Downtown Condos Luring Multifamily Investors

CHICAGO—Converting Chicago condos into rental units continues to be an attractive bet for investors, including those from out of town that want a piece of the city’s vibrant rental market. Marcus & Millichap says it brokered the $10.3 million deconversion sale of 227 E. Walton Pl., a 13-story multifamily building in the Streeterville neighborhood. The buyer, a group of private investors based in CA, plans to convert the property’s 25 condos back into rentals.

Working out of Marcus & Millichap’s downtown Chicago and Chicago Oak Brook offices, Kyle Stengle, Austin Weisenbeck and Sean Sharko, senior vice presidents of investments, and Brewster Hague, associate, facilitated the transaction. The sale price equates to $412,000 per unit.

“The incredible demand for apartments in Streeterville made this property extremely desirable to investors,” says Stengle. “Our extensive deconversion experience led to a successful transaction so the buyer could quickly add these units to the rental market. The individual condo owners were also pleased with the final sale terms, which produced a fair market price that would be difficult for them to attain individually.”

Notable deconversion efforts in Chicago this year includes Beal Properties’ $30 million purchase of 445 W. Wellington Ave., a 15-story condominium building in Chicago’s Lakeview East neighborhood. The Chicago-based investor plans to turn that 65-year-old building’s 117 condos back into rental apartments. In addition, Strategic Properties of North America bought Kennelly Square, a 268-unit condominium building located in the Old Town neighborhood, for $78 million.

Located at 227 E. Walton St., the Harry Weese-designed building was built in 1956 and sits a half block west of Lake Shore Dr. and one block south of Oak St. Beach. Twenty units in the building provide 1,325 square feet of living space with two bedrooms and two baths. The other five comprise three one-bedroom and two three-bedroom units. Most residences have been recently updated with granite countertops, maple cabinetry and hardwood flooring. The property also offers 19 parking spaces and additional private storage in the basement.

“The building will satisfy renters who want spacious living downtown at a more reasonable rate than a similar-sized unit in a newly constructed building,” says Stengle. “We also provided a plan to improve amenity spaces like the rooftop deck and party room – features desired by many downtown renters that will create additional value for the buyer.”