Chicago Office-to-Residential Ambitions Gain Financing

Another vintage Loop office tower is trading desks for beds: the 1928 Millinery Mart Building.

A joint venture of Acres Commercial Realty and Chicago-based Mavrek Development secured more than $90 million to convert the 24-story building at 65 East Wacker Place into 252 apartments. The package includes a $62.4 million senior construction loan from Derby Lane Partners, an $11 million loan from Hoyne Savings Bank and more than $17 million in state and federal historic preservation tax credits, Crain’s reported.

The redevelopment is slated to be delivered next spring, according to the project’s website. It joins several other office-to-residential conversions in the Loop, including city-backed efforts along LaSalle Street, as landlords face high office vacancies.

Built in 1928 as the Millinery Mart Building, the brick and limestone tower later housed Esquire magazine for the publication’s first couple of decades and is home to Morton’s The Steakhouse, which will stay on the ground floor.

The building changed hands several times in recent years: Rochester-based Intersection Realty bought it from an Acres venture in 2022, then gave it back through a deed-in-lieu of foreclosure last year. Acres then teamed with Mavrek to pursue the conversion, winning Chicago City Council approval last December.

With permits now in hand, the development team can begin to start interior work. The finished product will feature 105 studios, 105 one-bedrooms and 42 two-bedrooms with in-unit workspaces, plus amenities like a co-working lounge, gym and rooftop terrace. According to Mavrek’s website, the third floor will house most of the amenities. Fifty-one units — about 20 percent — will be affordable, priced at an average of 60 percent of the area median income. There will be no on-site parking. The project was designed by Pappageorge Haymes Partners.

The timing comes as downtown’s construction pipeline is all but frozen, with little relief expected until 2027. That scarcity has bolstered landlords’ leverage, pushing median Class A net rents up 6.4 percent year-over-year in the second quarter, according to Integra Realty Resources.

— Eric Weilbacher