A San Francisco investment firm is paying US$190 million for a new 56-story luxury apartment tower along Grant Park, the biggest Chicago multifamily sale of the year, according to a report.
Iconiq Capital is buying Essex on the Park, a 479-unit high-rise at 808 S. Michigan Ave., from the development joint venture that built it, according to Real Estate Alert, a trade publication. The venture between Chicago-based Oxford Capital and Quadrum Global, which has offices in New York and Miami, completed the project in spring 2019, one of three big South Loop apartment towers to open last year.
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The sale could bring some pricing clarity to the Chicago multifamily investment market in a slow year, offering another clue that could help investors figure out what downtown trophy buildings are worth these days. The coronavirus pandemic and recession have dragged down occupancies, rents and property incomes, but few big apartment high-rises have changed hands this year, making it difficult to determine where prices have settled—or even if they have.
Iconiq is paying $190 million, or about $397,000 per unit, for the Essex, according to Real Estate Alert. That’s the most paid for a Chicago-area multifamily property in 2020, eclipsing the $155 million price for Cityfront Place, a 480-unit building on the Chicago River that sold in April, according to Real Capital Analytics, a New York-based research firm.
The per-unit price for the Essex is much lower than those paid for some of the fanciest downtown towers in recent years, but tenants don’t pay top-of-the-market rents to live there.
Rents at the Essex also have fallen. The average apartment in the building rents for $2,568 per month, down 12 percent from fourth-quarter 2019, according to CoStar Group, a real estate data provider. The building also has taken time to fill up and is only 74 percent occupied, according to CoStar. Sonder, a vacation-rental company, leased 92 units in the building last year.
Executives at Oxford, Iconiq, and Jones Lang LaSalle, the brokerage hired to sell the Essex, did not respond to requests for comment.
Oxford and Quadrum broke ground on the Essex in late 2016, financing construction with a US$169.8 million construction loan from a lender group led by New York-based Goldman Sachs, according to Cook County property records.
The project included a major renovation of the Essex Inn hotel next door, which Oxford and Quadrum also own and is not part of the sale. In May 2020, the project’s lenders agreed to increase the construction loan to US$174.8 million, county records show.
Iconiq is expected to complete the acquisition at the end of the month.
For more on this story, go to Crain's Chicago Business.