Commonwealth Moves Forward with Magnificent Mile Office-to-Resi

Commonwealth Development Partners’ planned office-to-residential conversion on Chicago’s Magnificent Mile is taking shape.

The Connecticut-based developer is proposing to convert the upper portion of 500 North Michigan Avenue into 320 apartments, while preserving the lower floors for retail use, the Chicago Sun Times reported.

The 24-story building, designed by Skidmore, Owings & Merrill and completed in 1967, is among many office properties facing high vacancy rates in the wake of the pandemic. Vacancy on North Michigan Avenue reached 18.2 percent vacancy in the third quarter of 2024, according to Bradford Allen, further exacerbating concerns about the viability of office spaces in the area.

Commonwealth’s plans for the project are to proceed in two phases.

The first would see the delivery of 238 apartments, with the remaining 82 units added in the second phase. The lower floors, occupied by tenants including Chick-fil-A, Bank of America and Vans, will remain unchanged.

Commonwealth will designate 20 percent of the units — 64 apartments — as affordable housing for residents earning 60 percent of the area’s median income, approximately $53,820 for a two-person household. The building will offer a mix of studios, one-bedroom and two-bedroom apartments.

The plan also includes adding 20 feet to the building’s height for rooftop amenities, such as an outdoor deck and an indoor-outdoor space above the 24th floor. The conversion will also add 68 valet parking spaces.

Commonwealth has committed to preserving the building’s historic facade while focusing on interior renovations, including improved lighting, landscaping and stair enhancements.

The property has a complex history. Former ownership involved Israeli diamond magnate Beny Steinmetz, who was under investigation for bribery during his involvement with the building.

Alongside Sabby Mionis and HFZ Capital’s Nir Meir, who has since been indicted for grand larceny, tax fraud and falsifying business records, Steinmetz’s group took control of the asset, paying cash and later refinancing it with $94 million from Granite Pointe Mortgage Trust. The lender eventually took over after the ownership defaulted on the loan with an $80 million remaining balance, paving the way for Commonwealth to step in.

The adaptive reuse project is part of a broader wave of office-to-residential conversions in downtown Chicago, as the city seeks to repurpose underutilized office space.

Mayor Brandon Johnson has reignited his predecessor’s plan, called LaSalle Street Reimagined, which aims to add over 1,000 apartments to the city’s core by converting 1.3 million square feet of vacant office space.