Who says it’s a slow market?
Miami-based developer Crescent Heights has made a significant investment in Chicago’s Streeterville neighborhood with the purchase of a nearly 400-unit apartment tower for $173 million from Invesco, CoStar reported. It’s the highest price paid for a residential building in the city in nearly two years, according to the outlet.
The acquired property, located at 340 East North Water Street, consists of a 50-story tower completed in 2015. However, the deal only included the apartment portion of the building; a 400-room Loews hotel on the lower 14 floors is owned separately.
CBRE’s John Jaeger, Justin Puppi and Pete Marino represented Invesco
Crescent Heights’ purchase price falls below the record-breaking $240.31 million that Invesco paid for the apartment tower in January 2016. Invesco paid $604,000 per unit, while Crescent Heights paid a little less than $435,000 per unit.
Nevertheless, the apartment developer remains optimistic about the acquisition, citing favorable market conditions and a strong demand for private capital investments.
“We thought it was a really good time to buy,” Jason Buchberg, Crescent Heights vice president of acquisitions, told CoStar News. “Most of the institutions and pension funds have stepped back, so private capital is really who’s out there looking for deals today.”
Buchberg, said the reduced price is a result of shifting interest rates and cap rates, which led to increased returns for savvy buyers.
Despite the lower price, the tower is performing well, with over 95 percent of the units leased. According to CoStar data, the average rent is $3,650 per unit.
Crescent Heights has been actively investing in the Chicago market, with previous acquisitions including the neighboring 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-tall tower in the rapidly growing Fulton Market district, as well as a 413-unit apartment tower at 640 West Washington Boulevard.
The overall multifamily sales volume in the Chicago area has seen a decline due to various factors, including investors and lenders taking a more cautious approach.
So far in 2023, the sales volume has reached $1.2 billion, significantly lower than the previous year’s $5.6 billion, according to CoStar.
— Ted Glanzer