Waterton Lists Apartments Amid Chicago’s Hot Investor Market

Waterton is looking to cash out of one of the South Loop’s largest rental complexes two years after purchasing it, betting that Chicago’s tight apartment market will outweigh potential buyers’ higher financing costs.

The local investor hired Newmark to market the Grand Central, a 346-unit property at 221 West Harrison Street, Crain’s reported. Waterton paid $81.9 million, or $236,700 per unit, for the complex in October 2023. The asking price wasn’t disclosed.

The Grand Central spans two 14-story highrises built in 2020, sitting just south of Willis Tower and near Related Midwest’s planned $8 billion megadevelopment at The 78, which may include a new Chicago Fire FC soccer stadium. The listing comes as apartment landlords are testing investor appetite across downtown. Recent weeks have seen towers in Streeterville, the West Loop and the Gold Coast hit the block, as owners try to capitalize on rising rents before borrowing costs squeeze valuations further.

Downtown fundamentals are working in sellers’ favor. Net monthly rent at Class A buildings jumped 6.25 percent year-over-year in the first quarter, according to Integra Realty Resources. At the same time, supply is at its lowest point in decades. The fewest number of units in 30 years are expected to be delivered this year, due to high construction costs choking off development.

Waterton bought the Grand Central during a slowdown in sales caused by interest rate hikes that compressed values. If it finds a buyer now, the deal will be a bellwether for whether rent growth is enough to overcome lingering financing headwinds.

Waterton’s Chicago portfolio demonstrates a strategy of buying and selling large multifamily assets, including the 2,346-unit Presidential Towers in the West Loop, the Elle in the South Loop and Avant at the Arboretum in suburban Lisle.

— Eric Weilbacher