Jupiter Gets Nod for $162M Apartment Asset

CHICAGO-Don Smith, chief executive officer with Jupiter Realty, says plans for his $162-million apartment tower at 215 W. Washington were recently approved by the city Planning Commission. He presented the plans for the project Dec. 6 at the first Real Estate Lenders Association Inc. meeting to be held in Chicago.

Smith says he's optimistic about the class A rental market in the city. Though a record number of units are planned for delivery by 2010, about 4,000 units were dropped from the charts when developers went conversion crazy in the past few years, evening out, and even creating, demand. "Rent spikes are back, concessions have been dropped, and the former hold time of 10 years has been shattered," Smith says. The only uncertainty, he says, rests with increasing construction costs.

New apartment construction is everywhere in the city, Smith says. He listed projects in various stages of development, including: the Streeter at 345 E. Ohio, with 40% of its units preleased; Sky55 in the South Loop, 511 units and senior apartments at 1255 S. Michigan Ave.; 300 S. Canal, 451 units by Fifield; Kingsbury Plaza, next to the East Bank Club, with 421 units expected to be delivered by mid-2007; the Tides, with 607 units ready for delivery in early 2008; 1401 S. State, also in the South Loop, with 278 units expected by 2008; and 900 S. Clark, with 400 units coming online within months. More than 4,000 more units are in the planning stages, he says.

The 215 project, at Washington and Wells, is a little odd, he says, because very few apartment projects are done in the heart of the Loop. The company worked for three years to put the project together, he says, including assembling three parcels of land. One parcel featured the oldest parking garage in the city, but Jupiter convinced the city to allow the demolition, Smith says.

In its place, Smith says the building will have 38 floors, with the first floor being storefront retail ("Required of every building Downtown, these days," Smith says) and the next 11 floors being a parking garage. The entire project will cost about $162 million, but the garage and retail will be sold to Interpark to run for $40 million, Smith says.

"We view our market as the 120 million sf of office tenants and corporate tenants nearby, as well as some expectation of student interest," Smith says. He says the project will cost about $282,000 per unit to build, and the company expects to rent the units for $2.90 per sf when it's complete in 2010, and a projected return on investment at about 6.62%. Smith says the units will have high-end amenities, and will be condo-ready, though he says he's not counting on conversion.