Rezko venture is considering West Loop apartment project
If it gets city approval for what the developers say is a roughly $ 100 million, 280,000 square foot project, the company would buy the vacant land and air rights to the companies’ neighboring loft office buildings. of Chicago-based Peppercorn Capital, according to a source familiar with the matter. It is unclear what the properties’ pending sale price is, but Peppercorn was looking for around $ 10 million for them when they hit the market in 2019.
The proposal adds to the stack of apartment buildings planned for the West Loop and Fulton Market, the former meat-packing district that has become a trendy corporate destination that has recently picked up where it s ‘was stopped before the COVID-19 pandemic as a magnet for businesses. Hoping to house employees from companies like Google, McDonald’s, Mondelez International and others with large offices in Fulton Market, the developers plan to build thousands of residential units in multiple buildings over 20 stories tall. in and near the western part of Fulton Market.
To bolster their outlook, the downtown apartment market has shown signs of a rapid rebound this year after the pandemic. After building occupancy rates plunged to 86.5 percent last year at the end of 2020, tenants returned en masse in the first quarter and pushed the occupancy rate back up to 91.1 percent, according to data from the consulting and valuation firm Integra Realty Resources.
The city’s recently revised ordinance requiring a number of affordable units in new apartment buildings is also pushing apartment developers to push ahead with the plans. The city council voted in April to strengthen this requirement from October 1, changes that some apartment developers say will backfire by completely discouraging new residential projects.
MAC Founder and CEO Nick Melrose said in a statement the project aimed to undermine the rest of the West Loop rental market with rents 10-20% cheaper than the neighborhood average. Plans for the project on the MAC website indicate that rents will start at $ 1,650 per month for a studio.
“Our intention is to respond to a demographic that has been overpriced and overlooked by West Loop developers and to attract potential tenants who prioritize location, amenities, and more affordable rents than luxury multi-family homes. traditional Class A in the neighborhood, ”Melrose said in the statement.
The DAC-MAC company aims to connect the office buildings adjacent to the apartment building proposed for development with “modern shared facilities” and commercial spaces on the ground floor, according to the zoning request. The larger of the two neighboring buildings, which Peppercorn will keep, is 1201 W. Washington Blvd., a 75,000 square foot building that houses the offices of the Chicago Sun-Times.
The developers also hope to incorporate some flexibility into the potential uses of the new building. The group is seeking the right to have up to 154 hotel units on the property, removing one apartment unit for each hotel unit it adds. Short-term apartment rentals have become more common in recent years, with some landlords teaming up with vacation rental companies like Sonder and Stay Alfred to control a portion of the short-term rentals and share a portion of the revenue they have. they generate.
The Chicago-based DAC is headed by CEO Daniel Rezko, son of convicted power broker Antoin “Tony” Rezko, who was sent to jail over a decade ago for shaking up companies seeking to do business. with the State of Illinois under former Governor Rod. Blagojevich. Elder Rezko has no stake in DAC Developments, Daniel Rezko told Crain’s.
DAC and MAC have two other downtown projects underway, according to the MAC website. The duo are planning a $ 100 million 23-story mixed-use project in River North with 200 apartments and 23,000 square feet of retail space and a $ 68 million 18-story South Loop project that would include housing. collective and student accommodation. units.