio under its Quarterra unit. The Charlotte, N.C.-based operation has since sold 18 other apartment complexes with more than 5,200 units in coastal and Sun Belt markets to KKR, according to CoStar News.
The Oak Park property looks to have fetched more than the debt Lennar took out on it — the firm completed the building in 2017 with a $50.8 million construction loan from JPMorgan, then refinanced the property with a $53.3 million mortgage from Truist that matured July 15, according to data from research firm MSCI Real Assets.
Relatively strong rents are spurring investor interest in Chicago apartments, with a handful of big complexes in the city and suburbs selling and listing lately. Suburban rents are currently up by roughly 4 percent year-to-year, according to data from Integra Realty Resources.
The trend has picked up steam despite higher interest rates adding to expenses on financing deals.
Several cases of properties going on the market with assumable loans at rates before the recent hikes in interest have also fed the trend.
It also comes as investors are showing interest in apartment buildings around Chicago as the region’s rent growth outpaces other markets. Net monthly rents at suburban Chicago apartments were up percent year-over-year in the first quarter, rising to $2.06 per square foot.
An FPA executive confirmed an affiliate of the firm was the buyer in Oak Park, Crain’s reported, but declined comment.
The buyer took a Freddie Mac loan for $44.1 million for the deal, according to property records.
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