Prudential Real Estate Investors LLC has been looking into the purchase of SoNo East, an apartment building located in Lincoln Park. While the construction of the tower has not yet been completed, Prudential is hoping to take possession in June of next year.
SoNo East, an apartment tower whose construction broke ground in the early months of 2011, will be 22 stories and will house 324 luxury rental units at the time of its completion. As current prices for high-end apartment buildings are soaring, Prudential couldn’t pass up the opportunity to own the newest SoNo complex. Thanks to a business venture between Prudential, developer Bill Smith, Crate & Barrel founder Gordon Segal, and retail broker Stanley Nitzberg, the transaction could be finalized by the summer of 2012.
It’s too early to determine an exact price. The building is expected to bring in about $350,000 per unit, maybe upwards of $110 million overall. The rising occupancies and rents along with strong investor demands allow for success in apartment complex purchasing.
“A lot of owners are taking advantage of great conditions,” says John Jaeger, senior vice-president in the Chicago office of CB Richard Ellis Inc.
SoNo’s close proximity to the North and Clybourn retail center doesn’t hurt the property’s appeal either.
The first SoNo Tower was made up of 199 luxury condo units. Due to decline in the condo sales market, Smithfield Properties has been having trouble selling the last handful of units. Since the market has shifted in favor of apartment rentals, Smithfield went a new way with the second venture. A $46.1 million loan was taken out from U.S. Bank to finance SoNo East.
SoNo East is one of many apartment projects that have begun construction this year. Although Prudential does not seem to be too worried, some investors are concerned that the market may have too many units a few years from now, and the apartment market will face the same fate as condo sales.
Thus far, apartment rentals seem to be virtually untouched by real estate tumult. It is unclear what effect a rise in apartment construction will have on investor demand and prices if the industry should buckle.
“We’ll know more in 30 days,” says Mark Stern, senior vice-president at Waterton Associates, a Chicago-based apartment investor. “It’s going to be interesting to see what clears.”
According to http://www.chicagorealestatedaily.com/article/20110921/CRED03/110929979/buyer-lined-up-for-lincoln-park-apartment-tower