Who says it’s a slow market?
Miami-based developer Crescent Heights has made a major investment in Chicago’s Streeterville neighborhood, buying a nearly 400-unit apartment building from Invesco for $173 million, CoStar report. According to media reports, this is the highest price for a residential building in the city in nearly two years
The acquired property is located at 340 Northeast Water Street and consists of a 50-storey building completed in 2015. However, the deal only includes the apartment portion of the building; the 400-room Loews Hotel on the lower 14 floors is owned separately.
CBRE’s John Jaeger, Justin Puppi and Pete Marino representing Invesco
The purchase price for Crescent Heights is below the record $240.31 million that Invesco paid for an apartment building in January 2016. Invesco paid $604,000 per unit, while
Crescent Heights pays just under $435,000 per apartment.
Still, the apartment developer is optimistic about the acquisition, citing favorable market conditions and strong demand for private capital investment.
“We think it’s a good time to buy,” Jason Buchberg, vice president of acquisitions at Crescent Heights, told CoStar News. “Most institutions and pension funds have pulled back, so private capital is really the ones out there looking for deals today.”
Buchberg said the price cuts were a result of changes in interest rates and cap rates, which led to increased returns for savvy buyers.
Despite the lower prices, the tower is doing well, with more than 95% of the units rented out. According to CoStar data, the average rent is $3,650 per unit.
Crescent Heights has been aggressively investing in the Chicago market, with previous acquisitions including the adjacent 55-story North Harbor Tower in 2018. They have also completed notable developments such as the 76-story, 800-unit NEMA Chicago skyscraper in Grant Park. Looking ahead, the company has ambitious plans for a 600-foot tower in the fast-growing Fulton Market district and a 413-unit apartment building at 640 West Washington Avenue.
Overall multifamily home sales were down in the Chicago area due to a variety of factors, including a more cautious stance from investors and lenders.
Sales have reached $1.2 billion so far in 2023, down sharply from $5.6 billion the previous year, according to CoStar.
— Ted Glazer
