DAC Developments and Melrose Ascension Capital secured a $53M loan from OakNorth Bank to develop a 19-story residential tower at 626 S. Wabash Ave. as the city's shallow well of multifamily projects rises slightly.
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The project from the joint venture is expected to bring 164 residential units and two stories of rooftop amenities to the South Loop. The total budget for the development is $90M, according to Melrose's website.
“Our support of DAC Developments and Melrose Ascension Capital on this highly impressive 626 Wabash reflects our ongoing commitment to the lower mid-market and to addressing the structural undersupply of quality rental housing in major U.S. cities,” OakNorth Director of Debt Finance Max Saidman said in a press release.
The building will feature 20K SF of enclosed and outdoor terrace space, a half-court basketball court, coworking space for residents, a fitness center and a lounge. Rents are set to start at $1,650 per month.
Construction on the building reportedly started up earlier this year, which is welcome news for a Chicago multifamily pipeline that is exceptionally dry.
New multifamily deliveries are projected to fall over 40% in 2025 to just 4,200 units, the smallest amount of new construction in the city since 2012, according to a second-quarter Marcus & Millichap report. At the same time, vacancy is projected to decline to 4% by the end of the year, making Chicago the fourth-tightest major apartment market nationally behind only New York, Orange County, California, and Washington, D.C.
The city's average year-over-year effective rent jumped 5.5% in 2024. At $2,098 a month, it represented the highest gain among major U.S. metros, with Class-A and Class-C properties leading at 6.8% and 4.4% increases, respectively, the brokerage reported.
“Downtown Chicago is entering a new phase of performance as deliveries moderate and effective rents climb,” Joe Powers, Marcus & Millichap vice president and Chicago downtown regional manager, said in a press release.
“The Loop, Fulton Market and surrounding core neighborhoods are benefiting from tightening vacancy and increased leasing momentum, positioning the urban core for strong rent growth and renewed investor interest.”
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