An Ohio-based investment firm is the new owner of the landmark Hyatt House Chicago.
Rockbridge Capital purchased the 200-room hotel at 105 North May Street from Chicago-based developer Sterling Bay, underscoring the allure of the Fulton Market District, Crain’s reported. The transaction was brokered by JLL’s Adam McGaughy and John Nugent.
The 14-story hotel was developed by Sterling Bay in partnership with Connecticut-based Wheelock Street Capital and opened in 2019. Steps away from McDonald’s global headquarters, the Hyatt House has been a significant player in the area’s transformation from its industrial roots to a bustling hub of commerce and culture.
The purchase price wasn’t disclosed, but sources close to the deal say Rockbridge Capital paid well above the $61 million mortgage balance but less than the property’s $80 million appraisal value, or between $305,000 and $400,000 per room.
Anything in that price range would make it one of the highest per-room prices for a Chicago hotel since the onset of the pandemic, the outlet reported.
Unlike other recent transactions in the city’s hospitality sector, this deal was not distress-driven, highlighting the strong investor confidence in Fulton Market’s long-term potential.
Fulton Market has emerged as a focal point for Chicago’s commercial real estate scene, attracting a slew of major corporations like Google, Mondelez International and Deere & Company. The district’s appeal is not just limited to big business; it has also become a hotspot for residential development, with numerous apartment projects cropping up over the past few years.
The hotel was the first of Hyatt’s select-service brands to open in the city, and it directly benefits from this influx of corporate activity. A longstanding agreement with McDonald’s ensures a steady stream of guests from the fast-food giant’s Hamburger University program.
Sterling Bay has played a pivotal role in reimagining the area and is now looking to divest from several properties in the neighborhood as it navigates the challenges posed by the pandemic and rising borrowing costs.
Among the Fulton Market assets it recently listed for sale are 1200 West Carroll Avenue, 345 North Aberdeen Street, and 370 North Carpenter Street.
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Despite the broader challenges facing Chicago’s hospitality industry, the purchase of Hyatt House Chicago signals that investors still see immense value in well-located, high-performing assets, even as the market continues its slow recovery.
The Hyatt House sale also reflects a broader trend of increasing hotel sales in the Chicago area. Hotel sales in the region rose by 22 percent in the first half of the year compared to the same period in 2023, defying a nationwide decline of 16 percent, according to MSCI Real Assets. However, the full-year figures reveal a more subdued market, with a significant year-over-year drop in total sales.
— Andrew Terrell