It’s Happening: Apartment to Condo Conversion in the Gold Coast at 850 N. Lake Shore Drive
We’ve chattered recently about how there are no new condo towers going up downtown. There are some that have finished construction, but none that are going up.
That’s the first time in a decade.
Additionally, the downtown market has seen many older condo buildings “de-convert” back into apartments. This is the opposite of what we saw from 1995 to 2008 when apartments were converted into condos at a quick pace.
But it’s finally happening.
The first apartment to condo conversion of this cycle.
Crain’s is reporting that the Lake Shore Athletic Club at 850 N. Lake Shore Drive in the Gold Coast will convert to condos.
Built in 1927, it has 198 units ranging from 1 to 3 bedrooms. It was a dorm for Northwestern University which abandoned it in 2005.
In 2014, it was converted into luxury apartments.
It has an attached garage (currently valet parking), a landscaped rooftop terrace with grills and seating, a fitness room and an indoor pool.
It also has a Grand Lounge area overlooking the lake.
The units have tall ceilings and hardwood floors.
In March, a Crescent Heights-related legal entity bought the building for $79.75 million, according to the Cook County Clerk. That’s about 57% of the $140 million that an affiliate of J.P. Morgan Asset Management paid for the 19-story, 198-unit building in 2016.
Buying the building at a hefty discount “is what makes the numbers work” for going condo, Buchberg said.
Units will start at $240,000 and go up to $1.17 million+ for the 3-bedrooms.
Current tenants are being given the first right to buy their unit. But once the leases are up, the unit will go on the market.
Currently, there are 10 units on the building’s website.
You can see the floor plans and pricing here.
The developer is keeping the finishes “as is” because it was only converted 10 years ago. That means wood cabinets, granite counter tops and stainless steel appliances. The original apartments were built out by Booth Hansen.
Some of the two bedrooms are listed on the building site with these prices:
- $762,000
- $873,000
This is cheaper than the luxury buildings like Tribune Tower, St Regis and One Chicago.
Will this building sell well given that there are no other new condo developments in this price point in this neighborhood?
In a counter-trend move, Gold Coast apartments going condo [Crain’s Chicago Business, by Dennis Rodkin, June 6, 2024]
“The developer is keeping the finishes “as is” because it was only converted 10 years ago.” – AKA the developer doesnt want to sink any more $ into the deal
Looked at a few floor plans, they not optimal due to the shape of the building
The 2 units noted
1001 is a 1Br + Den
902 – The living space is laughable
Wonder what the HOA will run
Good luck
Just a single exposure in every unit, including the bigger ones. And those windows look tiny by highrise standards. No thanks.
great neighborhood, but not many windows in living spaces.
“Just a single exposure in every unit”
’07 tier is on a corner, with a second direction view.
Looks great in many ways. I love the amenities and views. Wouldn’t mind checking out a unit in person.
I rented there for several years. The amenities are amazing but very expensive to maintain. The HOA will be through the roof.
Nice units and building – I’ve been in a few times when they were rentals. My only concern would be purchasing a unit and the conversion doesn’t finish or ends up leaving the building half rental/half owner occupied etc
I can’t read Rodkin’s update but when the broker enlisted Crain’s help selling the property last fall, Danny Ecker wrote:
“The 96-year-old Beaux Arts building was originally known as the Lake Shore Athletic Club, but was sold in the 1970s to Northwestern University, which turned it into a dormitory. In 2008, a joint venture … purchased it for $38.5 million and later converted it into high-end apartments, ultimately selling the building to JPMorgan Asset Mgmt in 2016. JPM hired Newmark [to sell the building] in August 2020.”
“The building’s average apartment size is relatively large at 1,264 square feet, with an average rent of $3,574 per month…. As of [Sept 2023], the building was 95% leased….”
