After the first six months of 2016, multifamily has emerged as the hot real estate sector, dislodging the office market. Downtown (which at $1.11B sold so far is almost certain to beat previous records) and suburban multifamily sales generated a combined $1.9B in transaction volume in Q1 and Q2. The previous high was $3.79B in '07—a new record may be within reach.
We asked the folks at Real Capital Analytics to compile the top 10 Chicago area multifamily deals of 2016 so far. Here they are, all $1.9B worth.
10. Lux 24 Apartments for $35M
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Location: 24 South Morgan St
Buyer: Borregas Partners
Seller: Origin Investments and Randolph Street Real Estate Capital
Date of Sale: March
Origin and Randolph Street bought this former condo complex for $17M in 2013 and deconverted the units into rentals, a smart move in this market. The sale price marked one of the most stunning ROIs for a deconversion.
9. Optima Old Orchard for $44M
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Location: 9725 Woods Drive, Skokie
Buyer: Trilogy Real Estate Group
Seller: Optima
Date of Sale: March
Trilogy sees a bright future for the 172 rental condos in this project, located just off the Edens Expressway. Trilogy better find success; the firm paid $266k/unit.
8. Fountains at Stone Crest for $46M
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Location: One Fountainhead Drive, Westmont
Buyer: Pensam Capital
Seller: Investcorp
Date of Sale: January
Pensam loves what it sees in this 400-unit community in Westmont, near the always-busy Oak Brook market.
7. Woodlands of Crest Hill for $61M
Location: 1615 Arbor Lane, Crest Hill
Buyer: Canyon Partners, Citi
Seller: Redwood Capital Group
Date of Sale: January
The first major suburban multifamily deal of 2016 set the stage for things to come. The 730-unit community was built in 1972. Canyon JV'd with Citi and hopes to position it as a destination for workforce housing. The sale was part of an eight-property, $405M deal across five states for Redwood.
6. Gateway West Loop for $84M
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Location: West Madison and South Green streets
Buyer: Zurich Financial
Seller: Lennar Corp
Date of Sale: March
Foreign demand for core assets has taken hold in the downtown multifamily sector. One example: Zurich Financial's purchase of this 167-unit West Loop tower. The purchase price breaks down to over $500k/unit and the $3.23/SF average rent makes Gateway West Loop one of downtown's most expensive apartment buildings.
5. Stonebridge Village for $105M
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Location: 600 West Rand Road, Arlington Heights
Buyer: The Connor Group
Seller: Maria Magnus
Date of Sale: February
The suburb's top multifamily sale of the year is the only nine-figure deal for a suburban apartment building and the biggest suburban apartment sale of the past two years. Connor has been very active buying suburban multifamily. This marked the firm's third acquisition in 24 months.
4. 420 East Ohio For $109M
Location: 420 East Ohio St
Buyer: Gerding Edlen
Seller: Heitman
Date of Sale: April
We wrote in May about how Streeterville is crushing the downtown multifamily market—it's where all of the jaw-dropping nine-figure deals are. Gerding Edlen announced it acquired this 263-unit tower in January; the deal was finalized in April. Heitman marketed 420 East Ohio as a value-add opportunity and rehabbed 121 apartments when it put the building on the market.
3. 850 North Lake Shore Drive for $140M
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Location: 850 North Lake Shore Drive
Buyer: JP Morgan Asset Management
Seller: Integrated Development
Date of Sale: April
JP Morgan paid a record $707k/unit for the former home of the Lake Shore Athletic Club, which now houses 192 apartments. With rents ranging from $1,913/month for studios to $11k/month for three-bedrooms, the firm sees a guaranteed revenue generator in Streeterville's northern edge.
2. North Harbor Tower for $237M
Location: 175 North Harbor Drive
Buyer: Crescent Heights
Seller: Florida State Board of Transportation
Date of Sale: May
Here's another tower that was marketed to potential buyers as a prime value-add opportunity. Its proximity to Millennium Park was another draw. Crescent Heights acquired the 55-story, 600-unit building in May and now controls 2,200 apartments downtown.
1. North Water Apartments for $240M
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Location: 340 East North Water St
Buyer: Invesco
Seller: Convexity Properties
Date of Sale: January
The top sale of the year so far is in the heart of Streeterville. The 50-story building was delivered last year, along with the Loews Chicago Hotel, which Convexity sold for $156M in the top hotel sale of 2015. Invesco gets 398 apartments in the center of Streeterville, surrounded by Navy Pier, Millennium Park, downtown and River North. And the building's value will only increase with construction of a 44-story tower at 465 North Park underway.
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