Tandem Lists Chicago West Loop Apartments Amid Low Vacancy

As new supply dries up, landlords hope old bets will pay off.

Developer Tandem is testing the market for its 198-unit Avra West Loop apartment highrise, banking on a surge in investor interest amid a historic supply crunch in downtown Chicago, Crain’s reported.

The Chicago firm tapped CBRE’s John Jaeger, Justin Puppi and Jason Zyck to market the 20-story property at 1125 West Van Buren Street, which it completed in 2021. The building is nearly 95 percent leased, with average rents at $2,604 per month, or $4.26 per square foot, according to CBRE. The ground floor is anchored by Saltmara, an upscale nail salon.

Tandem director of development Dimitri Nassis said this is the best window to sell since before the pandemic, pointing to minimal multifamily deliveries and strong rent growth.

The offering comes as apartment construction in downtown Chicago has slowed dramatically from financing hurdles and higher interest rates, a climate favorable for landlords.

Chicago recorded its lowest number of multifamily project starts since 2014 last year, according to Institutional Property Advisors. With few deliveries expected this year, vacancy across the metro is below 5 percent for the second consecutive year.

The listing price was not disclosed, but Jaeger said the building could fetch up to $79 million, or $400,000 per unit, if investor appetite pulls through to match current leasing trends.

“The market is as tight as I’ve ever seen it in my 30 years here in Chicago in terms of occupancy and rent growth … the pipeline is so muted,” Nassis said. “Almost every investor we talk to wants to have a position or a flag in the West Loop.”

Construction on the Avra tower began in April 2020 during the early months of the pandemic. Tandem financed the project with a $42 million construction loan, later refinancing with a $55 million mortgage in 2022.

— Judah Duke