River North Pioneers Revive An Investment Deal After Tenants Start Returning
Development pioneer Urban Innovations has decided it’s time to start buying property again.
Over the weekend, the company’s investment affiliate North Wells Capital and its joint venture partner Skydeck Capital closed the purchase of a former industrial building at 720 North Franklin St. in the River North neighborhood with the aim of renovating and leasing up the 47K SF brick-and-timber structure.
It’s the kind of job Urban Innovations has done since the 1980s when it started transforming River North from an industrial warehouse district to a sleek loft office market. North Wells Capital had planned to buy the property from McCaffery Interests before the coronavirus pandemic hit, but it shelved the deal until the clouds over the office market began lifting this year.
“It’s our bread and butter but over the past 18 months, Covid made it a bit of a tough go,” North Wells Capital principal Tony Lindsay said.
Confidence was restored when tenants began to sign leases over the past few months in the firm’s historic River North portfolio of more than 700K SF. Like other players in the River North submarket, it serves mostly small entrepreneurial firms, many leasing about 1K SF, and Lindsay said it seems likely this group will return to the office faster than larger, less nimble Central Loop companies.
“Whether or not everyone is actually sitting in their seats, we are seeing very robust plans to return,” he said.
Especially gratifying was getting its latest project, 306 West Erie St., to 85% leased. North Wells Capital acquired the five-story building in 2017 and nearly doubled its size during a renovation. The company plans to make it the centerpiece of Verso, a proposed three-building community hub. Workbox Coworking Co., a coworking center and startup accelerator, is the first office tenant and will move in later this month.
720 North Franklin St. is just north of the Verso site. It was originally constructed in 1925 for industrial use and later renovated into a retail and office property. That makes it an easy fit with the rest of the company's portfolio, but Lindsay said it does need a little help. The new owners plan to replace its elevators and upgrade its HVAC systems, including the addition of advanced air cleaning technology that can eliminate viruses and harmful bacteria.
Lindsay can’t disclose the purchase price due to a confidentiality agreement with McCaffery Interests, he said, and the transaction details are not yet public information.
The building is now about 70% leased, he added, but the renovation plans, coupled with an economic recovery and a return to the office, should help fill in the vacancies.
“There’s no rocket science to it, we’re going to do it the same way we’re doing it for our existing River North assets,” he said.