This Week's Chicago Deal Sheet

Single-tenant office buildings in Fulton Market are still selling for big money, but a luxury apartment building in the neighborhood got snapped up at a discount. Chicago-based investor Dwelle acquired the 72-unit 1247-1249 West Madison St. for $32.8M, or about $405 per SF, according to company officials. They couldn’t resist the price.

“It’s a COVID-19-era deal,” Dwelle Managing Principal Drew Breneman said. “The going-in cap rate is higher than anything we’ve come across in years of comparable size and quality. We like the price per pound we are getting here, too.”

Even though most of the property’s tenants’ incomes have not been hurt by the pandemic, he added, the per SF price is 20% lower than what the Monroe Aberdeen apartment building around the corner at 1050 West Monroe St. sold for in March. Most of the properties the firm looked to purchase this year traded with little to no discount compared to pre-pandemic pricing.

“After looking at and bidding on countless deals, we finally feel like this was our discounted shot,” Breneman said.

“Dwelle invests capital from high net worth investors who are looking to own real estate long term and generate dividend income that exceeds other asset types in an extremely tax-efficient manner,” Managing Principal Sam Meyer said.

EXECS

Avison Young appointed Beth Phillips as principal and managing director of the firm’s Chicago office. Phillips joins Avison Young from Stay Alfred where she was vice president of real estate. Her previous experience also includes serving as vice president of asset management at Equity Commonwealth and as chief operating officer of Leasable, a commercial real estate technology platform. She will succeed Danny Nikitas, who will now lead Chicago's agency leasing practice.

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The Opus Group promoted Olga Olejniczak to manager of real estate development. Olejniczak worked on many Chicago-area multifamily projects over the last several years, including Uptown LaGrange, The Marke of Elmhurst and Ellison Apartments. She recently led the development management of the interior design and build-out of Opus’ newest student living project, Ascend Five Points South in Birmingham, Alabama.

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Neighborhood Housing Services of Chicago’s board of directors selected Anthony Simpkins as the organization’s new president and CEO. Currently serving as managing deputy commissioner of the Department of Housing, Simpkins was appointed a judge of the Circuit Court of Cook County in 2014 and served until 2016. Previously, he was deputy commissioner for the city of Chicago's Department of Planning and Development.

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Olivier Gompel joined CBRE as managing director and practice leader of the company’s Midwest Hotels Advisory practice. Prior to joining CBRE, the Chicago-based Gompel underwrote $2.5B in acquisitions and $3B in corporate-owned, new-build developments, company officials said. Prior to Hyatt, Gompel worked as a senior associate from 2004 to 2007 at PricewaterhouseCoopers LLP.

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Chicago-based architecture firm Lucien Lagrange Studio promoted Victor Krasnopolsky to design principal after four years with the company. Additionally, the firm hired Joseph Lai as senior associate. Krasnopolsky previously served as design specialist and senior project manager at Bailey Edward Architecture in Chicago, and director of design at L.R. Kimball Architecture / Engineering in State College, Pennsylvania.

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Commercial real estate industry veterans Christopher Nolte and David Schreiber launched AneVista Group, a private equity platform focused on the development and redevelopment of small shopping centers with e-commerce-resistant retailers. Nolte worked for the Marcus family as the president of the family office, Marcus Investments. He also founded Berengaria Development, a firm focused on retail and senior living assets. Schreiber was managing director and retail sector lead at LaSalle Investment Management.

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Stream Realty Partners hired Dale Todd as senior director of Stream’s Industrial Development Services Division. Based out of Stream’s Dallas office, Todd will focus on expanding its capabilities in East Coast and Chicago markets. Prior to joining Stream, Todd spent 13 years at J.P. Morgan Asset Management Global Real Assets.

LEASES

Bestway Transport Inc. leased 68K SF at 888 Central Ave. in west suburban Wood Dale from ML Realty Partners. Chris Nelson of Lee & Associates represented Bestway Transport and Colliers’ Tom Rodeno, Matthew Stauber and Pat Turner represented ML Realty Partners.

