A condo association recently cashed in on the demand in the suburban Chicago multifamily market by closing a long-deliberated deconversion sale.
The condo board for the 132-unit Park Towne Condominiums sold 140 West Wood Street in Palatine for $18.5 million in recent weeks. Chicago-based QMR Partners bought the property. The deal comes out to $140,000 per unit.
Sean Connelly, who sold the property along with fellow 33 Realty broker Mark Kurgan, said the condo board initially hired their firm to market the building in 2019 but had to put those plans on hold during the pandemic. Once the building hit the market again, timing worked in the board’s favor.
“We went back to market with it and got it under contract at $18.5 million, and there was no way you could have gotten that number last time,” he said. “We were getting numbers in the 15 to 16 million range in 2019, but rents grew so much in that submarket that all of a sudden it made sense for a value-added buyer to take that one on.”
Units range from studios to 2-bedrooms, and the property is large enough to accommodate additional development should QMR seek to add units.
Multifamily buyers have been tapping into the Chicago area’s record-high rent growth in recent years, but finding the right opportunity is easier said than done.
In Cook County, which includes the city of Chicago, Palatine and other adjacent suburbs, reforms to the property tax system since 2019 have kept institutional investors at bay. But buyers have found luck with midsize properties in the county.
Also in recent weeks, a portfolio of three courtyard-style buildings totaling 115 units in the far Northside Chicago neighborhood of Rogers Park sold for $16.1 million, or about $140,000 per unit. Chicago-based investor David Pezzola bought a portfolio of 110 units in the far South Side neighborhood of Beverly for $16.3 million around the same time.
And multifamily giant Morgan Properties recently bought $501 million worth of apartment buildings across the Midwest. The one building the firm chose to buy in Chicago was a midsize, 138-unit apartment building in Logan Square called NoCa Blue.
Condo deconversions, on the other hand, have proven tricky for other buyers.
Strategic Properties of North America tried and failed to pursue two condo deconversions in and around downtown Chicago before both condo associations backed out of their proposed sales with the firm in the past two years. Both sales had dragged out for months as SPNA sought funding and delayed the closings.