AEW Capital Management is testing the multifamily market in Chicago’s West Loop, where apartment demand is strong while high interest rates and a tight lending climate make it tough to sell.
The Boston-based firm, whose North American CEO is Jonathan Martin, hired Newmark brokers Chuck Johanns, Liz Gagliardi and Susan Lawson to market the 190-unit JeffJack Apartment at 601 West Jackson Boulevard, Crain’s reported.
No official asking price has been revealed, but people familiar with the property expect offers to range from $60 million to $70 million, based on its net operating income of roughly $3.7 million, the publication reported. If it sells within that price range, it would highlight how much the building’s value has dropped since 2015, when it was bought by LaSalle Investment Management for $82 million for it shortly after opening.
While Chicago’s multifamily sector faces challenges, there have been some silver linings, particularly in the West Loop area. Last month, the family office of billionaire Zara founder Amancio Ortega purchased the 492-unit, 45-story luxury apartment tower at 727 West Madison Street for $232 million, marking the priciest multifamily sale in Chicago this year.
It’s unclear why AEW is selling the 15-story asset or how much the firm paid for the asset in 2020, when the landlord took over the property from LaSalle. However, there’s a chance it’s worth less than what the building last fetched, given that hiked interest rates have pushed down property values across much of the city since last year.
Despite the building’s 94 percent occupancy rate and a 4 percent increase in average leased rent over the past year, borrowing costs could hinder a potential sale. Nationally, apartment sales this year were down 67 percent year-over-year through July, the outlet reported, citing data from research firm MSCI Real Assets.
Newmark is emphasizing JeffJack’s more than 17,000 square feet of amenities, including an indoor pool, to help land a buyer. The average unit size in the property is 718 square feet, and average rent is $2,548 per month.
— Quinn Donoghue