A 292-unit apartment complex on Chicago’s North Side that was owned by Sam Zell for decades is for sale about a year after the billionaire’s death, paving the way for the first ownership change since the property was converted from a shoe factory in the 1980s.
JLL brokers have been hired to sell the Cobbler Square Lofts complex at 1350 N. Wells St. in Old Town, according to marketing materials that bill the investment as an opportunity to assume long-term, low-interest-rate debt and potentially build new units to increase the value.
An ownership entity tied to Zell has owned the property since it was converted from a Dr. Scholl's shoe factory to apartments in the 1980s. It was one of the few remaining Chicago properties owned by the colorful billionaire when he died last year at age 81.
Chicago-based Zell was known as a pioneer in real estate investment trusts that invested in a wide range of properties, including multifamily giant Equity Residential. His deals included selling Equity Office Properties Trust to Blackstone for $39 billion in 2007.
It’s unclear which Zell entity owned Cobbler Square, but a $51 million refinancing of the property in April 2019 listed his office at 2 N. Riverside Plaza as the entity’s address and a longtime Equity Group Investments executive signed the loan documents, according to Cook County property records.
Formerly Zell-led Equity Group Investments did not immediately respond to a request for comment from CoStar News.
The loan from Wells Fargo, just under a year from the start of the pandemic, is described as a key feature of the Cobbler Square offering in JLL documents. With a 3.8% interest rate and a 2034 maturity, it can be assumed by the buyer, according to JLL.
That could significantly boost the sale price as rising interest rates in recent years have decreased real estate values and slowed the pace of deals throughout the country.
JLL said there is further upside for a buyer to renovate units and increase rents, as well as to build a five-story, 26-unit expansion atop the southwest corner of a 177-space parking garage, pending city approval.
Existing structures range from three to five stories, and there is just over 19,000 square feet of retail space. The complex is 94% occupied, with rents averaging $2,095 per unit and $2.65 per square foot, according to the brochure.
The property began as a factory for Western Wheel Works, then the world’s largest bicycle marker, in the 1880s, according to JLL. Dr. Scholl's shut down a factory and headquarters in the building in 1981, and the current owners then undertook the residential conversion.
Renovations were completed in 1985. Today, Wells Street is known for restaurants, nightlife and shops, creating high residential demand.
For the Record
The seller is represented by JLL brokers Mark Stern, Kevin Girard, Zach Kaufman and Sam Grohe.