A small building in Chicago’s River North that has lost its only tenant is available for sale in the latest example of a potential office-to-residential conversion.
The owner of the three-story, 42,000-square-foot office building at 225 W. Superior St. has hired Colliers International to seek a buyer, the brokerage confirmed to CoStar News.
Built in 1969, it is being marketed as a 14,000-square-foot development site, with the potential to replace the current structure with a taller residential tower of about 13 stories and 113,000 square feet, topped by a roof deck and other amenities for residents, according to Colliers broker Alissa Adler.
“There’s a potential it could be a user sale, but we think the highest and best use is a residential conversion,” Adler said. “We’re going to market it both ways, but we expect that it’s probably going to be a redevelopment.”
If so, it would continue the trend of developers seeking new uses for offices as remote and hybrid work trends persist more than four years since the onset of COVID-19. Developers throughout the country have sought office buildings to redevelop or knock down and replace in urban and suburban markets.
Chicago Mayor Brandon Johnson recently announced four office buildings in the Loop business district that the city is considering providing a combined $151 million-plus in public backing to help convert to more than 1,000 new apartment units, at least 30% of which would have affordable rents.
Several outdated office buildings in Chicago’s suburbs have been sold to be knocked down and replaced with new uses, including an ongoing conversion of Allstate’s former headquarters into a logistics campus in Glenview, Illinois, and plans to replace Sears’ longtime corporate base in Hoffman Estates, Illinois, with a complex of data centers.
In River North, Colliers and HED Architects are presenting 225 W. Superior as the chance to create a taller, transit-oriented development with studio, one- and two-bedroom units. The site is along the Chicago Transit Authority’s Brown and Purple Line train station at Chicago Avenue and Franklin Street.
Although rising interest rates and construction costs have made all development more difficult to finance, demand for apartments in top Chicago markets such as River North will help get new projects off the ground, Adler said.
“This is a live-work-play area where you have the art galleries, restaurants and nightlife of River North, and the train entrance is right in front of the building,” Adler said.
The building hasn’t changed hands since 2005, when an affiliate of San Francisco-based Atel Capital Group paid $6.85 million, according to CoStar data and Cook County property records.
GoHealth recently moved out of the building as it consolidates multiple smaller offices in River North into a single office in the nearby Merchandise Mart. GoHealth’s lease expires in January, Adler said.
“If we were just selling a vacant office building, someone would have to pay all cash to convert it to a multitenant building,” Adler said. “As multifamily, I don’t see a developer having trouble getting financing. We expect to get a lot of activity.”
For the Record
Colliers International brokers Alissa Adler, John Homsher, Tyler Hague and Lauren Stoliar are representing the seller.