The leasing rate is impressive.
https://www.chicagobusiness.com/commercial-real-estate/lake-shore-drive-apartment-building-sale
This pin’s taxes were knocked back to 2015, a good year (one would think) to get levered & long:
2011 $43,800
2012 $44,871
2013 $45,478
2014 $109,299
2015 $187,170
2016 $238,907
2017 $269,195
2018 $215,685
2019 $219,375
2020 $243,240
2021 $287,910
2022 $308,492
2023 $169,670
pin: 17032280050000
That haircut is/has been happening all over the CBD — bad news for resi pins who’ll have to pick up the slack, since local govt expenses haven’t also declined by 50%.
Zillow advertised this 2bd unit for $4700/mo.
https://www.zillow.com/homedetails/850-N-Lake-Shore-Dr-APT-1402-Chicago-IL-60611/2090781846_zpid/
My notes don’t say where I got this quote:
“Last year, Crescent Heights paid about $173 million for another Streeterville property, the 398-unit residential portion of the 50-story tower at 340 E. North Water St., far below the $240 million-plus paid by Invesco in 2016.”
Given the new owner’s in the moving, not storage, business, I’d suggest bidding very low with lots of cash.
“Given the new owner’s in the moving, not storage, business”
??
CH owns a number of for rent buildings. Wouldn’t be shocked by this being a bit of a boondoggle, with a decent percentage held to rent for a long time.
Even if they sell 1/3 of the units, the remaining basis is close to zero, and the rentals would be a cash cow.
anon
In Chicago, 150 North Michigan Avenue is another distressed building that was bought at half the price of its previous sale.
anon
who bought it last for how much and this time who bought it and for how much?
chichow,
I read the requests you directed to anon and since I also wondered I asked google.
It appears that in 2017 CBRE Investment Management paid $121 million to buy the 150 N Michigan Ave building from John Hancock Real Estate (who’d paid $102 million to acquire it in 2012). In early 2023, after having invested $35 million in building renovations, CBRE Inv. Mgmt put the building up for sale, In June of 2023 a news article claimed that R2 Companies, a local real estate investment/ development company had contracted to purchase the building for $70 million. But in January 2024 when the R2 Co. acquisition closed the price was “nearly $60 million”.
Since ime anon has better access to factual information I’ll wait to see if he posts
hey south b
hope all is well
Yeah I could have just also google d , but in this case wanted a bit more precision. Because I have seen before how reported numbers don’t always line up and also what’s recorded differs a lot because of FFE.
so I figured I’d ask dee one who knows….
looking at it even more
I wonder what other Class A buildings have changed hands as prior we talked about class B buildings that are being converted to housing
“[Stone Container Bldg]”
1995 foreclosed by Travelers based on ’88 mortgage ($95m)
1997 sold to Tishman in a supposedly $0 transfer. $50m mortgage later
1999 sold for 113.2m (german buyer; $101.9 mortgage)
2012 sold for 102m (John Hancock; no mortgage)
2017 sold for 121m; (CBRE fund; 86.5m mortgage)
2024 sold for $60m; (friend of CC, Matt Garrison (MGG); $73.7m mortgage)
“2017 sold for 121m; (CBRE fund; 86.5m mortgage)
2024 sold for $60m; (friend of CC, Matt Garrison (MGG); $73.7m mortgage)”
Looks like the current buyer got a good deal.
“I wonder what other Class A buildings have changed hands as prior we talked about class B buildings that are being converted to housing”
There have been several sales in recent years.
“Even if they sell 1/3 of the units, the remaining basis is close to zero, and the rentals would be a cash cow.”
The way they are selling the building, as the leases come up, is smart. They keep a renter in the unit until that happens and the renter has the first right to buy. I also wonder if current renters aren’t getting some kind of sweetener as well.
But I am surprised they aren’t going to offer an upgrade package. I think they will have to eventually. It would be an extra $50k to $75k to get a new kitchen and/or baths. In the housing boom conversions, they mostly offered an upgrade package. You didn’t have to do it, obviously, but it was there if you wanted to make it look new.
10 years as a rental is pretty long. Some wear and tear by that point.