SALES

An out-of-state investor purchased 7900 South Merrill Ave., a 15-unit multifamily property in Chicago’s South Shore neighborhood, for $825K. Essex Realty Group’s Brian Mond and Abe Eilian represented the seller. This is the third South Shore apartment building Essex sold in October. Earlier this month, the firm closed the sales of 7748 South Kingston Ave., a 34-unit apartment building, and the 18-unit 7400 South Chappel Ave.

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A local investor purchased 4401-4407 North Mozart St., a 19-unit mixed-use property in Chicago’s Ravenswood neighborhood, for about $3.4M, or $180K per unit. Steve Livaditis of Essex represented the buyer. The seller, a local investment group, was represented by Essex’s Abe Eilian and Matt Feo. 

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A confidential investor bought 20 units at 4901-4907 North Kenmore Ave. for $2.4M. The 22-unit property in Chicago’s Uptown neighborhood is a condo building. Interra Realty’s Brad Feldman represented both seller and buyer, who plans to renovate the property, deconvert the building from condos to apartments and raise rents to market rate.

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Local investor ISP Joliet bought an industrial warehouse at 1745 Irish Indian Trail in Joliet for $1.45M. Beverly Hayes and Karen Kulczycki of SVN | Chicago Commercial represented the owner. The transaction moved from contract to close in 42 days, at a near-record closing price for the area, according to SVN.

FINANCING

JLL Capital Markets capitalized the development of a 278-unit, 25-story apartment tower at 1400 West Randolph St. in Chicago’s Fulton Market district. JLL represented the developer, Marquette Cos., to secure a pension fund equity partner and construction loan. Bank OZK provided the financing. Marquette partnered with Chicago-based Power Construction to build the development with an expected completion date of spring 2022. Matthew Schoenfeldt led the JLL team.

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JLL Capital Markets also arranged $15.68M in financing for Red Top Plaza, a 147K SF retail center anchored by Jewel-Osco in north suburban Libertyville. A JLL team led by Christopher Drew, Brian Gaswirth, Christopher Knight and Michael DiCosimo worked on behalf of the borrower, Florida-based Sterling Organization, to place the 10-year, fixed-rate, nonrecourse loan with an insurance company.

CONSTRUCTION AND DEVELOPMENT 

Developer Crescent Heights opened the Skyline Collection of two- to four-bedroom residences on floors 49 through 76 of its new NEMA Chicago apartment tower at 1210 South Indiana Ave. in the South Loop. NEMA, the city’s tallest rental apartment building, was designed by architect Rafael Viñoly and the Rockwell Group, and built by McHugh Construction.  

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The coronavirus pandemic continues to take a big chunk out of new construction starts in the Chicago metro area, according to Dodge Data & Analytics. Construction starts totaled $7.8B year to date, compared to $10.3B in the same time period last year, a 24% decline. The drop was especially steep for residential construction, which totaled $2.8B so far in 2020, compared to $4.1B over the same time in 2019, a 31% drop.

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General contractor Principle Construction Corp. finished Lola’s Truck Wash, a four-bay, 12K SF truck cleaning facility at 1331 North Independence Blvd. in southwest suburban Romeoville. The company completed the ground-up facility last month, and it is now open to truckers. Principle’s Mark Augustyn served as the principal on the project, while Matthew Cotherman worked as senior project manager. A&M Architects LLC handled design.

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Skender, serving as general contractor, completed interior construction of the 40K SF global headquarters on the third floor of 3100 Sanders Road in Northbrook for IDEX Corp., an industrial machinery manufacturer that relocated from nearby Lake Forest. Skender collaborated with architect Harley Ellis Devereaux and engineer Syska Hennessy Group to deliver the project.

THIS AND THAT

Chicago’s Central Business District continues to show signs of an economic downturn due to the coronavirus pandemic, according to MBRE. There was a total of 63K SF of negative absorption in Q3 2020, the firm found. The overall direct vacancy was relatively stable at 13.43% at the end of Q3. But the total vacancy rate, including sublease space, increased by 64 basis points to 16.58%.

Only one sales transaction was completed in the CBD in Q3, MBRE researchers added. Two others are under contract, and three buildings went on the market. This year is also on track to be an even slower investment market than last year. Year-to-date transactions total $758M, compared to the $873M seen by the end of Q3 2019.