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Strategic Properties of North America will be adding more apartments to Lincoln Park's inventory. The firm acquired Kennelly Square, a 22-story, 268-unit condo tower at 1749 North Wells, after condo owners narrowly voted in favor of deconverting. The purchase is $78M.
Owners of 75.8% of Kennelly Square's condo owners voted to sell. The threshold to approve a deconversion under Illinois law is 75%. Had owners voted against deconversion, they would have been responsible for a $14M special assessment to recover repairs to the building and upgrade windows and tuckpointing.
Higher assessments and a lack of interest in smaller condos has driven a deconversion trend in North Side neighborhoods. Investors can realize greater returns from rent spreads than by reselling the units as condos, and can bring the units to market faster with upgrades and repairs.
Kennelly Square will be Strategic's third condo deconversion on the North Side. The firm bought the 133-unit Clark Place at 2625 North Clark for $35M in 2016, and acquired Bel-Harbour condominiums at 420 West Belmont last June for $51.5M, which deconverted 207 condos into apartments.
The condo deconversion trend has reached downtown, as well. Condo owners at Century Tower agreed to a $60M deconversion offer from Golub & Co. in March. Marc Realty, which offered $100M to deconvert River City in December, lowered its most recent offer to $89M.
Avison Young's Jim Hanson, Richard Hanson and Paul Cohen represented the condo association.
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