JK Equities to Convert South Loop Office Building to Residential

Jerry Karlik is joining Chicago’s mix of office-to-residential developments.

His firm, Port Washington, New York-based developer JK Equities, is planning to convert the offices at 1006 South Michigan Avenue, also known as the Graphic Arts Building, into 49 loft-style apartments. Ten of the apartments will be set aside as affordable.The developer’s plans were approved by the Chicago Plan Commission earlier this month and construction is expected to begin in early 2026.

Office-to-residential conversions have been propped up as key catalysts for reviving downtown areas struggling to regain vibrancy since the pandemic. Yet they’ve proven perilous for some developers who’ve attempted them, as well, including a Chicago project at 65 East Wacker Place that is now being led by Adam Friedberg’s Mavrek after going through a lender’s seizure under a previous owner.

JK Equities’ project joins the pipeline as other office-to-residential developments gain steam around Chicago.

The European liquor mogul Campari family alongside Chicago-based developer R2 are deploying $64 million to turn half of the 14 floors at 79 West Monroe Street into 117 apartments. About 30 percent of them will be designated for households making an average of 60 percent of the area’s median income in exchange for $28 million in tax increment financing from the city for the project.

It is the first of several conversions to be subsidized under a city program known as LaSalle Street Reimagined. In exchange for city funding support, the developers agree to meet a higher-than-usual threshold of affordable housing within the residential conversion project — usually about 30 percent of the resulting units for the LaSalle Street program.

The city has approved four other projects through the program, four of which have not broken ground but are in various stages of pre-construction.

The JK Equities development is not part of the La Salle Street program, proving developers have an appetite for such projects even without city funding. The conversion of the 8-story, 130,000 square foot building is expected to cost $14.5 million. It will be located next to a 73-story luxury apartment tower at 1000 South Michigan designed by Helmut Jahn that the firm recently completed.

Representatives of JK Equities declined to comment.

While conversions have made popular discussion points for revamping outdated offices, they have been difficult to execute. At 65 East Wacker, for instance, developer Chase Chavin’s firm Intersection handed the keys of the 24-story office at 65 East Wacker Place to lender Acres Capital. Intersection had purchased the building for $19 million in 2022 after the previous owner defaulted on its Acres mortgage and planned to convert a portion of the 96-year-old building into 144 apartments.