JK Equities, Time Equities Take on Chicago Office Conversion

Two New York developers have office-to-residential ambitions for a building they’ve held for 10 years in Chicago’s South Loop.

JK Equities and Time Equities, in partnership with Chicago investment firm Oak Capitals, plan to convert the eight-story Lightner Building near Grant Park into 49 residential, with ground-floor retail space, Crain’s reported.

The 117-year-old building at 1006 South Michigan Avenue is adjacent to the recently completed 73-story 1000M apartment tower, a high-profile development by the same group. The developers are seeking zoning to accommodate their development; it’s unclear whether it is planned as rentals or for-sale units.

JK Equities and Time Equities purchased the Lightner Building for $10.5 million, about $170 per square foot, in 2015, when it was 84 percent leased.

They also converted a South Loop warehouse, at 2100 South Indiana Avenue, into apartments in 2013. That conversion opened as the 59-unit Vesta Lofts.

The move to transform the 62,000-square-foot South Michigan Avenue building follows a broader trend of residential conversions, particularly in downtown Chicago, where landlords are struggling to fill vacant space. The city is pitching in on those efforts, making $151 million in tax increment financing funds available for downtown office-to-residential conversions.

The low demand for office space, driven by the pandemic and the shift to remote work, has led to a record-high vacancy rate of 26.3 percent in the fourth quarter. That marked the 10th consecutive quarter of rising vacancies, with negative absorption reaching 1.6 million square feet for the year, the worst number since 2021.

Similar adaptive reuse projects include the conversion of office buildings at 135 South LaSalle Street and 65 East Wacker Place into 386 and 200 apartment units, respectively. Additionally, Commonwealth Development Partners is converting the upper portion of 500 North Michigan Avenue into 320 apartments, while preserving the lower floors for retail use.

— Andrew Terrell