Related Midwest is buying up big patches of Streeterville, according to a recent article by Crain’s Chicago Business. The company recently bought the defaulted loan on the failed Chicago Spire Project at the end of June, and its new 500-unit apartment tower is only a couple of blocks away at 500 N. Lake Shore Drive.
The firm is also buying a 22,300 square-foot development site just west of that building, according to the article.
At this point in the real estate cycle, demand from buyers remains strong, but there is already a downtown construction boom, and this influx of new residences may test the buyer’s market.
Asked about whether the condo market’s recovery means it’s time to start building again, Ron Devries, vice president of Appraisal Research Counselors, says “it’s probably too soon.”
The acquisition includes a parking garage for 704 cars that has already been completed. According to an online brochure from Jones Lang LaSalle, which had been hired to sell the site, the land is zoned for (potentially) a 280-foot tower with 232 condos or apartments.
Related Midwest bought the property from MS & AD Insurance Group Holdings Inc., which seized the property through foreclosure from Dan McLean, who planned to build a tower, but defaulted on the loan after the condo market crashed.
It is unclear what the land was bought for, but it was valued at $19.9 million in the foreclosure auction.
Related Midwest owns a lot of property downtown. It bought three South Loop condo towers, as well as the Waterview Tower and Shangri-La Hotel project, which it is turning into apartments.
But Streeterville is where Related Midwest is focusing at present. The 500 N. Lake Shore building, which opened in May, has leased 45 percent of its apartments.
The company acquired $93 in defaulted debt on the site of the proposed Chicago Spire, and they have not disclosed their plans for the property, which is still in the foreclosure process.
They also acquired ParkView, which is in Streeterville as well.
Other developers have begun to concentrate their investments together in one neighborhood. Magellan Development Group LLC focusses on Lakeshore East, and Fifield Cos. concentrates on River West.
“It’s a way that you can control the market a little bit,” DeVries says.
The Streeterville apartment market is becoming increasingly crowded. Including Related Midwest’s projects, 1,223 units will be completed this year, and 1,200 are in the planning stages.
Whatever may happen to Related Midwest in Steeterville, there is a benefit to buying the property already zoned.
“The site’s ready to go,” DeVries said. “They’re not going to see that 12- to 18-month delay to get the zoning done that another site might run into.”