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Alta Roosevelt apartments in South Loop selling for $180 million

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The deal will provide one data point for investors wondering what multifamily high-rises in downtown Chicago are worth these days. So few big downtown apartment buildings have changed hands over the past year or so that it’s hard to get a handle on multifamily values these days.

They’re almost certainly not moving up anymore. Many investors were already steering clear of Chicago amid concerns about rising property taxes and crime. Climbing interest rates, volatile financial markets and worries that the economy may be heading into a recession can’t help either.

American Landmark and Evergreen Residential are paying about $180 million, or $363,000 per unit, for Alta Roosevelt, according to Real Estate Alert. That price works out to about $459 per square foot. That’s “stunningly low,” especially considering it would cost about $600 per square foot to construct the same building today, according to one person familiar with the downtown apartment market.

Representatives of Wood Partners and American Landmark didn’t respond to requests for comment, nor did an executive at Jones Lang LaSalle, the brokerage hired to sell Alta Roosevelt.

American Landmark has invested mainly in office properties over the past several years, with recent holdings include Schaumburg Towers in Schaumburg and the Illinois Science & Technology Park in Skokie. The firm also owned a stake in the Willis Tower, cashing out in 2015, when Blackstone Group acquired the skyscraper for $1.3 billion.

At $180 million, the deal would be the biggest downtown apartment sale since December, when Waterton, a Chicago landlord, paid $209 million, or $344,000 per unit, for the Tides at Lakeshore East, according to MSCI Real Capital Analytics, a New York-based research firm. Since the Tides deal, just one apartment building in the greater downtown has sold for more than $50 million: Astoria Towers, a 248-unit property in the South Loop that fetched $82.5 million, or $333,000 per unit, in March.

Standing just east of the Chicago River’s South Branch, Alta Roosevelt opened in 2017. The building is 95% occupied, according to CoStar Group, a real estate data provider. Rents range from $2,091 per month for a studio to $4,351 for a three-bedroom unit, according to CoStar.

Though investor demand for downtown apartments is soft, demand from renters is strong. Occupancies and rents plunged in the first year of the pandemic, but have bounced back over the past year or so. The average apartment at Alta Roosevelt rents for $3.34 per square foot, up 8.8% from a year ago, according to CoStar.

But investors everywhere are lowering their expectations when it comes to multifamily values. Green Street Advisors, a California research firm, recently reduced its estimates of U.S. apartment values by 3.5%, citing market volatility and rising interest rates, which increase borrowing costs.

“The apartment transaction market is far from frozen,” Green Street wrote in a recent report. “Debt is still available, albeit at higher prices, and (Fannie Mae and Freddie Mac’s) lending activity for the sector will continue to provide support in the event credit market conditions tighten further. However, widening bid-ask spreads and the sharp move higher in rates in the last few weeks suggests values are in the process of heading lower.”



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