A Miami-based apartment developer has paid $173 million for a 398-unit apartment tower in Chicago’s Streeterville neighborhood, the highest price paid for a single residential building in the city in nearly two years.
Crescent Heights paid just over $173 million for the apartment portion of the 50-story tower at 340 E. North Water St., according to Jason Buchberg, the firm’s Chicago-based vice president of acquisitions.
A 400-room Loews hotel on lower 14 floors of the tower is owned separately and was not part of the deal. The building, developed by Chicago-based Convexity Properties, was completed in 2015.
It was the highest price paid for a single Chicago apartment building since July 2021, when the leasehold interest in the 1,061-unit Arrive Streeterville tower at 333 E. Ontario St. sold for $175 million, according to CoStar data.
But amid rising interest rates, a pullback by institutional investors and other economic challenges, the North Water sale price came in well below the $240.31 million that the seller, Invesco, paid for the North Water Apartments tower in January 2016.
During a soaring market for high-end Chicago apartment properties, Atlanta-based Invesco paid nearly $604,000 per unit, still one of the highest rates ever seen in the city.
Crescent Heights’ price is just under $435,000 per unit.
“We thought it was a really good time to buy,” Buchberg told CoStar News. “Most of the institutions and pension funds have stepped back, so private capital is really who’s out there looking for deals today.”
He described the reduced price as “a function of where interest rates and cap rates have moved,” leading to higher rates of return for buyers able to pull off deals.
“We like the discount to replacement cost and overall we like the market,” Buchberg said. “We like Chicago and we like Streeterville. Longer term, we think Chicago is positioned for growth.”
An Invesco spokeswoman did not immediately respond to a request for comment from CoStar News.
The apartments at 340 E. North Water are more than 95% leased, with asking rents of $3,645 per unit, according to CoStar data.
Before the Streeterville deal, the highest-priced single-building Chicago apartment sale of 2023 had been a $119 million deal for the 256-unit Lincoln Park Plaza tower.
With many investors and lenders on the sidelines, multifamily sales volume in the Chicago area is at $1.2 billion so far in 2023, on pace to fall well short of last year’s $5.6 billion, according to CoStar data.
Crescent Heights is a major investor in Chicago, including buying the neighboring, 55-story North Harbor Tower for just over $240 million in 2018.
The firm also has completed several developments in Chicago, including the 76-story, 800-unit NEMA Chicago skyscraper along Grant Park.
Upcoming projects include plans to build a 600-foot-tall tower that would become the tallest in the fast-growing Fulton Market district. Crescent Heights paid more than $34 million for that residential development site earlier this year.
The firm also plans a 413-unit apartment tower at 640 W. Washington Blvd.
Last year, Crescent Heights sold the 350-unit Echelon tower in the Fulton River District to Canadian investor Morguard for $133 million.
For the Record
The seller was represented by CBRE brokers John Jaeger, Justin Puppi and Pete Marino.